On Sat, 10 Feb 2001, Rakesh Narpat Bhandari wrote: > I agree with you that prices of production change only as a result of > changes in the productivity of labor; this is exactly why they change > interperiodically. Technical change is continuous, albeit uneven. Rakesh, sorry for my delayed response. It's been a busy week. I am glad that you agree that prices of production change ONLY as a result of changes in the productivity of labor. But what you don't seem to understand is that, if that is true, then input prices must be equal to output prices (i.e. both input prices and output prices are long-run average prices. Because if input prices are not equal to output prices, then prices of production will continue to change in subsequent periods (in order to equalize profit rates) EVEN THOUGH THERE IS NO CHANGE IN THE PRODUCTIVITY OF LABOR - as in the first 13 periods in Andrew and Ted's 14 (1988) article. This is another cause of changes in prices of production (input prices not equal to output prices), without changes in the productivity of labor, which is contrary to Marx's theory. Do you see this? Or if you disagree with this for some reason, please explain. > But prices of production are changing interperiodically; they are not > the same at t1, t3, t5, etc.. I certainly agree that prices of production may be chaning interperiodically. I think you have misunderstood me here. See below. > To take your example: let's say that there is a technical change in > Branch A between t0 and t1. Now you argue that it will take some time > for the market price to adjust to the new price of production > established at t1. But in your interpretation at some point--let's > say t6 and t7--THE PRICE OF PRODUCTION WILL BE EQUAL as it > settles down into its new price of production which had been > established as far back as t1. But this is highly unreasonable. It > now only assumes that advances in labor productivity in Branch A are > not continuous orinterperiodic; it also assumes that there are no > advances in labor productivity in any other branch until t7, for a > change in labor productivity anywhere else would be sufficient to > change prices of production all around and the price of production of > A at t3, t5... I am not sure what you mean by the emphasized "the price of production of A will be equal ... " Equal to what? Do you mean that the market price of A will eventually be equal to its price of production (in the absence of further technical change)? If not, then please explain what you mean. If so, this is not what I am arguing. I am not arguing that there will be no further technical change until the market price becomes equal to the new price of production. I only argue that the new price of production becomes the new center of gravity toward which market prices gravitate. If there is further technical change before the market price reaches the new price of production, then there will be a newer price of production, which will become the newer center of gravity, etc. But each time the price of production changes, input prices will continue to be equal to output prices. Otherwise, there would further changes in prices of production, even if there is no further change in the productivity of labor, as explained above. I look forward to further discussion. Comradely, Fred P.S. Rakesh, thank you very much for your articulation of my interpretation in response to Andrew in several posts this week. You are correct. With his corn-corn model in terms of physical quantities, Andrew is asking me to determine prices of production with a method that I have explicitly and vehemently rejected.
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