[OPE-L:8597] Re: long term centers of gravity?

From: Fred B. Moseley (fmoseley@mtholyoke.edu)
Date: Wed Mar 12 2003 - 22:47:18 EST


Hi Rakesh,

You seem to misinterpret my paper.  My paper does not argue that prices of
production, as long-run center-of-gravity prices, do not change.  I don't
know how you get this idea from my paper.  Instead, my paper argues (and
repeated on OPEL, as Jerry indicated) that prices of production, as
long-run center-of-gravity prices, change for ONLY TWO REASONS: a change
in the productivity of labor or a change in the real wage.  It presents
many passages in which Marx clearly stated this point.  

My paper argues further that the TSS interpretation of Marx's concept of
prices of production is not a long-run center-of-gravity price - and is
therefore a misinterpretation - because, according to this interpretation,
there is ANOTHER CAUSE of changes in prices of production - because input
prices not equal to output prices.		

Below are two paragraphs from my paper.  KM refers to Kliman-McGlone.

	"However, I argue that KM's concept of "prices of production" is
not the same as Marx's concept of prices of production which we have
examined above.  We have seen above that Marx's concept of prices of
production refers to long-run center-of-gravity prices around which market
prices fluctuate from period to period.  These long-run center-of-gravity
prices may change from time to time, but they change only due to changes
in the productivity of labor or changes in the real wage.  KM's concept of
"prices of production," on the other hand, are not long-run
center-of-gravity prices.  Their "prices of production" are short-run
prices that change from period to period.  Most importantly, their "prices
of production" change from period to period, not due to changes in the
productivity of labor or the real wage (the productivity of labor and the
real wage are assumed to remain constant), but rather due solely to the
continuation of the process of equalization of profit rates from period to
period.  Therefore, KM's "prices of production" are fundamentally
different from Marx's prices of production."  (p. 28)

	"In their interpretation of "prices of production," KM assume that
the prices of inputs are not equal to the prices of outputs,  i.e. that
the prices of production of the means of production and the means of
subsistence as inputs are not equal to the prices of production of the
means of production and the means of subsistence as outputs.  However,
this assumption is incompatible with prices of production as long-run
center-of-gravity prices, as defined above, i.e. that change only due to
changes of productivity or the real wage.  Such long-run center-of-gravity
prices require that the prices of inputs are equal to the prices of
outputs.  If the prices of inputs were not equal to prices of outputs (as
KM assume), then "prices of production" would necessarily continue to
change in the next period, due solely to the continuation of the
equalization of profit rates, without changes in the productivity of labor
or the real wage.  The inequality between input prices and output prices
implies that the prices of inputs in the next period will be different
from the prices of inputs of the current period.  If the prices of outputs
in the next period were to remain the same as in the current period, while
the prices of inputs in the next period change, then the rates of profit
across industries would be unequal.  Therefore, in order to equalize
profit rates, the "prices of production" of outputs in the next period
must continue to change, even though the productivity of labor and the
real wage remain constant.  Therefore, we can see again that KM's "prices
of production" cannot be long-run center-of-gravity prices, as defined by
Marx."  (p. 30)


Comradely,
Fred


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