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

From: Ian Wright (wrighti@ACM.ORG)
Date: Mon Jan 30 2006 - 17:48:28 EST

Hi Andy

Thanks for adding precision to the discussion. Steedman has a number
of different arguments against Marx's LTV. But he does emphasise that
in general there is "no way of going" (paraphrase) from labour values
to prices, from one prong to the other. The reason for that is due to
the disconnect between the two accounting systems, which I briefly
explained in my last message.

> It may be insignificant but the notion of Marx's LTV being 'redundant'
> or 'inconsistent' does not capture the notion you are stressing of there
> being 'no necessary relation' between value and price systems. E.g.
> labour-time could be redundant even if there is such a relation.

Yes. Other authors have shown/argued (e.g., Brody in early 70's, Keen
more recently), if labour-value is the substance of value, then so is
corn-value, or oil-value etc. This is especially clear in simple
commodity production (r=0). So even if a necessary quantitative
connection is shown then, according to this view, labour-value isn't
special (at least in the case of static equilibrium models).

> I just had a quick look at Steedmans' 'Marx after Sraffa'. His summary
> of key points at the end does *not* stress the 'no necessary relation'
> point. It stresses redundancy and inconsistency. In fact, Steedman
> argues that values are derivative of the profit rate, rather than vice
> verse (since production techniques are chosen according to the principle
> of profit maximisation). In that sense there is a relation between
> values and prices, on Steedman's account, but allegedly running in
> reverse direction to that in Marx's theory.

I was trying to dig a little deeper and determine the root cause of
why the neo-Ricardian critique generates claims of redundancy. Sorry
for the simple analogy, but I think this is the root cause:
Say I'm trying to count the number of eggs in basket (price
accounting). I also have a number of potatoes (value accounting). In
general, there is no correlation between the number of potatoes and
eggs (mismatch of accounting systems). That's because the number of
eggs actually depends on what day it is (dependence of prices on
income distribution); but I always buy the same number of potatoes
every day (independence of values from income distribution). So why
bother counting the potatoes?

F&M's response to this, for example, is to claim there is a
correlation between eggs and potatoes in a probabilistic framework.

Thanks for reminding me that Steedman goes on to show that
labour-values, far from determining the average rate of profit via
S/(C+V), are crucially dependent on the rate of profit under choice of
technique. I was restricting my attention to no choice of technique.

> Imo, the economic basis for refuting neo-R critique lies in the
> necessity for there to be limits on prices, to ensure enough needs of
> workers are met, and enough profit needs of capitalists are met, across
> the economy and through time. These limits are given by SNLT.

That may well be so. But the neo-Ricardian critique assumes a static
situation (or, more precisely, self-replacing equilibrium). You're not
refuting it unless you accept the assumptions of the critique, or show
that an assumption is necessarily wrong or misguided. Steedman
challenges defenders of the LTV to do just that.

> The theory of exploitation shows in essence how the system actually
> enforces these limits. But it is folly to think that at any point in
> time the aggregate equalities actually hold at market prices because the
> limits take effect only through rupture and crisis.

I agree that it would be folly when talking about market prices,
because in disequilibrium situations labour-value is not necessarily
conserved in exchange (e.g., some labour may not be equalised with
other labour because it is unwanted). But the TP is situtated in ch.9
when Marx is talking about theoretical prices of production. Although
the text is not crystal clear, I read Marx's stress on aggregate
conservation claims to mean that he's trying to square price-value
conservation (Vol I.) with uniform profit-rate.


This archive was generated by hypermail 2.1.5 : Thu Feb 02 2006 - 00:00:02 EST