[OPE-L:7388] Absolute and relative prices in Marx and Sraffa; was interpreting Marx's text

From: Fred B. Moseley (fmoseley@mtholyoke.edu)
Date: Fri Jun 14 2002 - 21:44:11 EDT

Gary, I am getting more and more curious about absolute and relative
prices in Marx and Sraffa. Thanks for pursuing this discussion.  

I think one source of misunderstanding between us is that these terms -
absolute prices and relative prices - have very different meanings in
Marx's theory and in Sraffa's theory.  Let me try to sort this out.


a.  ABSOLUTE PRICES are the visible expressions of the invisible abstract
labor contained in commodities, and this visible expression is in terms of
the EXCHANGE-RATIOS OF COMMODITIES WITH MONEY (e.g. the price of 20 yards
of linen  =  2 oz. gold; C.I: 162).  Gold itself has no price, since the
abstract labor contained in gold cannot be expressed in gold itself, but
only in its relation of equivalence with other commodities  (C.I: 161).

b.  RELATIVE PRICES are ratios of two absolute prices, and thus are ratios
of exchange between two commodities other than money (e.g. 20 yards of
linen = 1 qtr. of wheat).  Relative prices are not exchange ratios with


a.  ABSOLUTE PRICES are PURE NUMBERS (see Sraffa, p. 4).  They are not
ratios of exchange with money, as in Marx's theory. Neither are they
expressions of abstract labor.  Instead, absolute prices are those values
that are consistent with the reproduction of the system of physical inputs
and outputs.  Gold may be selected as the numeraire, and assigned an
absolute price of 1.  

b.  RELATIVE PRICES are again ratios of two absolute prices, but since
absolute prices are different in Sraffa's theory than in Marx's theory, so
are relative prices.  Relative prices are ratios of two pure numbers, and
thus are pure numbers themselves.  If gold is chosen as the numeraire,
then relative prices will also be in effect EXCHANGE RATIOS WITH GOLD.

Thus in Marx's theory, exchange ratios with gold are ABSOLUTE PRICES,
whereas in Sraffa's theory, exchange ratios with gold are RELATIVE PRICES.  

It seems to me that there is something fundamentally wrong with Sraffa's
concept of absolute prices.  These prices are not exchange-ratios with
money, but are instead simply pure numbers.  However, the Sraffian
equations are supposed to represent the sum of ACTUAL costs of the inputs
in his industry (pi*aij) and ACTUAL prices of the output in each industry
(pj).  The actual costs and actual prices in the real capitalist economy
are EXCHANGE RATIOS WITH MONEY.  But the Sraffian absolute prices are NOT
exchange-ratios with money; they are simply pure numbers.  Therefore, the
Sraffian absolute prices do no adequately express what absolute prices
really are in the real capitalist economy - exchange ratios with money.  

So I can see why Sraffians are not interested in absolute prices.  Because
absolute prices in Sraffian theory is a completely bogus concept.  

In Marx's theory, on the other hand, absolute prices are exchange-ratios
with money, as in the real world.  

Gary, I look forward to your response and to further discussion.


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