[OPE-L:7504] [OPE-L:1041] Re: Re: Re: Marx's Concept of Prices of Production

Paul Cockshott (clyder@gn.apc.org)
Wed, 23 Jun 1999 09:51:04 +0100

>1. In their original (1988) article, Andrew and Ted (hereafter A&T)
>presented a numerical illustration of their interpretation of Marx's
>transformation of values into prices of production. In this illustration,
>there are 14 periods. In all these periods, the quantities of inputs and
>outputs remain the same. In other words, productivity and the real wage
>remain the same in all these periods.
>2. In their period 1, the input prices are assumed to be equal to the
>values of the given means of production and wage goods and output prices
>(prices of production) are then determined which are different from the
>input values due to the equalization of profit rates.
>For the next 12 periods, (i.e. through period 13), a new set of prices of
>production are determined in each period. In other words, prices of
>production change every period even though productivity and the real wage
>remain constant in these periods.
>In the 14th period, the prices of production remain the same as in the
>13th period. From this point forward, if productivity and the real wage
>were to remain constant, then the prices of production would also remain
>constant. In other words, A&T's sequence finally reaches long-run
>equilibrium in period 13 which would remain constant unless there is a
>change of productivity or the real wage.
This exercise by A&T seems wierd to me. At first sight it looks like an
exercise in showing how the system arrives at an equilibrium set of
prices of production. As such it would appear to be an exercise in
disequilibrium analysis. But at the same time they covertly introduce
an equilibrium condition - an equal rate of profit - into their assumptions.
In the end it is neither one thing nor the other.

I agree with you that Marx's concept of price of production is a long
run equilibrium concept. It has to be sufficiently long run for capital
movements to equilibrate rates of profit, thus if they exist at all they
operate only over a 10 year or more period. A production period in the
sense used by A&T is surely much shorter - of the order of months
in industry, or a year in agriculture.

The investigation of disequilibrium pheonomena is a worthwhile exercise,
but it has to be consistently done. All factors must be assumed to
be in disequilibrium. I do not know if anyone has yet produced a
robust model showing the formation of an equilibrium rate of profit yet.
It would be interesting to see just what the assumptions that you have
to make to ensure that this comes about. Having spent some time
trying to construct models of price of production formation on computers
I am struck by how bloody hard it is to get a model that shows any
reasonable sort of dynamics.