A brief reply to Fred on the following: >> The simultaneous equation formulations of Marx's value theory don't take a >>stance on the temporal priority of determination: they simply maintain that >>if the real wage is given the profit rate cannot be explained INDEPENDENTLY of >> prices of production. > >This proposition is NOT TRUE, even according to the simultaneous equation >(i.e. matrix algebra) interpretation of Marx's theory, as I understand >it. This interpretation is a system of n equations in (n+2) unknowns (n >prices, plus the real wage and the rate of profit). Therefore, there are >two degrees of freedom in this system. It is indeed true that, if the >real wage AND ONE PRICE are taken as given, then the rate of profit cannot >be determined independently of the (n-1) relative prices (which are not >the same concept of Marx's prices of production), as you say. > >However, if no price is taken as given and absolute prices (which are >closer to Marx's concept of prices of production, but still not the >same) are determined, rather than relative prices, then both the real wage >and the rate of profit could be determined independently of the n absolute >prices. > >Gary, isn't this correct? We seem to agree that Marx regarded the real wage as given in some sense that is consistent with elimination of one of the degrees of freedom contained in a simultaneous system formulation of the value analysis. But there appears to be a point of contention over whether Marx's theoretical outlook is consistent with closing the system by designating one of the commodities as numeraire and fixing its price to unity. I have the impression that Marx would not object to this procedure: in certain contexts he treated gold as commodity money, and hence as a standard of value, that is, a numeraire. Strictly speaking, the mathematics don't so much require that a particular commodity's value or price be given; rather they require that we recognize that the equations can only determine relative prices. So maybe we should recalibrate the question. Did Marx understand, as Ricardo did, that the problem of determining prices of production was a problem of explaining RATIOS of exchange as opposed to absolute prices? I think he must have, since this was a well-established and uncontroversial result of classical political economy. A trickier question is whether Marx meant his VALUE analysis to be concerned mainly with relative or absolute values. I won't venture a position on this since (a) I'm much less immersed in Marx's text than most listmembers; (b) my general impression is that Marx was alternately concerned with absolute and relative vlaues at different places in his writings; and (c) I don't think it matters much for his account of capitalism, in view of my interpretation of his value analysis as a substitute for an unavailable simultaneous equation determination of the profit rate. Fred also writes: >And Gary's proposition is certainly not true for my >"monetary-macro" interpretation of Marx's theory. According to this >interpretation, the total surplus-value and the general rate of profit is >determined by Marx's analysis of capital in general in Volume 1, and then >taken as given in the determination of prices of production in Marx's >analysis of the competition among capitals in Volume 3. > > No disagreement here. I agree with Fred that this is what Marx did (though I don't see that it has anything in particular to do with money). The question is whether, in following this procedure, Marx gave an erroneous explanation of the profit rate. I think he did. The next question would be, well, why did he make that mistake? I think the answer is that he didn't have at his disposal the mathematical tools required to get it right. So in the end we are back to the question of how is Marx's project related to Ricardo's. Ciao for now, Gary
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