[OPE-L:3821] Re: Prices of production=bourgeois socialism:Samuelson

Paul Cockshot (wpc@cs.strath.ac.uk)
Fri, 13 Dec 1996 01:20:36 -0800 (PST)

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> You say finally, though, that prices of production are a bourgeois
>socialist demand for fairness between capitals and that price of production
>theory can be dropped in favour of value theory.

I think that people may have misunderstood my reference to prices
of production being bourgeois socialism. It was in part an ironic
reference to Samuelson, who in his 1972 paper 'A new labour theory
of value for rational planning using the bourgeois profit rate',
advocates just this.

This advocacy of prices based on prices of production is actually
quite rational for advocates of some form of managed market socialism.
I think that it is only under such circumstances that prices of production
as presented in the classical literature on the transformation problem
could actually operate.

I agree that there is some tendancy for rates of profit to equalize,
but there are also the stickiness factors that you mention. In addition
there is the additional point that the standard account of prices of
production ignores the class struggle. If firms have very high profit
to wage ratios, workers will struggle to get some of that back in
higher wage rates, whereas if the profit to wage ratio is low, struggles
to increase wages will be less successful. This struggle between labour
and capital tends to equalise the wage/profit ratio or the apparent
rate of surplus value between firms. I think that this may be at least
as important a factor as the flow of capital between branches of

I agree that prices of production are to some degree an attractor of
market prices, but not to any stronger degree than values are. I think
that the deviations in prices from values due to differential wage rates
in different industries may be at least as significant. My main point in
this debate is that a totally disproprtionate effort has been expended
on the finer points of the mathematics of the transformation problem,
without enough consideration being given to whether prices of production
operate in practice. Once you see the actual figures from I/O tables,
the finer points about whether you should transform the inputs or not
become very much secondary matters, not really worth going into print
about. They are of some interest from the standpoint of the history
of thought, but of very little practical bearing on how capitalism
really operates.

Paul Cockshott