Andrew, I am very sorry that you have unsubscribed from OPEL, and I urge you to return. I would very much like to continue our OPEL discussion, that I think has been going on for many years and that I think has been especially productive in recent weeks. Below is my reply to your latest post. On Fri, 23 Feb 2001, Drewk wrote: > So you can go from the money wage and get the real wage, or > vice-versa. Whichever you do, if your real wage (either specified > as an initial datum or derived as a result) is the same as > Steedman's, and if all your other physical quantities are the same > as Steedman's, then your profit rate and relative prices will be > the same as Steedman's. > > It is thus not true that technical change in luxury industries > will alter your general profit rate. As long as you are dealing > with the SAME ECONOMY in physical terms -- same real wage (either > taken as initial datum or derived) and same technical > coefficients -- as he is, your profit rate will be the same as his > is. His profit rate can't change in response to changes in > productivity in luxury industries, so neither can yours. > > ... > > You need to get different profit rates for the SAME economy as > Steedman's. And that means that all of your technical and real > wage coefficients must be the same. And since, as we know, if > they are all the same, then your profit rates must be the same, > you will not be able to get what you need to get. Your > interpretation contradicts Marx's theory. No, Andrew, this is not correct, and it is the basic flaw in your critique of my interpretation of Marx's theory. There is NO UNIQUE REAL WAGE for a given capitalist economy. The real wage is not a physical datum, like the physical quantities of inputs and outputs. Rather, there is an infinite number of possible real wages that are consistent with a given capitalist economy. The real wage depends on: (1) the MONEY WAGE, which is taken as given; (2) the PRICES OF WAGE-GOODS, which are determined on the basis of the given money wage and other variables, including especially the rate of profit; and (3) the CHOICES WORKERS MAKE about how to spend their money wage, i.e. which particular wage-goods to purchase with their money-wage. Different choices will determine different real wages. And different rates of profit will also determine different prices of wage-goods, and hence also different real wages. And all these different real wages are consistent with the same capitalist economy. Steedman and the Sraffians may take as given a specific bundle of goods, given prior to the determination of money wages, prices, and the rate of profit, and independent of workers consumption choices. But this is pure fantasy. It has nothing to do with the actual real wage in the real capitalist economy. In the real capitalist economy, workers are paid a money-wage, not a bundle of goods; and the bundle of goods they consume is determined as above. Heaping fantasy upon fantasy, it is even assumed in the Sraffian interpretation that each worker consumes EXACTLY THE SAME bundle of wage-goods. In the real world, of course, different workers consume different bundles of goods (and some even save). And different choices determine different real wages. There is clearly not one unique real wage for a given capitalist economy. This critique of the Sraffian given real wage was first put forward (that I am aware of) by the "new solution" folks, especially Dumenil. This critique has not been answered, so far as I know. In any case, it is certainly true that, IN MY INTERPRETATION of Marx's theory, the real wage is determined as above. It is not takes as given, ex-ante, but is instead derived ex-post from the money-wage, as above. Therefore, the real wage in my interpretation is in general a DIFFERENT BUNDLE OF GOODS from the real wage in the Sraffian interpretation. The real wage in my interpretation is the goods workers actually consume, not a hypothetical assumption in a theoretical model. Andrew's critique of my interpretation has been based on the premise that the real wage in my interpretation is THE SAME as the real wage in the Sraffian interpretation (i.e. the same bundle of goods). Andrew's argument has been that, since there is only one real wage for a given capitalist economy, the real wage in my interpretation of Marx's theory must be the same as the real wage in Sraffian theory. From which it necessarily follows, according to Andrew, that the rate of profit and prices in my interpretation must be the same as in the Sraffian interpretation (because I also assume that input prices are equal to output prices). However, we can see from the above that there is NOT JUST ONE REAL WAGE for a given capitalist economy, and that the real wage in my interpretation is a DIFFERENT BUNDLE OF GOODS, from the real wage in Sraffian theory. The real wage in Sraffian theory is a specific bundle of goods, determined ex-ante (prior to prices and money wages), and determined independently of workers' consumption choices. Moreover, it is assumed that each worker consumes the same bundle of goods. By contrast, the real wage in my interpretation is not taken as given as a specific bundle of goods, but is rather derived ex-post from the given money wage and prices and workers consumption choices. And the real wage is generally different for different workers. Therefore, I think it should be clear that the real wage in my interpretation is different from the real wage in the Sraffian interpretation. From which it follows that the rate of profit and prices of production in my interpretation are different from the Sraffian interpretation. The assumption that input prices must be equal to output prices does not determine a unique rate of profit and prices of production. Andrew, I look forward to your response and to continued discussion - preferably on-list, but off-list if you prefer. Comradely, Fred
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