[OPE-L:6466] Re: What is prior?

Gerald Levy (glevy@pratt.edu)
Wed, 15 Apr 1998 20:45:15 -0400 (EDT)

John wrote on Fri, 10 Apr:

> It seems to me that many producers of commodities know what
> they will sell for and know what they will buy for before
> they produce. My wife has an uncle who is a part-time farmer
> here in the States. Every year before he plants he knows what
> he will get for his output. In this case, the price of the output
> is known prior to production no matter how much haggling one
> experiences at the retail level.

A few comments:

1) The issue I posed previously is not really addressed in the above
example. To refresh everyone's memory, I suggested that the "list price"
may be systematically different from the actual price and that any attempt
to add-up the asking prices for commodities as a proxy for actual market
prices contains an aggregation error which overstates the value of the
commodities being sold. As I explained previously, capitalists often
purposely inflate the "list price" with the expectation that it will be
reduced prior to sale (either through some bargaining process with buyers
or as part of a purposeful marketing strategy, e.g. "Sale/Prices
Slashed/Buy 1 Get 1 Free"). You assert above that the sellers know the
pries of commodities that they will sell prior to production. That may or
may not be the case (read on), but *we* have no way of knowing in many
cases whether the list prices (what they initially tell us their prices
are) are the sellers' anticipated prices.

2) There can be (higgling and) haggling at the wholesale level in addition
to the retail level. Right?

3) Even if a capitalist can be able to say that they "knew" the prices for
the commodities they sold and the prices for constant capital prior to
purchase, there is no way of knowing whether that will continue to be
the case. E.g. a crisis (macroeconomic and/or sectoral) could easily
shatter such (over-) confidence.

4) In the particular instance you cite (i.e. farm prices in the US),
market prices are kept artificially high as a result of government price
supports. Thus, to the extent that Phyllis's relative "knows" prices in
advance, that knowledge may be dependent on the (probably justified)
belief that the government will maintain its price supports. But, an
adequate answer to that subject would pre-suppose that we investigate the
role of the *state* in protecting individual capitalists and profitability
in individual branches of production. Would you like to talk about that?

> There is a futures market.

Exactly. The very existence of futures markets suggests a high level of
"volatility", i.e. uncertainty, in many markets.

In solidarity, Jerry