[OPE-L:7500] [OPE-L:1037] Re: Marx's Concept of Prices of Production

John R. Ernst (ernst@PIPELINE.COM)
Tue, 15 Jun 1999 01:11:09

RE: Fred's OPE-L 1035
Hi Fred,

Great response. But, alas, still no agreement.

You wrote:

1. Marx's increase in the money wage in Chapter 11 is an increase in the
real wage, so all your related comments have to be revised: Marx says
toward the end of the chapter (pp. 305-06)

In both cases, that of a rise of wages and that of a fall, the
working day is assumed to REMAIN THE SAME, AND SO ARE THE

My comment: I note that Marx begins the chapter by considering
increases in the money wage. He then tells us at its end that the prices
of all necessary means of subsistence remain unchanged after the
wage increase by assumption.

What can be said at this point? Clearly, the wage increase causes no
changes in the prices of means of subsistence for the period in question.
But let's consider the other commodities involved within this process.
Can we make the claim that their prices are unchanged as well? Marx
makes no such assumption. If we were to claim that the input prices
were somehow already transformed into the new output prices, then it is
unclear why Marx found it necessary to make the assumption he does
concerning the prices of the means of subsistence. The unchanging prices
of the means of subsistence exist only by assumption. Marx is perfectly
comfortable with the idea that the input prices of the period in question
will differ from the output prices save for those commodities that
make up the means of subsistence -- their prices are unchanged only
by assumption.

There is no effort to transform the inputs into new and different prices
of produciton based upon the prices of production established after
the wage increase. There is no claim or assumption that the prices
of production of those commodities that are not the means of subsistence
remain unchanged as the new prices of production are computed. Put simply,
the set of input prices will generally differ from that of output prices.
Clearly, there are no equilibrium prices in sight. Marx leaves matters

But now let us follow Marx and consider his treatment of the case
where the money wage changes as the real wage remains constant.

Continuing your citations from Capital(p 306),

How the matter is affected if the rise or fall in wages derives
from a change in the values and hence in the production prices of
commodities that customarily go into the workers' consumption
will in part be further investigated below, in the section on
ground-rent. The following points, however, have to be made
here once and for all:

My comment: Here we hit a real snag. What does ground rent have to
do with any of this? Marx seems to know something we don't. Given that,
I turned to his Theories of Surplus Value which he wrote, as we know,
prior to this section of Capital. There in Part II we find that the
5th Section of Chapter 15 is entitled "The General Rate of Profit and
the Rate of Absolute Rent in Their Relation to Each Other. The Influence
on Cost-Prices of a Reduction in Wages." (pp 386-395, Progress)

In that section, there are two tables which depict the change in
cost-prices (prices of production in Capital) after a wage reduction
due a fall in the price of grain. The production of grain itself is
not depicted in the tables. Indeed, the differences between cost-prices
and values in each table are limited to "non-agricultural capital."
(p. 389)

Marx then is transforming values into prices of production for only
the non-agricultural capitals. Given that some of the commodities
workers consume like grain will have prices equal to their values because
of absolute rent, grain's price, part of the means of subsistence,
is determined by the degree to which the value of grain exceeds its
price of production.

This entire section of Theories does allow us to make more sense of Marx's
letter to Engels (April 30, 1868) that natural monopolies are excluded
from the transformation of values into prices of production in Part II
of V 3. We've skipped over this as we've focused on the question of
the number of periods in which prices of production change due to
increases in wages and/or changes in productivity.

I do not think that this presents problems for Ted and Andrew as their
work is a response to Bortkiewicz. For you, the matter is different.
You claim that the prices of production can be seen as equilibrium
prices. You argue that the inputs are already transformed as Marx
begins the transformation process. But clearly some of them are not
as they are products of "natural monopolies." For Marx, these inputs
would be purchased at or below their values and above their prices
of production.(See note at the end of this post.) I simply can't see
how you get equilibrium prices out of this.

Continuing your citation from Capital,

If the rise in wages results from a change in the value of the
necessary means of subsistence, the only modification of the
process analyzed above occurs when the commodities whose
price-changes serve to increase or lessen the variable capital
also enter as constituent elements into the constant capital
and hence do not simply affect wages. But in so far as they do
only affect wages, the above argument contains all that has to be

My comment: Now we have a situation in which the real wage remains
constant and are asked to consider the case in which only the value(s)
of the components of the real wage change. We are asked to consider
how a change in "v" alters the prices of production. Further we
are asked to assume that the increase or decrease in "v" is caused
by a change in the value of at least one commodity that is a means of
subsistence and not a means of production. The change in "v" is
completely external to the three capitals Marx is dealing with --
one with a lower, one with a higher and one with a lower composition
of capital. Again this calls into question your notion that Marx's
prices of production are equilibrium prices.

You wrote:

2. I have argued before (several times) that the reason why input prices
must = output prices in Marx's determination of prices of production
change is that prices of production change if and ONLY IF productivity or
the real wage change. If input prices are not equal to output prices,
then "prices of production" will continue to change every period, even
though productivity and the real wage remain constant, as Andrew and Ted's
examples clearly demonstrate.

My comment:

Marx does consider the cases where the real wage remains the same while the
value of the means of subsistence changes. That said, let's get to the
other issues here.

I do not think it is true that if there are differences in input and output
prices in a particular period "prices of production" will continue to
change in every period. It depends upon what we assume about that next
period. Clearly, if we are talking about simple reproduction, you're
right -- the prices of produciton will continue change in subsequent
periods. But would not those additional changes be caused by the change
in producitivity or in the wage? Why must the changes in prices of
production take place entirely in one period? Has Marx somehow
made this claim in Chapter 11?

I think not. He shows us how the prices of production change in one
period with a wage change. Again with the increase in the real wage
and money wage, we saw that the prices of the means of subsistence
remained constant by assumption as the prices of production changed.
It is difficult to see why and how all prices of other commodities
would be the same before and after the wage change.


My Note: I think there is a difference in the concept of absolute
rent in TSV and Capital. In TSV, the commoditites produced by
sectors that earn absolute rent are sold at their values which
are greater than their prices of production. In Capital, they
are sold above their prices of production but not necessarily
at their values.