[OPE-L:6957] [OPE-L:449] New Evidence on Sectoral Prices and Values

Alejandro Ramos (aramos@btl.net)
Fri, 19 Feb 1999 14:55:12 -0600

>Ale: "1) Aren't there other ways "for testing" 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?

Well, no. Actually, my concern is that it the literature on this issue
seems to be limited in its statistical sources. For example, following that
literature (given your own purpose, I see), you use the NIPA data for
calculating both prices and values. But, do we know how are actually
"cooked" those data?

So, I'm wondering if it isn't posible to test the LTRP by using
*independent* sets of data for, e.g. consumed living labor and profits.

What strikes me about LTRP is the dynamics, I think, it would predict:
Given a wage level, to have higher profits, capitalists should hire more
people or go to intensive labor branches. Don't you think that this
wouldn't be the world we are seeing daily? So maybe there is something
"wrong" in the statistics which are being used and, more importantly, those
statistics are taken uncritically to conduct the tests. (Maybe you feel
that I'm going out of your original point... which is true!)

Also in "statics terms", I think, the LTRP would predict that lower profits
are in "capital intensive" sectors, right? Isn't this a necessary corollary
of the LTRP?

Other point concerning the usual procedures is the constant rate of
exploitation assumption you refer to in ope-l 436. This recalled me a
passage by Howard & King (Vol 1, p. 29) where they summarize George S.
Stiebeling early attempt to make "Marxian econometrics". I think it's worth
to quote it:

"[Stiebeling] cites data from the US 1880 Census of Production to show
that industries with high organinc composition tend to have high rates of
exploitation, and viceversa... He ranks all 29 industries in order of their
organic composition (defined as the ratio of total capital to variable
capital employed), and divides them into 2 groups. The top 14 industries
have an average organic composition of 5.50, and average rate of
exploitation of 1.38, and an average rate of profit of 25.1%. For the
bottom 15 industries the figures are 2.58, 0.57 and 22.1%."