# [OPE-L:8637] Re: long term centers of gravity?

From: Fred B. Moseley (fmoseley@mtholyoke.edu)
Date: Wed Mar 19 2003 - 19:54:45 EST

```Rakesh, I think that again that you are misunderstanding what I am saying
(probably my fault).  Let me try to clarify.

You say:

>
> Again I think there is a conflation of two questions--the question of
> how the value transferred from means of production is determined and
> whether one should assume that output prices equal input prices.
>
>
> But let me restate my criticism.
>
> Let us say that we have three production periods
>
> t0 => t1
> t1=>t2
> t2=>t3
>
> Firm one buys means of production at t0 which it will be amortize
> over three periods.
> Firm two buys means of production at t1 which it will amortize over
> the next three years
> Firm three buys means of production at t2 which it too will amortize
> over three periods.
>
> I assume that each firm buys its means of production at a cheaper
> price and those sets of means of production though roughly physically
> equivalent  each represent less value.
>
> For the sake of simplicity I also assume that the price of production
> at t1, t2 and t3 is determined by the most efficient firm in that
> period.
>
> That is, at t1 price of production will be the kr for firm one; at t2
> PoP will be the kr for firm two; at t3 Pop will the kr for firm three.
>
> So that means at t3, firm one must sell at the price of production
> determined by firm three. The value transferred from the means of
> production owned by firm one to its output in the period t2-t3 is
> also determined not by the value such non depreciated stock would
> have had at the point firm one did purchase means of production but
> by the current value of the non depreciated stock, i.e., the value of
> the equivalent means of production purchased by firm three at t2.
>

Rakesh, I agree with this completely!  This is the point I have been
trying to make.  When I say that input prices are equal to output prices,
I mean this as a paraphrase of what you say in this paragraph.  By "input
prices", I mean the value transferred to the value (or price) of the
output in the current period.

By "input prices", I do NOT mean the actual prices at which the inputs
were purchased by firms one and two at t0 and t1, and by "input prices are
equal to output prices", I do NOT mean that these actual input prices in
past periods are equal to the output prices of these inputs at
t3.  Rather, I mean that the value transferred from the means of
production to the value (or price) of the output in the current period is
equal to the price of the means of production in the current period.  Once
the prices of the means of production change, then the original actual
input price is irrelevant to the determination of the price of the current
output, so it is no use talking about these old, out-dated prices.  "Input
prices", i.e. the value transferred, are the current prices of the means
of production.

So maybe we are using "input prices" with two different meanings.  But we
seem to agree on the crucial point, which I have been trying to emphasize
- that the value transferred from the means of production in the current
period is equal to the current price of the means of production, not the
actual price of the means of production in previous periods (if this is
different).  This is also what Carchedi is saying.

So, I don't see where our disagreement is, except perhaps over the meaning
of the term "input prices".

What do you think?