[OPE-L:7400] [OPE-L:931] Re: Marx's concept of prices of production

John R. Ernst (ernst@pipeline.com)
Fri, 30 Apr 1999 15:13:06

Re: Marx's Concept of Prices of Production

Some comments:

The idea that prices of production in Marx's *Capital* are
equilibrium prices is simply mistaken.

a. Because market prices/values move around the price of
production does not mean that prices production do not
not change as this movement takes place.

b. Given that Marx himself stated that not all sectors are
included in the transformation procedure, it's hard to see
how one can even imagine that prices of production are
equilibrium prices. It's a strange equilibrium that
abstracts from significant portions of the economy. If
Marx's transformation procedure does not represent
the production of all products used as inputs, how can
one claim that this is somehow a picture of equilibrium?

c. To assert that the rate of profit that Marx says has a
tendency to fall is an equilibrium rate of profit forces
one either to agree with Okishio's criticism of Marx or
to assert that rising real wages are necessary for the
rate of profit to fall.

d. Much as we'd like to abstract from technical change as we
move from one period to the next we cannot do so without a
full understanding of what we are abstracting from. To
simply claim that the transformation procedure in Marx
abstracts from technical change and proceed to develop
one's ideas about the nature of technical change itself
that are compatible with an economy in which there is
no technical change, one is forced to either

i. ignore the traverse from one period to the next as
technical change takes place.

ii. hold fast to the notion that Marx's falling rate of
profit differs only slightly from that of Ricardo.
The former saw the cause as diminishing returns to
land; the latter to capital.