Fred writes:
"Marx's concept of price of production is a long-run
center-of-gravity price, in the precise sense that it has the
following four characteristics:
1. RATES OF PROFIT ARE EQUAL ACROSS INDUSTRIES
as a long-run tendency, not as an actual fact in every period
2. SUPPLY AND DEMAND EQUAL FOR ALL INDUSTRIES
again, as a long-run tendency
3. FUNCTIONS AS LONG-RUN "CENTERS OF GRAVITY" PRICES,
around which actual market prices fluctuate from period to period,
due to supply and demand. In other words, prices of production are
long-run average prices, not the actual prices of any given period.
4. CHANGES IF AND ONLY IF there is:
a. a change in the productivity of labor
b. a change in the real wage"
With respect to point 3: in a paper presented at the panel Fred
mentions, Alan Freeman *demonstrated* that simultaneously determined
"prices of production" CANNOT function as long-run centers of
gravitation. He also *demonstrated* that temporally determined
production prices DO function as long-run centers of gravitation.
Since -- as Fred himself admits here -- Marx's prices of production
are centers of gravitation, they are thus temporally determined, not
simultaneously determined. End of story.
What is your response to this, Fred? It seems to me that you must
do one of the following:
(a) find an error in the demonstration
(b) renounce Marx in favor of simultaneous determination
(c) renounce simultaneous determination in favor of Marx
It doesn't seem to me that continuing to avoid the matter solves
anything.
With respect to point 4: in the same session, speaking from the
floor, I pointed out that simultaneist "prices of production" --
including Fred's macro-monetary "prices of production" -- DO NOT
change if and only if the productivity of labor or the real wage
change. I reproduce a slight variant of the example below. The
real wage is zero, and profit rates are equal. Gold can be taken as
the money commodity or one can assume non-commodity money.
====================================================
Table 1
per- corn liv. simult/phys
iod sector input labor output profit rate
---- ------ ----- ----- ------ -----------
corn 100 1000 110 10%
1 gold 10 100 11 10%
corn 100 10 110 10%
2 gold 10 1 11 10%
====================================================
Note that the rate of profit, and therefore the production prices,
do NOT change, even though the productivity of labor increases (the
same outputs are produced with no more corn input, but with 99% less
living labor, in period 2).
I also pointed out that a change in the productivity of labor in
luxury-producing industries DOES NOT affect the equalized
simultaneist profit rate -- including Fred's macro-monetary profit
rate. I originally proved this three years ago on this list in
three different ways. Fred has still not produced a counterexample.
The proofs are general, but the point can be illustrated by a table
like that above:
====================================================
Table 2
per- corn liv. simult/phys
iod sector input labor output profit rate
---- ------ ----- ----- ------ -----------
corn 100 1000 110 10%
1 gold 10 100 11 10%
corn 100 1000 110 10%
2 gold 10 1 11 10%
====================================================
There's a rise in productivity in gold production, but no change in
the profit rate. This result holds for any real wage rate.
What was Fred's response to all this? Only that his interpretation
of Marx's method is different from the Sraffian interpretation!
I'm sorry, Fred, that is utterly irrelevant. Method is NOT at issue
here. What is at issue is *quantitative determination*, i.e., the
influence or lack of influence of productivity changes on the
*magnitudes* of production prices and the profit rate.
You claim that Marx's prices of production change if and only if
productivity or the real wage rate changes. You also claim that
your "prices of production" are Marx's. It is therefore incumbent
upon you to demonstrate that your "prices of production" will always
change if productivity changes. Don't you agree? And if you don't
agree, please tell me why not.
"Givens in terms of money" simply will not do here. You have made
claims regarding the QUANTITATIVE impact of changes in productivity.
Quantitative claims can only be verified or falsified
quantitatively, i.e., by reference to NUMBERS. You've made a
quantitative claim regarding the impact of changes in productivity,
and productivity is measured in terms of the relationship between
use-values and labor-time, NOT in terms of money.
You assert that your simultaneously determined "production prices"
and uniform profit rate must always change if productivity changes.
OK, Table 1 tests that claim. It posits a change in productivity.
Isn't it incumbent upon you to show that your simultaneously
determined uniform profit rate changes as a result?
By "show," I mean you have to produce NUMBERS. You must constrain
input prices to equal output prices, and keep the profit rate
uniform, but come up with one NUMBER for the profit rate in period 1
and a different NUMBER for the profit rate in period 2. If you come
up with different numbers, then your claim has been vindicated. If
you come up with the same numbers, then your claim is refuted.
If you do neither, but instead quote Marx and discuss what you think
his method was, then you are simply evading the issue. That is
because, again, the issue here isn't method, much less Marx's
method, but YOUR claim that YOUR profit rate must change -- the
NUMERICAL value of the profit rate must change -- as a result of a
change in productivity.
The same thing is true with respect to Table 2 and productivity of
luxury-goods industries. You claim that the numerical value of your
profit rate will change if there's a change in productivity in
luxury production. You need to constrain input prices to equal
output prices, and keep the profit rate uniform, but come up with
one number for the profit rate in period 1 and a different number
for the profit rate in period 2. If you come up with different
numbers, then your claim has been vindicated. If you come up with
the same numbers, then your claim is refuted. Quantitative claims
must be tested, and can only be tested, quantitatively.
(BTW, having examined the textual evidence Fred cites with respect
to point 4 a second time, I'm beginning to have some doubts about
it. But that's another matter. So is Fred's interpretation of the
TSS interpretation. I'll be happy to discuss them, but first things
first.)
Oh, one more thing. Arguments based on intuition are not an
acceptable substitute for numerical demonstrations. Your intuition
could be flawed.
Ciao
Andrew