# [OPE-L:7432] [OPE-L:965] Re: Marx's Concept of Prices of Production

John R. Ernst (ernst@PIPELINE.COM)
Tue, 11 May 1999 05:02:25

Ajit,

I dug out my copy of Sraffa in an effort to figure where
you coming from on matters concerning absolute rent. Before
digging I did discover that the book is out of print here in the
States (not a good sign for any of us).

At any rate, a post or two ago, you quoted Sraffa in PCMC

"87 If land is all of the same quality and is in short supply,
this by itself makes it possible for two different processes of
methods of cultivation to be used consistently side by side on
similar lands determining uniform rent per acre. While any two
methods would in these circumstances be formally consistent, they
must satisfy the economic condition of not giving rise to a
negative rent: which implies that the method that produces more
corn per acre should show a higher cost per unit of product, the
cost being calculated at the ruling levels of the rate of profits,
wages and prices.
The production of corn would thus be represented in the
general system by two equations with the two corresponding
variables of the rent of land and the price of corn
Both equations would enter the Standard system, although with
coefficients of opposite signs and of such values as would in the
aggregate eliminate the land from the means of production of that
system." (Sraffa in *PCMC*, p. 75)

So are we reading the same book John? There are much more on
absolute rent further in the chapter.

Comment: I think we are. But let's look at 86 a bit before
we dwell on 87.

"If n different qualities of land are in use, they will give rise
to an equal number of different methods of producing corn (supposing,
at first, corn to be the only agricultural product). There will
therefore be n production-equations, to which must be added the
condition that one of the lands pays no rent;(footnote below) and
to these equations there will correspond an equal number of variables
representing the rents of the n qualities of land and the price of
corn.

"Only the process that produces corn on the no-rent land can enter
into the composition of the Standard system, since the no-rent
land itself is eliminated from the equation, along with all other
'free' natural resources which, although necessary to production,
are not reckoned among the means of production."
(pp 74-75)

Footnote: "By this token only can it be identified as the least
productive land in use."

I have some difficulty with this as a way of understanding absolute
rent. For Sraffa, there must be that land with no rent. If so,
86 implies that absolute rent cannot exist.

All I am saying is that this is not Marx. For him, there could be
rent, other than differential rent, on the least productive land.
It is that rent he calls absolute. Marx recognized that in
Ricardo there was no absolute rent.

Given absolute rent, Marx is incapable of constructing anything
like a general system ala Sraffa. To maintain that Marx's prices
of production are equilibrium prices, as Fred does, is unthinkable
since without reference to demand we have no idea what the amount
of absolute rent might be. In Vol 3 of Capital, Marx does assume
that the land that earns absolute rent is used to produce commodities
by means of processes in which the composition of capital is lower
than average. He claims that the surplus value produced under these
conditions does not completely enter the pool of surplus value
that capitals share according to their magnitudes. Nor does he
claim that all of the excess surplus value produced in such
processes be captured as absolute rent. Without any knowledge of
demand, it's impossible to know what the price of the output
containing absolute rent will be. Given that impossibility, the
derivation of equilibrium prices at a point in time is hopeless.

Now on to Sraffa's 87. Perhaps tommorrow.

John