Re: Dynamic value and natural price

From: Philip Dunn (pscumnud@DIRCON.CO.UK)
Date: Mon Nov 03 2003 - 13:53:31 EST

Quoting Paul Cockshott <wpc@DCS.GLA.AC.UK>:

> 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?

I imagined that the data collection problem would be just to big to be
practical, so this was purely theoretical exercise. In general, I would be wary
of aggregating into sectors because of the loss of degrees of freedom. It is
possible that aggregating into sectors would wash out much of difference
the actual sectoral wage bill and the recalculated one. It does need a
breakdown into different skill groups, as finely as possible.  Also it would be
desirable to break down the firm's wage bill into parts corresponding to joint
products and then break those down into skill groups. This would pitch things
at the level of the valorization process for each joint product.  Apart from
requireing a solution to the joint production problem, this would escalate the
data collection task even the degrees of freedom would improve.

> >  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?

I was not very clear here. I was thinking of a 'bulk' price markup, rather than
a rate per some unit, so the natural price markup was a value-added type of
thing, measured in hours.

> >
> >
> > 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?

No. I want it as an alternative to prices of production in a simple reproduction
model, for purely theoretical purposes.


This archive was generated by hypermail 2.1.5 : Tue Nov 04 2003 - 00:00:01 EST