Re: Dynamic value and natural price

From: Paul Cockshott (wpc@DCS.GLA.AC.UK)
Date: Mon Nov 03 2003 - 10:52:37 EST

Phil Dunn wrote:

> I associate these R-potentials with natural wages and natural prices
> (or, more accurately, natural price markups).  These natural wages
> and prices are not sums of money.  In a simple reproduction model
> money prices and wages would be equal to natural prices and wages but
> natural prices and wages come under intrinsic value.  A natural price
> markup is a property of an individual valorization process.  A
> natural wage is a property of an individual producer commodity (an
> producer commodity is individuated by skill -- so all plumbers would
> come under one individual producer commodity).
> Adam Smith distinguishes between natural and market prices and wages.
> I am dropping his ideas of natural rates of profit and rent.  Market
> prices fluctuate and at any one time are dispersed about natural
> prices.  To measure the natural price markup we use wage data.  We
> use real wages -- the average hourly wage is equal to 1. Then we
> recalculate each firm's wage bill using not the actual wage paid to
> each worker, but the economy-wide average wage paid for each type of
> skill.  Since these economy-wide averages will be statistically
> independent, the recalculated real wage bill will be immunized
> against market noise.  The greater the number of different skills
> used by the firm the better this works.

This seems an interesting procedure could you please elaborate
on what data one would need for this.
Would you need a breakdown in the wage bill of each sector into
types of labour for which the wages were paid?

>  This recalculated real wage
> bill is an estimate of the natural price markup, the R-potential for
> value creating labor activity.

Is the wage bill an estimate of natural price markup, or is the
ratio of wage bill to selling pirce a measure of natural price markup?

> The natural wage is a bit more complicated.  We use price data.  We
> need to do a least squares fit:
> minimize with respect to x the square of  (y - Mx)
> where x is a vector of hourly natural real wage rates, y is a vector
> of recognized labor activity, measured by money, expressed in hours
> and M is a matrix.  The element M(f,t) gives the hours worked in firm
> f  by workers of skill type t.  We need to have the number of firms
> much greater than the number of skill types to get good immunization.
> The potential price markups should be equal to wage bills
> recalculated at natural wage rates.

Have you done any studies using this method?

Paul Cockshott
Dept Computing Science
University of Glasgow

0141 330 3125

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