[OPE-L:3793] Predicting market prices

aramos@aramos.b (aramos@aramos.bo)
Sun, 8 Dec 1996 18:15:10 -0800 (PST)

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In OPE-L [3783] Paul wrote:

> Remember that what Marx puts forward in volume 3 of
> capital is both a hypothesis about what happens -
> profit rates equalise - [...]

According to Paul, to use "production price" as "attractor"
("centre of gravity")

> depends crucially on how strong the tendancy for the
> rate of profit to equalise is. If this tendancy is weak, then
> prices of production will not be the center of gravity
> around which prices will oscillate.

1. I do not think Marx maintains "in volume 3" that the
rate of profit has a "tendency to equalise". In any case
this is a result of the particular analysis carried out in
Part 2, an analysis done under certain premises that we
would clarify.

It seems clear to me that a "tendency of the profit rate to
equalise" would not be compatible with Marx's general
viewpoints on the accumulation process. For example. V.1,
Part 6: The General Law of Accumulation depicts capitalism
going towards monopoly and oligopoly, i.e. towards markets
where the rate of profit is not equal and does not tend to
be equal. There are surplus-profits everywhere. An
interpretation considering that Marx has a theory where
"the profit rate equalises" as a calm, unilateral,
"equilibrated" process would transform Marx into...
Marshall, or something worst.

2. Paul's idea that the "centre of gravity" must be "value"
(as he calculates it, i.e. as Tugan did) would be compatible
with the different rates of profit that he finds in his
statistical research only if there would be a positive
correlation between the "intensity" in living labor and
profit rate: if capitals with lower composition would get
higher returns. In other words, "value" must be the "centre
of gravity" only if commodities were sold... at their
values. But I suspect that this is not the case Paul finds
in the statistics.

3. The difference between profit rates comes from surplus-
profits. In that case, we would think that the "attractor"
in specific markets is not "production price", but some
"regulating/governing price" which allows these capitals to
"capture" a rent. That is, in order to pursue Paul's
project ("to predict market prices" in real, present
economies) we should make use --as a general guide-- of what
Marx presents in V.3, Part 6: Ground Rent. In concrete
situations, like those considered by Paul, the "centre of
gravity" of market prices is neither "value" (calculated
either in a dualistic or in a non-dualistic way) nor
"production price". The "centre of gravity" is a "governing
price" which allows the appropriation of surplus-profits.

4. Concerning the premises under which the examples in
V.3, Ch.9 are worked out, in OPE-L [3603] (Nov. 5), John
Ernst points out an interesting piece from a Marx's letter
to Engels of April 30, 1868:

Those branches of production which constitute natural
monopolies are excluded from this equalisation process
even if their rate of profit is higher than the social
rate. (Marx to Engels, 4/30/1868)

The problem here is, if in the examples of Ch. 9, the
inputs are being purchased at prices which give a rent to
some other capitals, not depicted in the tables. How would
look these tables if we considered capitals yielding
surplus-profits and, in particular, absolute rent? I think
these are the questions John is proposing, whose answer
would permit us to clarify what are the premises behind the
tables in Ch. 9.

5. I also want to say that the letter referred by John is
an incredible summary of the whole transformation
procedure. The letter was wrote some years after Marx
finished the "main manuscript". In a precedent letter
(April 22) Marx says to Engels that he is "glancing the
part of my manuscript about the rate of profit". So, the
letter of April 30 is a kind of gloss of the "main
manuscript", precisely in the part concerning to the

Among other interesting things, we find there the
definition of value as W = K + m (omitted by Engels), the
equality of cost price for both values and production
prices, the equality of production price and value for
"average commodities" (attention Allin and Fred), the
single example of V.3, Ch.9, with the "numbers" which,
presumably, Engels "inserted" in his edition of V.3.

Alejandro Ramos M.