Re: [OPE-L] questions on the interpretation of labour values

From: Rakesh Bhandari (bhandari@BERKELEY.EDU)
Date: Sat Mar 31 2007 - 17:45:04 EDT

Hi Fred,
In the below I think you did not quote my criticism of your
interpretation. At any rate, I am only making three points.

1. Marx never said he left his inputs in values or value prices or simple
prices, but he did admit to errors in his transformation tables. We are
fifty percent agreed here. The error to which he admitted is in fact not
precisely correctable (given the constraints on the data in  a fetishistic
economy) but it also has no negative impact on the theory of price of
production and its epistemological, economic and political implications.

2. Given Marx's emphasis on regular changes in prices of production, he
would not have thought that the prices of production which governed the
prices of the inputs could have been the same as the prices of production
which he derives for the outputs. So even if one thinks Marx left the
inputs in the form of values or simple prices, there is no evidence that
he was calling for a vector of equilibrium prices in the specific sense of
same prices for the inputs and outputs. Indeed the chapter as a whole
indicates that Marx would have rejected the equilibrium idea that prices
of production do not change interperiodically. To judge Marx on the
neoclassical equilibrium terrain is to impose foreign standards on him,
not to judge him on his own terms. Marx cannot be said to have called for
the neoclassical equilibrium test which he then fails. But that is how it
is presented in almost every account of Marxian economics. Take Heinz
Kurz's entry on value in The Radical Political Economy entry, ed. by
Malcolm Saywer as just one of countless examples. Some radical political
economy! Though that point of view is vociferously defended on this list;
unfortunately I have been disallowed with the AC's approval from replying

3. There are two aspects to equilibrium--equilibrium in the classical
sense of some very imperfect tendency towards equalization of profit rates
over time and equilibrium in tne neoclassical sense of the same price for
inputs and outputs. As i read you, you think that Marx agreed to both
senses of equilibrium. I argue that Marx and Ricardo only agreed to the

4. But since you seem to think Marx accepted the second sense, then I
think you have to show that prices of production which you derive for the
outputs via your monetary macro sequential method could have also
regulated the prices of production of the inputs. And I don't see how you
have done that.

Yours, Rakesh

> Quoting Rakesh Bhandari <bhandari@BERKELEY.EDU>:
>> I think you are putting an unnecessary burden on yourself by arguing
>> that the prices you derive had to have been the same prices which
>> roughly determined the market prices of the mop and mos bought with
>> the initial M. It's not that I believe that Marx is transforming
>> prices into prices. He's deriving new prices of production from the
>> initial M based on whatever the prices of production in the previous
>> period were. Indeed the transformation chapter dwells on length not
>> on equilibrium prices of production but on the causes of their change
>> over time!  So Marx's analysis of the transformation is not simply
>> logical and timeless and static as Allin has suggested.
>> Moreover, we have to begin with the price data and infer values from
>> that. So I agree with taking M as a given precondition, not unknown
>> values or modal techniques of production. The unknowns are not the
>> prices or even the average rate of profit but the value transferred,
>> the rate of surplus value. It could not be otherwise in a fetishistic
>> economy.
>> If you drop the neoclassical equilibrium assumption, then I agree
>> with your monetary macro sequential method.
> Hi Rakesh,
> Thanks for your response of last Monday,  After a very busy week, I
> have some time to respond.
> I don’t understand your objection.  Prices of production are by
> definition prices with equal rates of profit.  You agree with that,
> don’t you?  That is what I mean by equilibrium prices:  prices with
> equal rates of profit.  Therefore, by this definition, prices of
> production are equilibrium prices.
> You are right that Marx does devote 4-5 pages at the end of Chapter 9
> to a discussion of CHANGES in prices of production.  However, this is
> after 11-12 pages in which Marx discussed the determination of prices
> of production, prior to any changes.  That is the first stage of Marx’s
> theory of prices of production.  After that, comes the second stage –
> the analysis of changes of prices of production.
> Furthermore, Marx emphasis in these pages is that prices of production
> change IF AND ONLY IF the values of commodities change, either in final
> goods industries, or in industries that produce means of production.
> You seem to have in mind a situation in which prices of production
> change from period to period, because input prices are not equal to
> output prices, even though the values of commodities remain the same.
> Do I understand you correctly?  If so, then I think it is clear that
> this interpretation is contradicted by Marx’s emphasis that prices of
> production change only if the values of commodities change.  On the
> other hand, if I misunderstand you, and you agree that prices of
> production change only if the values of commodities change, then we
> would seem to be in agreement.  But these prices of production (that
> change only if the values of commodities change) assume equal rates of
> profit, and therefore are equilibrium prices.
> I look forward to your reply and to further discussion.
> Comradely,
> Fred
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