re 5043 >On Thu, 22 Feb 2001, Alan Freeman wrote: > >> Fred says "Alan, I am still not completely clear just exactly what is your >> alternative interpretation of prices of production (and you don't tell us in >> this post)" >> >> My concern in the Copernicus post is that the term 'centre of gravity' has >> more than one possible meaning. We can resolve this very simply: Fred, in >> your view is this term unambiguous? You write as if it was: and that's my >> point. > > >Alan, sure I am willing to consider alternative interpretations of "center >of gravity". That's why I asked for a clarification of your >interpretation of prices of production. So, please spell it out and let's >discuss it. > >Comradely, >Fred Marx's prices of production are not centers of gravity in the sense of long term equilibrium prices. As Marx argues in Capital 3, ch 10 what becomes more effective over time is the capitalists' sense of their social power--their claim on society of an average rate of profit on their investments. As capital and labor become more mobile, they are able to collectively exert this specific power over society. But this says nothing about market prices converging on new long term equilibrium prices. The tendency towards the equalisation of profit rates (and Marx himself underlines that it works in conjunction with ever renewed inequalities in the profit rate) is logically independent of any tendency towards the formation of long term equilibrium prices. Prices of production are counterfactual prices--what the prices would have been in any one period had the profit rate equalized and demand equalled supply. In each period prices will oscillate around what prices would have been had the profit rate equalized and demand equalled supply--that is, prices of production. But there are many other factors working on prices, and following Korsch, I don't think Marx had any intention in descending into the world of actual market prices. I will continue to learn from the exchanges between Andrew, Allin and Fred on the differences in method, and look forward to whether by taking the money wage as given (I can hear Ajit raising sharp objections to such a given), Fred can derive stationary prices other than those set once the technical conditions and real (or money) wage are established. From my perspective whether Fred's method proves to be substantively different than Sraffa's in the quantitative determination of stationary prices, it does not matter as to the critique of such a goal in the first place. It is interesting that Fred seems to justify the use of stationary prices because they serve as real centers of gravity over the long term--an ontological justification, to use terms as Laibman has; while Duncan justifies the use of stationary prices because they allow for the simplest models--an epistemological justification which he gives in his review of Carchedi and Freeman, eds. Marx does indeed assume constant values on epistemological grounds in vol 2 (in both the study of the circuits of capital and reproduction). But in the former case, Marx is assuming constant values just so he can lay out analytically the moments in the circuit (he of course himself underlines that revolutions in value do actually lead to grave disturbances in the circuit). In the case of reproduction, Marx seems to be arguing much like in equilibrium theory that under specified conditions which help to render the problem cognitively tractable it is possible for expanded reproduction not to founder on a permanent consumption deficit. Marx may be wrong on his own terms, as Paul Z argues; or as with equilibrium theory, the conditions may be so restrictive (annual turnover of fixed capital, uniform OCC, constant values, etc) that the demonstration may not even have heuristic value and leap into a Platonic, noumenal beyond. Andrew K seems to give good reasons why in the study of technical change, which is an inherently dynamic phenomenon, the epistemological assumption of constant value or stationary prices simply makes no sense. It doesn't make the problem cognitively tractable; it simply wipes away the problem of study. Moreover, if we are studying the formation of prices of production, while underlining that they can and do change as a result of changes in productivity, it seems as John E was the first to argue (I think) that the assumption of stationary prices renders the concept of price of production irrelevant in specifically capitalist conditions since technical change is indeed continuous. Andrew K and John E are both wrong I think in refusing to acknowledge that it was Grossmann who first posed the problem of continuous revolutions in value in an important but neglected section of his magnum opus and in his dynamics book. I am still confused why John E rushed to defense of Andrew K's criticism of Grossmann since in his critique of simultaneous valuation John E said he was working in the tradition of Grossman. Yours, Rakesh
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