John's point about the 'vicious circle' involved in deriving prices from
values whenb fixed capital is included is, so far as i understand it, an
extension of Steedman's point that since technology in use is determined by
prices and the profit rate, you cannot say that values determine prices.
With fixed capital the lifetime of a capital good is paert of the
technology (just as relative quantities used are for circulating capital).
John is correct to say that this aspect of the technology is dependent on
prices and the rate of profit. Capitalists will tend, though the tendency
is weaker with the lifetime of capital goods, to choose the lifetime of a
capital good which gives the greatest return. Similarly, when it comes to
proprotions of inputs, say more or less labour, capitalist will tend to
choose less rather than more labour input if that is more profitable.
However, it does not follow from the fact that technology depends on prices
and profitability that there is "vicious circle' in the 'derivation' of
prices from values. There is a problem only if you take the idea of values
determining prices as meaning that values are the independent and prices
the dependent variable. This is not necessary. My own view explained in
ch4, ch6 of my book *Analytical and Dialectical Marxism*) is that we have
what may be called a "dialectic" of value and price which means that values
and prices are mutually dependent (and mutually constitutive, but this
another matter whci connects with how you handle joint products, etc) and
function equivalently in some contexts. On this view, without a one-way
causal track between values and prices, you can still say that values
"determine" prices, but this will mean that where values and prices
conflict, values have a stronger effect on the outcome than do prices (I
think whether this is so depends on the context: in the short run, prices
"determine" values in this sense, but in the long run, values determine
prices). That is, if you interpret "values determine prices" as saying that
values have greater causal weight than prices (if only in the long run),
then you don't have a 'vicious circle'. If you want to hang on to the
vicious circle though, it applies just a smuch in the case of circulating
capital.