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

From: Philip Dunn (pscumnud@DIRCON.CO.UK)
Date: Sat Feb 12 2005 - 10:45:07 EST

Hi Jerry

Quoting Gerald_A_Levy@MSN.COM:

> Hi again Phil:
> Previously I reproduced  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*. [with added
> > emphasis, JL]  Why?."
> You replied:
> > Why not?
> Your question is cryptic.
> RK's  "why?"  must have been because s/he believed (mistakenly,
> in my view) that the law of value requires that commodities with
> equal costs of production should have equal market prices.  The
> underlying presumption seems to be that the LOV requires that
> the market price of any commodity should equal its value.  This
> premise is incorrect in my view, but answering his question allows
> one to explain the multitude of ways that individual commodity
> values do not necessarily equal individual commodity market
> prices.
> If someone accepts the distinction between value and market
> price, then your question -- "why not?" might be a reasonable
> initial reply.  But, as I understand your perspective, the value
> of any commodity is equal to the quantity of money it sells for.
> Hence,  _you_ especially  should answer the "why?" question
> since the divergence in price between ribs and rib tips can not
> be easily explained if one conflates price with value.

I do not conflate price with value.  The embodied labour value of a produced
commodity is instrinsic to that commodity.  The value of the money that the
commodity sells for is intrinsic to the money.  They are quite distinct,
despite being equal.

The ribs and the rib tips can have equal unit wage costs, equal unit non-wage
costs, etc. but none of this means the unit value of ribs and tips must be
equal.  I espouse a non-deterministic theory of value creation.  

> > > 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 commodity.
> I recall that you have mentioned the "law of one price" (LOOP) in
> previous discussions (a "law" that I have questioned the existence of).
> If there is a LOOP then if there was only 1 commodity it should have
> only 1 price.  Beyond that, I would say that we can observe in the
> market because consumers are willing to pay prices / pound
> of ribs that are different from the prices / pound of rib tips that
> consumers have demonstrated that they view the use-value of
> each as being different.
> > 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 theory.
> Nothing to do with value theory?  Not quite.  But, clearly the level of
> abstraction required to satisfactorily answer RK's question is different
> from the level of abstraction where prices are assumed to equal values.

I am not *assuming* prices are equal to values.  Values, as recognised by
cannot fail to equal prices.
> > > 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?
> Because according to your perspective -- unless I have misunderstood it --
> Rp should equal Tp.  The challenge for you posed by RK's question
> is to explain a situation that _does_ exist that your theory tells you
> should _not exist_.

No, my theory says 'Rp not equal Tp' is to be expected, and 'Rv not equal Tv'
to be expected.

> >>  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.
> One still has to _explain_ the relation of values to market prices.

They are equal.  There is nothing to explain.

> > No doubt they are caused by many things including sunspots.
> > But not determined.
> What commodity prices are caused to change by sunspots?

Probably most prices are affected but since sunspots affect weather
prices would be most affected.

> > Has any economist ever determined the price of a cup of tea?
> The price of tea is determined in the marketplace. Suppose, for the
> sake of argument, that the price of tea equals the value of tea.  Now,
> suppose that the price of tea goes up.  Unless one has a theory that
> explains the divergence of price from value then one is forced to
> conclude ipso facto that the value of tea has gone up. One's theory
> of value then collapses into subjectivism.  For instance, if there is
> a shift in demand from coffee to tea causing the  relative and
> absolute price of tea to go up then one has a perspective that
> allows for any number of factors other than living labor input to
> cause an increase in  commodity value.
Living labour does not *cause* added value.  Living labour is identical to value
creation.  So if value added increases so does living labour.

Philip Dunn

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