# Re: [OPE-L] price of production/supply price/value

From: Andrew Brown (A.Brown@LUBS.LEEDS.AC.UK)
Date: Thu Feb 02 2006 - 05:06:27 EST

```Paul,

Your argument is not clear and an example of how formal systems, here that of probabilistic statistics, can 'sneak' in assumptions (something you accused dialectics of not so long ago!). You make it look as if all you have done is 'assumed' a MELT ["All that one is assuming here is that there is some MELT that equates total values to total prices."]  but a MELT is not an assumption at all to anyone who agrees that both prices and labour-times exist!

The only way I can interpret what you are saying lies in focusing on what you originally called 'costs', and discussed as a 'price/costs ratio'. I presume you have in mind that money costs (money measures of constant capital, c, and variable capital, v) for any given firm are close to being equal (directly proportional) to labour-time measures of the same. Why? Because the money measure of 'c' is determined by aggregation over the different means of production purchased by a firm. The prce/value ratio is random, so deviations in it will begin to cancel out when aggregating over a number of commodities. Hence the labour-time measure of 'c' is likley to be close to the money measure of 'c', even at firm level. A similar argumet can be applied to 'v' if we think of it as determined by a basket of consumption goods.  When we consider that costs are the sum of c + v then this further reinforces the point. This would be enough to make sense of your argument because it leaves firm level deviations in surplus value ('s', measured in labour-time) from profit (price measure) as the main cause in deviations of price from value. And, sure enough, in that case the coefficient of variation of deviations of price from value can't be very large for any plausible rate of exploitation since otherwise too many firms produce at too great a loss.

As stated, there are problems with the argument (relating to my earlier remark about the aggregate equalities) which I won't elaborate since the problems must mean that I have not grasped your argument properly. Please enlighten me!

Many thanks

Andy

-----Original Message-----
From: OPE-L on behalf of Paul Cockshott
Sent: Wed 01/02/2006 16:03
To: OPE-L@SUS.CSUCHICO.EDU
Cc:
Subject: Re: [OPE-L] price of production/supply price/value

Andrew
Hi Paul

You write:

"I was making very parsimonious assumptions in my post:
a) Assume that the selling prices of firms are a random function of the
value of their products."

You seem to actually be specifying this function such that prices are
proportional to values with a random disturbance (i.e. prices fluctuate
around values with zero mean fluctuation). If so then you are assuming
the famous aggregate equalities hold (with random disturbance). But
isn't this assuming just what is at issue?

Andy
----------------------------
All that one is assuming here is that there is some MELT that equates
total values to total prices. But this is a necessity in any case
because
the two are in principle in different units.

One could similarly set total actual prices to total of theoretical
prices of production and see what the dispersion of prices of
production
around the mean would be.

What I am concerned with is the constraints that reproduction sets
on the dispersion of the price/value ratio as a random variable.

```

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