Re: [OPE-L] SV: [OPE-L] what is irrational in the functioning of capitalism?

From: Rakesh Bhandari (bhandari@BERKELEY.EDU)
Date: Sat Dec 02 2006 - 12:16:13 EST

>This has led Professor Stiglar (1958) to characterize
Ricardo’s theory as 93% labor theory of value.

>As far as the divergence of value ratios from
>their labor ratios due to differences in time
>structure of capitals is concerned, it could be
>considerable. It should also be noted that Ricardo’s
>results have no general validity and are the products
>of his particular example. The variation in values
>could be much larger if Ricardo started from much
>higher rate of profits and thus allowed a larger fall
>in it. Furthermore, the variations in value would be
>much larger the two goods were far apart in terms of
>their composition of the direct and indirect
>labor-time. As a matter of fact, Ricardo was well
>aware of it and in the first edition of the Principles
>he had worked out examples of variations in relative
>values of two commodities produced by equal amount of
>capital investment but one produced by labor only and
>the other produced by machine only. Ricardo showed
>that a fall in rate of profits from 10% to 3% would
>cause the relative values to vary “68% if the machine
>would last 100 years; 28% if the machine would last 10
>year; 13% if the machine would last 3 years; and
>little more than 6% if the machine would last only 1
>year” (Works I, p. 60).  It appears that Ricardo’s
>comments in the third edition relate to the relative
>value deviation from his chosen ‘money commodity’,
>which was supposed to be produced by a capital
>composition close to the average of the ‘most of the
>commodities produced’, leaving out the extreme cases.]


Ajit, I think you mean George Stigler, no? The 
way you present Ricardo he sounds more as a 
precursor to neo classical economics than Marx? 
Why don't you agree with Samuel Hollander's 
interpretation as I am sure you don't? I remember 
Peach's challenge to him.

And even if Ricardo did not hold to LTV, didn't 
Marx read Ricardo as reluctantly allowing for and 
minimizing the other putative factors, viz 
capital structure, in the determination of value 
only because the mediations between the law of 
value and observable economic phenomena escaped 
him? Didn't Marx think Ricardo was correct that 
changes in labor productivity are the key factor 
for the observable changes in exchange ratios 
over time? It's overstating the case to say that 
Ricardo had no special place for labor in his 
theory of value. But even if  Ricardo is misread 
as an exponent of LTV, Marx seems to have read 
Ricardo as a frustrated and honest exponent of 
the it, no?

So I think it remains a possibility that Marx's 
arguments for the labor theory of value are 
undeveloped at the beginning of Capital because 
he thought it was widely accepted on the 
authority of Ricardo.

He thus set himself the task of explaining why if 
LTV is true, commodities do not come with 
announcements of the labor time embodied but seem 
to be in possession of the enigmatic property 
value which is expressed in price.


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