**From:** Paul Cockshott (*wpc@DCS.GLA.AC.UK*)

**Date:** Fri Feb 03 2006 - 04:58:05 EST

**Next message:**Andrew Brown: "Re: [OPE-L] price of production/supply price/value"**Previous message:**Ian Wright: "Re: [OPE-L] price of production/supply price/value"**Maybe in reply to:**Andrew Brown: "Re: [OPE-L] price of production/supply price/value"**Next in thread:**Andrew Brown: "Re: [OPE-L] price of production/supply price/value"**Messages sorted by:**[ date ] [ thread ] [ subject ] [ author ] [ attachment ]

Andrew Your argument is not clear and an example of how formal systems, here that of probabilistic statistics, can 'sneak' in assumptions (something you accused dialectics of not so long ago!). You make it look as if all you have done is 'assumed' a MELT ["All that one is assuming here is that there is some MELT that equates total values to total prices."] but a MELT is not an assumption at all to anyone who agrees that both prices and labour-times exist! ------------- Paul A MELT is just a conversion operator analogous to the constants of physics which map between different dimensions. Thus "c" maps between time and distance. If one wants to discuss homomorphism between different domains - say values and prices, then one needs a mapping operator that goes between them. ------------------ The only way I can interpret what you are saying lies in focusing on what you originally called 'costs', and discussed as a 'price/costs ratio'. I presume you have in mind that money costs (money measures of constant capital, c, and variable capital, v) for any given firm are close to being equal (directly proportional) to labour-time measures of the same. Why? Because the money measure of 'c' is determined by aggregation over the different means of production purchased by a firm. The prce/value ratio is random, so deviations in it will begin to cancel out when aggregating over a number of commodities. Hence the labour-time measure of 'c' is likley to be close to the money measure of 'c', even at firm level. A similar argumet can be applied to 'v' if we think of it as determined by a basket of consumption goods. When we consider that costs are the sum of c + v then this further reinforces the point. This would be enough to make sense of your argument because it leaves firm level deviations in surplus value ('s', measured in labour-time) from profit (price measure) as the main cause in deviations of price from value. And, sure enough, in that case the coefficient of variation of deviations of price from value can't be very large for any plausible rate of exploitation since otherwise too many firms produce at too great a loss. -------------------------------- Paul Yes! That is exactly the argument. The point about c being derived from a large number of different commodities and hence the deviation of prices/values being small for c, was originally made by Shaik in his contribution to the book Freeman edited ( I think it was called something like Ricardo, Marx, Sraffa ). ------------------------------------------- As stated, there are problems with the argument (relating to my earlier remark about the aggregate equalities) which I won't elaborate since the problems must mean that I have not grasped your argument properly. Please enlighten me! ----------------------------- Paul I am not sure where the problem with the aggregate equalities lies? The aggregate equality of prices/values is a definitional assumption. The theory's predictions would not be altered in any significant way if one assumed that aggregate prices were exactly double aggregate values, or Pi times aggregate values. What is important is the the correlation between the two, or perhaps the mutual information between the two: if I know the relative values of two commodities, how much does that tell me about the relative prices? This mutual information is preserved whether the mean price is the same as or a scalar multiple of the mean value. On the other hand I do not expect that, subject to total price=total value, then total profit=total surplus value. I would expect them to be related but only loosely. When dealing with total surplus value, one has to ask how you will estimate it. One approach would be to use i/o tables and sum the row corresponding to Other Value Added which is close to profits, but to get total surplus value one has then to add the rows corresponding to interest tax and some unproductive expenditures. At the end of this one would have a monetary sum corresponding to the broad definition of surplus value. Using the MELT one could convert this into an anticipated amount of labour. However this is working backwards from monetary accruals, it is not a direct computation of value flows. To get the surplus value directly in labour one would have to look at the columns to the right of the table showing things like gross fixed investment, net exports, government expenditure etc. These columns vectors have elements corresponding to the gross fixed investment that takes the form of all the major industry sectors : how much of the fixed investment is in things like New construction Maintenance and repair construction Ordnance and accessories Food and kindred products etc Since we can work out the price/labour ratios for the outputs of each of these industries, we can impute a figure for the labour required to produce net fixed investment for the whole economy. Similarly for govt expenditure, net exports etc. However there is a big hole in the available data in that there is no separate breakdown of personal expenditure on a class basis. It all appears in one column. SO we don't know form the personal expenditure of capitalists takes, ie, its distribution across different commodities. Without knowing this we do not know the total labour embodied in the commodities they personally consume. This makes it hard to estimate the actual deviation of total surplus value from the total of profits, interest etc, that one can get from summing along the lower columns of the table. Andy -----Original Message----- From: OPE-L on behalf of Paul Cockshott Sent: Wed 01/02/2006 16:03 To: OPE-L@SUS.CSUCHICO.EDU Cc: Subject: Re: [OPE-L] price of production/supply price/value Andrew Hi Paul You write: "I was making very parsimonious assumptions in my post: a) Assume that the selling prices of firms are a random function of the value of their products." You seem to actually be specifying this function such that prices are proportional to values with a random disturbance (i.e. prices fluctuate around values with zero mean fluctuation). If so then you are assuming the famous aggregate equalities hold (with random disturbance). But isn't this assuming just what is at issue? Andy ---------------------------- All that one is assuming here is that there is some MELT that equates total values to total prices. But this is a necessity in any case because the two are in principle in different units. One could similarly set total actual prices to total of theoretical prices of production and see what the dispersion of prices of production around the mean would be. What I am concerned with is the constraints that reproduction sets on the dispersion of the price/value ratio as a random variable.

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