I am finally getting around to replying to Allin's (5051) of Feb. 23. Allin, thanks again for your very helpful contributions to this discussion. On Fri, 23 Feb 2001, Allin Cottrell wrote: > On Thu, 22 Feb 2001, Fred B. Moseley wrote: > > > Andrew's short-run equilibrium prices of production change from > > period to period, even though there is no change in productivity. > > I think this is contrary to Marx's prices of production, which are > > the long-run equilibrium prices at the end of the adjustment > > process, and change only due to changes in productivity. > > > > What do you think? > > I think that if one says "Changes in E are due solely to changes in > C", in a context where lagged adjustment may occur, this should be > taken to mean > > All changes in E can be ascribed or traced back to current or > prior changes in C > > which does not imply > > You'll never see a slice of time in which E changes but C does > not > > [N.B., I'm not actually defending Andrew's concept of prices of > production; I'm just suggesting that the sort of quotation you have > brought forward doesn't settle the matter.] > > Allin. Allin, you seem to be suggesting that prices of production may change in a given period, even though productivity remains constant in that period, due to changes in productivity in a prior period (i.e. that prices of production will change from period to period as part of a "lagged adjustment process"). Do I understand you correctly? If so, then you seem to be confusing two different concepts - prices of production and market prices. Let me try to explain. Assume a given change in the productivity of labor. This change in productivity determines a new price of production for at least one commodity (let's assume just one). However, the actual market price of this commoditiy does not immediately adjust to the new price of production, but rather adjusts over a number of periods (i.e. a "lagged adjustment process"). In each period of this adjustment process, the actual price of this commoditity is equal to a market price that it is not yet equal to the new price of production. These market prices do indeed change from period to period, in this "lagged adjustment process", as they converge toward the new price of production. But the new price of production itself does not change during this adjustment proces - unless there is a further change in the productivity of labor. Thus it seem to me when you say that E may change, even though C is not changing, due to prior changes in C, what you mean in terms of Marx's theory is that the market price in this period changes due to changes of productivity in prior periods. But what does not change in this adjustment process to the new price of production is the price of production itself - unless there is another change in the productivity of labor. There will certainly be "slices of time" in which market prices change without a change of productivity. But there will not be slices of time in which prices of production change without a change of productivity. Allin, do you agree or disagree with this distinction between prices of production and market prices in Marx's theory? Am I missing something in your remarks? Thanks in advance for your reply. I will relate this to Andrew's interpretation of prices of production in a subsequent post, but I would first like to clarify this point. Comradely, Fred
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