# [OPE-L:2699] multiple periods?

Fred Moseley (fmoseley@laneta.apc.org)
Sat, 20 Jul 1996 18:25:30 -0700 (PDT)

[ show plain text ]

This is a reply to Andrew's (2661) on whether or not his and Ted's
interpretation of the transformation process requires multiple periods.

In previous posts, Andrew has acknowledged that in their interpretation,
prices of production and the rate of profit continue to change from period
to period. However, he argued that what is really causing these continuing
changes in prices of production and the rate of profit is not the
transformation of output prices, but is instead the inequality of input
prices and output prices.

I have argued that this is a false distinction because the latter (the
inequality of input prices and output prices) is caused by the former (the
transformation of output prices). In any of their numerical examples, given
input prices are assumed. The prices of output then change as a result of
the equalization of profit rates, or as a result of the transformation of
output prices. As a result of this transformation of output prices, output
prices will not be = to input prices.

Andrew has responed to this argument in his most recent post:

The nonstationariness of prices is "caused" by market prices that differ
from productin prices, in these particular examples. The market prices
happen to equal static equilibrium "values," not production prices. (This,
however, does not mean that we begin conceptually from static equilibrium
"values." The initial conditions are completely arbitrary.)

....

The inequality of input and output prices in these examples in caused by a
previous inequality between input and output prices (beginning in the
initial period).

My response:

What exactly does this mean: "a previous inequality between input and
output prices"? According to KM's logic, the input prices in the initial
period are taken as given prior to production and thus prior to the
determination of output prices. At the time these intput prices are taken
as given, they cannot be unequal to output prices because output prices (the
other side of the inequality) do not yet exist. The output prices are then
determined by the equalization of profit rates. As a result of this
transformation of output prices, input prices will not be equal to output
prices. IF THIS TRANSFORMATION PROCESS DID NOT OCCUR, THEN OUTPUT PRICES
WOULD BE EQUAL TO INPUT PRICES. This can be seen in any of KM's numerical
examples in their published articles. In subsequent periods, input prices
are not equal to output prices both because of the prior transformation of
output prices in previous periods and because of the continued
transformation of output prices in the current period.

Therefore, it makes no sense to say that the continuing change in prices of
production and the rate of profit in KM's published articles are caused by
the inequality of input prices and output prices, and not by the
transformation of output prices. Because the former are caused by the
latter.

Therefore, KM's interpretation of the transformation process as presented in
their published articles requires multiple periods, as evidenced by the
continuing changes in prices of production, which are caused by the
transformation of output prices.

In recent ope-l posts, Andrew has introduced an entirely new element to
explain the inequality of input prices and output prices and thus to explain
the continuing changes in prices of production and the rate of profit:
MARKET PRICES, which are not equal to prices of production. Market prices
are never mentioned in this sense in KM's published articles; it is never
mentioned that the input prices might be equal to market prices which are
not equal to prices of production. Andrew has recently introduced this
assumption in response to my criticisms of their published articles. Under
this assumption, the inequality between input prices and output prices may
be explained by these market prices of inputs, rather than by the
transformation of output prices.

However, I know of no textual evidence to support this new interpretation
that, in Marx's theory of prices of production, he assumed that the prices
of inputs are equal to market prices which are not equal to prices of
production. Marx noted several times that the prices of inputs would be
equal to prices of production which are not equal to values (the famous
passages in which Marx is alleged to have "admitted his error", but was in
fact doing nothing of the kind). But he never said that the prices of
inputs in his theory of prices of production might be market prices.

According to my understanding of Marx's logical method, market prices are at
a lower level of abstration than prices of producion. In Marx's explanation
of prices of production, market prices differing from prices of production
are not yet considered - just as in Marx's aggregate theory of
surplus-value, prices of production differing from values are not
considered. Rather, Marx assumed that input prices were equal to prices of
production The issue between KM and I up until now has been whether the
prices of production of inputs were assumed by Marx to be the prices of
production of the CURRENT period (me) or of the PREVIOUS period (KM). But
both interpretations had to do with prices of production, not market prices.

Now Andrew argues that input prices are equal to market prices which are not
equal to prices of production. And from this Andrew infers that continuing
changes in prices of production are caused by these market prices and
therefore that their interpretation of the transformation does not require
multiple periods. This may be a possible theory of prices of production,
but is is not Marx's theory of prices of production which does not involve
market prices.