[OPE-L:7505] [OPE-L:1042] Re: Re: Re: Re: Marx's Concept of Prices of Production

Tsoulfidis Lefteris (lefteris@uom.gr)
Wed, 23 Jun 1999 13:04:07 +0300

Paul Cockshott wrote:
> >
> >
> >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
> would
> 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.

I think that the papers by Flaschel and Semmler (1990) "On Composite
Classical and Keynesian Microdynamic Adjustment Processes" in
Cristodoulakis N. (ed) Dynamic Modelling and ... Oxford University
Press. Also a series of Articles By Dumenil and Levy address these
issues or better show the problems that one faces in addressing these

Lefteris Tsoulfidis