Re: [OPE-L] price of production/supply price/value

From: Ian Wright (wrighti@ACM.ORG)
Date: Mon Jan 30 2006 - 00:38:41 EST

Hi Jurriaan

I think my overall point is that I want to take the neo-Ricardian
formalisation of the TP seriously, whereas you seem to be rejecting it
on grounds of realism.

> There's a big difference though for Marx between (surplus-) values produced
> and (surplus-) values realised, which is precisely the implication of
> Ricardo's "contradiction", i.e. the discrepancy of values and prices. That
> contradiction reflects the practical reality that product values are
> produced before their final real prices are established, and that
> enterprises do not know how much income exactly they will get from the
> values they have produced. The problem Marx is then really concerned with
> is, how is this contradiction mediated in practice, and how will capital
> flows move, assuming the fulcrum of competition is the maximum realisation
> of surplus value (i.e. ideally sales at prices above ruling production
> prices) ?

No, I don't think so. Marx was not concerned with uncertainty of
profit realisation in ch. 9, unless I've missed something. I am sure
he is abstracting away from such factors. He later talks about market
prices. I think he is concerned to show that, despite appearances,
labour value is conserved in price, so that the Vol I. law of value
still obtains. It's important for Marx here that the quantitative
connection is maintained.

> We can impute a number for a value and a number for a realised price, and
> then examine mathematically how they would relate under given conditions.
> But surely drawing an equation between values and prices cannot prove
> logically that value magnitudes must correspond to price magnitudes?

It can, given the starting assumptions. You can count labour values.
You can count prices. In what way are they related?

> It seems to me there is no logical proof of the theory of value possible in
> this sense, beyond its internal coherence, only empirical proofs, i.e. does
> the real pattern of economic behaviour occur as the theory would predict?

Yes, I agree. But there's a logical proof that Marx's theory of value
is logically impossible. I don't buy it for one minute, but that's
what the TP is. Neo-Ricardians, in general, reject labour theories of
value on these grounds (e.g. Steedman). According to them, there isn't
an important relationship between labour-time and prices. The question
is not one of proving, but disproving.

> Anybody knows e.g. that you cannot "prove" that GDP is the correct measure
> of gross value-added, that is true by the definition of terms. All you can
> prove, is that the concept is more or less accurately measured empirically,
> with observed prices adding up to the ideal price as consistently as
> possible. But what Marx was really concerned with was the specific pattern
> of adjustment of production conditions and market conditions, in a situation
> where the movement of capital is guided by profit maximisation. It's not a
> problem of comparative statics, but of dynamics, a "law of motion".

Yes, maybe for Marx (e.g. TSS intepretation heavily emphasises a
dynamic reading of Marx). Nonetheless, there is a modern TP, which is
static. You are rejecting this special case study.

> The use of mathematical equations is based on the idea that there is
> something to be equated. Thus, if we assume total values and total prices,
> and total profits and total surplus values, are identical at the
> macro-level, then the divergence of values and prices at the micro-level
> must be reconcilable at the macro-level, just as in an accountant's balance
> sheet. Once you have that idea, you can create mathematical functions to
> show how values and prices will be allocated, in a (hopefully) logically
> tight solution. But all you've really done, is to say that values and prices
> are not equal magnitudes at the micro-level, but equal magnitudes at the
> macro-level. Qualitatively different entities at one level of abstraction
> become qualitatively equal entities at another level of abstraction.
> Ricardo's contradiction remains... it is logically irreconcilable, yet in
> practice it is reconciled, hence the notion of a dialectical relationship.

But the possibility of that reconciliation is precisely what is at
question. You know that neo-Ricardian critics will interpret your last
statement as dialectical "mumbo-jumbo". They will say that no such
contradiction is reconciled in practice, and that this is just Marxist
wishful thinking, that somehow the economy sorts out their theoretical
confusions for them (etc.).


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