Re: (OPE-L) Ajit's paper

From: Rakesh Bhandari (rakeshb@STANFORD.EDU)
Date: Mon May 31 2004 - 05:38:56 EDT

>Rakesh, None of these people can answer my very simple
>question--the question that I asked you in the other
>post, that you have not answered yet. So let me again
>reiterate. Let's say somebody says, 'the value of a
>commodity x is 10 hours of socially necessary abstract
>labor'; Is this statement formally correct or
>incorrect. If incorrect, then why and if correct, then
>formally how can one arrive at the measure of 10 hours
>of SNA labor?

Ajit, I think it is the nature of a fetishistic economy that we can
never measure with precision value which is necessarily
mis-represented in the form of prices. All we have are price
phenomena; that is why I have insisted that the whole transformation
literature makes no sense. The unknowns are not prices and the
average rate of profit; the unknowns are, and have to be, the value
of the used up c, new value added and thus s/v. That is the mistake
that Marx is claiming that he made in his transformation tables. By
assuming that price was proportional to value, he assumed that he
could determine from visible flow price data the value transferred;
moreover, since wage goods could have sold above or below value, he
had no way of knowing about much actual labor power the money wage
could actually buy. If wage goods sold above value, he set s/v too
high in his transformation tables; if below value, s/v should have
been higher. But we never know what s/v is before we arrive at output
prices. We infer what s/v is from price data and changes in s/v from
time series. And even then the data are distorted and only allow
guesses.   We also cannot make a direct measure of the value of the
used up means of production. We know however that its value is the
SNALT it represents. And we know whatever the value of the used up c,
the output has greater value than the input and that new value is
redistributed through the formation of an average profit rate.

  I think of Marx's value theory as a form of retroduction or
inference to the best explanation (important differences between the
two that I cannot now remember). That is, features of capitalist
development such as concentration, centralization, the alternation
between prosperity and depression, and the onset of major general
crises that can only be resolved (if at all) politically are best
explained in terms of changes in social labor time relations and in
particular changes in the relationship between dead and living labor.

It's been a long time since I read Peter Lipton's book on inference
to the best explanation and Andrew Collier on retroduction. No time
now. But this is how I see it.

>>  4. While Hahn questions the assumption of input and
>>  output prices as
>>  equal in order to enter demand considerations to
>>  close the equations,
>>  Giusanni, Freeman and others question that
>>  assumption in order to put
>>  technical change into the formalism.
>Hahn is coming from intertemporal general equilibrium
>position. Whatever one may think of the GE, one cannot
>deny that it is a theory of prices. For the A-D model,
>different time periods define different commodities,
>and thus can have different prices. But these prices
>are determined by the determinants other than prices.
>That's why it qualifies to be a theory of prices. If
>they determined prices of a commodity in time t on the
>basis of observed prices of the same commodity in time
>t-1, then it would not be a theory of prices but
>rather be simple mumbo-jumbo, which is what TSS is.

TSS does not determine prices at t only on the basis of prices at t-1.

>Hahn's critique of Sraffa on this score is not sound.
>All Sraffa's equations are saying is that the rate of
>profits is calculated on the basis of the replacement
>coast of the physical capital items used up in
>production. As far as technical change is concerned,
>since technique of production is one of the
>determinant of prices, a change in technique will
>definitely explain change in prices, but it will be
>the technique in use that must explain the prices at
>any time.

Prices at any one time (t) are the same as prices at another time
(t-1). After all, even before the full onset of the Industrial
Revolution, Ricardo had already recognized that prices are changing

Yours, Rakesh

>Cheers, ajit sinha
>  That seems to
>>  me to be the real
>>  fight--about how and why to drop the static
>>  assumption in the
>>  Sraffian formalism when it comes to studying actual
>>  capitalist
>>  economies, ie. when one is doing more than
>>  critiquing popular
>>  mythology about the productivity of capital and
>>  profit as just
>>  reward. Sen implicitly recognizes Hahn's point but
>>  pays no attention
>>  to the Marxian criticism. But that's where the
>>  action is.
>>  Rakesh
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