[OPE-L:3784] Re: Predicting market prices

patrick l maso (patrick.l.mason.20@nd.edu)
Thu, 5 Dec 1996 06:41:55 -0800 (PST)

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Paul C's point on labor coefficients and market prices is well stated and
quite accurate. All empirical work is carried out with messy data. Some data
is less messy than others, but one never gets to work with ideal data.
Critics of this approach then have to say something more substantial than
"input-output coefficients may be contaminated by market prices." (my
paraphrase). For example, critics should provide some empirical estimate of
the extent and direction of contamination. Or, suggest an alternative
empirical approach. Or, suggest a different data set. In other words, a
useful critique of current empirical practice has to contain some indication
of how to better confront theory with the data.

peace, patrick l mason

>Do Labour coefficients presuppose market prices?
>There is a real problem relating to the adequacy
>of the statitistics currently available for testing
>Marxian value theories. In principle what one would
>like to have would be
>1. A matrix of product flows in use value terms.
>2. A vector of current commodity prices.
>3. A vector of labour expended per industry.
>4. A vector of gross outputs per industry in use
> value terms.
>Such a collection of vectors and matrices would be
>very large for a real economy, probably containing
>of the order of millions of distinct products. Although
>it is now within the capability of technology both
>to collect such matrices and to perform iterative
>approximations to labour values using them, we dont
>have access to them as the statistics are not
>currently collected.
>What we do have access to are aggregate i/o tables
>which group whole industries together as if they
>produce a single product. For something relatively
>homogenous like electrical energy, grouping a whole
>industry together could still allow you to have the
>entries in use value terms - so many megawatts of
>electricity used in car production, so many megawatts
>used in plastics production etc. But when one groups
>a whole industry like plastics into a single column
>one is effectively aggregating all of the different
>plastics PVC, polyurethane, polyethelene etc into
>a single composite product : plastic. The only way these
>can be aggregated is if they are converted into a
>common unit, which, in a capitalist economy is money.
>Thus aggregate i/o tables are constructed in terms of
>monetary valuations of the product flows between sectors.
>This then appears to create the problem that as soon
>as you try to extract from the i/o table a set of labour
>values, these have been contaminated by the market prices
>prevailing when the table was constructed. This would
>appear to vitiate any attempt to compare market prices
>with labour values.
>I wish to argue that this objection is overstated. It has
>some limited validity - relating to the contamination
>arising from differences in wage rates - but as a general
>principle it is false.