[OPE-L:6955] [OPE-L:447] Re: New Evidence on Sectoral Prices and Values

Andrew Kliman (Andrew_Kliman@email.msn.com)
Fri, 19 Feb 1999 13:40:22 -0500

A reply to Alejandro Ramos' OPE-L 442 and 445.

Ale: "1) Aren't there other ways "to test" the "labor theory of
relative prices"
other than both of you are attemping?"

Yes, and there are data for this, but I don't see the point in it.
The tests I performed were the most direct tests possible of the
claims made by the theory. They give results that have an
unambiguous economic meaning, unlike the other tests you propose.
The theory alleges that prices and values are highly correlated.
That's what I tested, and I found out it isn't so. The theory
alleges that prices and values are close, and I found that values
are no closer to prices than ANY variable that has the same variance
as the values. So values are not close in the sense that their
theory requires.

Let me ask, do you have any problem with the tests I conducted, and
if so, what are they?

Ale: "2) What would be the theoretical explanation of the "labor
theory of
relative prices"?"

Beats me. Maybe you can understand Allin's answer (in OPE-L 444); I

As for your OPE-L 445, what you say is quite right. Allin is just
playing word games with the word "markup." He's trying to evade the
implication of his theory that the markups, or whetever the hell one
wishes to call them -- it matters not a whit, should be highly
correlated. He seems to dispute that this is an implication of his
theory, but I've already shown, in the paper and in OPE-L 441, that
the theory does indeed imply the exact same relationship between the
markups as between the aggregates. I'll return to this point in my
reply to his latest, too.