Re: [OPE-L] The Law of Value and Rib Tips

From: Philip Dunn (pscumnud@DIRCON.CO.UK)
Date: Fri Feb 11 2005 - 09:14:51 EST

H Jerry

Quoting Gerald_A_Levy@MSN.COM:

> > I think it is entirely a joint production problem.
> > First, suppose that the division of rib and rib tip is held constant in
> > some sense, some regulation that specifies what a rib tip is and
> > what a rib is. So an amount a of rib tip is always produced with
> > an amount b of rib.  That seems to be a case of rigid joint production.
> > So there is only one commodity, the embodied labour value of the
> > rib tip part of the commodity is equal to the value of the money it
> > sells for, and the same for the rib part.  Costs,  labour-time etc. are
> > then divided between the two parts in proportion to revenue.
> Hi Phil:
> Let us recall again Red Kronstadt's question:
> "At every step *these two erstwhile commodities share identical costs
> of production*.  And yet, in spite of the fact that there is a greater
> weight per pig of ribs than rib tips, at any given BBQ stand *a, say,
> pound of ribs will cost you more than a pound of rib tips*. Why?."

Why not?

> In other words, the costs of production of a pound of ribs and a pound
> of rib tips are identical, but the *price* of the two will be different.

This, I think, is so for the very special case of flexible production that we
have here.  The proportion, by weight, of ribs to rib tips can be varied
without costs changing at all. Further, one kilo less of ribs means one kilo
more of tips.  It follows from this that unit costs are equal  -- the cost of a
kilo of ribs is equal to the cost of a kilo of tips.

None of this logically entails anything about unit prices.  Statistically, it
might well be found that the ratio of unit prices to unit costs had a mean > 1.
But there will always be a spread.

> So, when you say that there is "only one commodity" that posits a
> condition that is fundamentally different from the one RK asked about.

I agree that the flexible case matches RK's example.

> > Second, suppose that the division is variable.  It is then possible for
> > the butcher to vary the ratio, by weight say, of rib tips and ribs.  Then
> I
> > think we have two commodities.
> RK suggested a situation in which both rips and rib tips are sold by
> the pound.  Of course, there *are*  2 separate commodities.

How do you know this?  There are certainly two use-value types and very often
the use-value type is a good marker for a commodity. But not always.  The
use-value type and the individual commodity are different entities.  There is
no reason why the ribs and the tips cannot be material bearers of a single

> The question
> -- which unless I missed it you haven't answered -- is:  *what explains the
> difference in price where you have two related commodities produced by
> the same firm with identical costs of production*?

Explanations could be sought but they would have nothing to do with value
> I have a couple of  additional, special questions *for you* (which seek
> to probe your perspective further):
> 1. How can it be that:
> *  the value of ribs (Rv) /pound is = to the value/pound it sells for (Rp)
> and
> *  the value of rib tips (Tv) / pound is equal to the value/pound it sells
> for (Tp)
> *  when Rp does *not*  = Tp
> *  but the costs of production of ribs (Rcop) / pound =
>    the costs of production / pound of rib tips (Tcop)  ?

Again, why not? 

> 2. Has demand no role at all in determining the relative prices of ribs and
> rib tips?
None, since prices are not determined at all.  No doubt they are caused by many
things including sunspots.  But not determined.

Has any economist ever determined the price of a cup of tea?

Philip Dunn

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