[OPE-L:985] Re: Definitions and Tautologies

akliman@acl.nyit.edu (akliman@acl.nyit.edu)
Wed, 7 Feb 1996 11:44:52 -0800

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Andrew here, with a quick response to Allin's puzzlement at the
temporal single-system interpretation of value determination. I'll
write the equation system as

v(t+1) = p(t)A + L

if there's no fixed capital, etc.

Allin suggests that this makes prices "theoretically prior" to values.
Actually, it doesn't--*input* prices are *temporally* prior to output
values, but the "value" rate of profit

r = (LX - p(t)bLX)/(p(t)[A+bL]X)

enters into the determination of output prices:

p(t+1) = p(t){A + bL}(1+r)

so that the "value" rate of profit is also *temporally* prior to
*output* prices.

The whole notion of "ontological," "logical," or "theoretical" priority
thus loses its meaning in the TSS interpretation. It does remain true,
however, that you cannot comprehend prices (of products) or profits
until you comprehend value determination, because the rate of profit is
determined in production, before the products go to market, and
aggregate price and profit are indeterminate without the "closing
equation" (for the profit rate) that is determined once production
is completed.

I don't know if I can answer all the questions about prediction, but one
I can: in the TSS interpretation, the problematic of deriving "the" vector
of prices from "the" vector of values is eliminated, empirically and
theoretically. Neither values nor prices are dependent solely on input-
output relations and the real wage.

Andrew Kliman