[OPE-L:5515] Re: Humbug Aggregate Price-Value Correlations

Paul Cockshott (wpc@cs.strath.ac.uk)
Wed, 24 Sep 1997 08:11:06 -0700 (PDT)

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> ************
> I also tested whether the sectoral price-value ratios are random, by
means of
> a similar equation:
> ln(P/V) = m + n*(ln[C/L])
> Again, the Cockshott ("null") hypothesis is n = 0, and almost everyone
> predicts n > 0.
> The results were:
> ln(P/V) = -0.0469 + 0.3990*(ln[C/L])
> (0.068) (4.528)
> Figures in parentheses are Student's t's.
> r-squared = 0.745. F = 20.5.
> n has the positive sign almost everyone expects, and it is significant at
> .0015 level (1-tailed test). The null hypothesis can again be rejected
> great confidence. The value composition accounts for 3/4ths of the
> in the price-value ratios.
> ****************

I missed your letter yesterday, but if these are results from
a real economy, and if they are showing that there is some tendancy
for prices/value ratio to be higher in industries with a higher
organic composition of capital, then this corresponds to the
result that we reported for the UK economy at the Bergamo Conference
in our paper Does Marx Need to Transform. We find that there is some
tendancy for high organic composition industries to have a price/value
ratio above the average but:

1. The price of production model is no better at explaining market
prices than a simple value model

2. The industries with a high organic composition of capital have
a lower rate of profit.

This is consistent with there being some tendancy for profit rates
to equalise, but not for them to completely equalise. Thus in the real
economies studied, values are only partially transformed into prices
of production.