[OPE-L:8598] Re: Re: long term centers of gravity?

From: rakeshb@stanford.edu
Date: Thu Mar 13 2003 - 02:40:53 EST


 Fred writes in 8597: 
> 
> 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 never said that you argue this. What I say is   that you conflate two 
ideas; specificially you conflate the idea that as a result of the 
movement  of market prices  most sectors will not receive over the 
long term more or less than the average rate of profit (this could 
mean that short periods in which the sectoral profit is low is 
matched by short periods in which it is high or it could mean that 
over time more capital will be invested in a new sector in which the 
profit rate is temporarily high or vice versa) with the idea that unit 
market prices converge  on  points that remain firmly fixed over a 
long term by a constant and unchanging (transformed) unit value. 

I call the latter notion the idea of an equilibrium price,an idea which 
justifies the assumption of input=output prices which you do in fact 
share with the Sraffian framework. 

I argue that what Marx meant by market prices being tethered by 
prices of production is only the first idea, i.e., the idea that (most) 
sectors over the long term do make more or less than the average 
rate of profit.  Marx's passages which you quote say nothing more. 

In these passages Marx never commits himself  to the idea that 
prices of production are equilibrium, long term transformed unit 
values. He is not interested in equilibrium price theory, and I doubt 
that Ricardo is a precursor to such; Marx is only here accepting the 
classical notion that the profit rate will be equalized over most 
sectors in the long term. The notion of equilibrium prices on the 
other hand empties Marxian theory of the real possibility of any 
dynamics as Paolo Giusanni, Paul Mattick Sr, Henryk Grossmann 
and others have argued. 


  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.  

Yes of course. But the point is that the productivity of labor is 
changing interperiodically or daily as Ricardo himself says. 

> 
> 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.		

Well putting aside KM, the point remains that prices of production 
do  change interperiodically, if not continuously,  not because input 
prices are not equal to output prices but because the productivity of 
labor changes interperiodically. This is why on your own terms 
prices of production cannot be long-run centers of gravity.  


> 
> 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.

And often does the productivity of labor change? 



  KM's
> concept of
> "prices of production," on the other hand, are not long-run
> center-of-gravity prices.  

Neither are Marx's in the equilibrium sense in which you mean 
them. 


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. 

Yes but this seems to grant implicitly that prices of production 
could change from period to period because the productivity of 
labor is changing from period to period. Yet once this is granted, 
then TSS (Carchedi in particular) does have good grounds for 
opposing the setting of input prices equal to output prices in 
theorizations of the transformation or the effects of technical 
change. 


 Therefore, KM's "prices of production" are fundamentally
> different from Marx's prices of production."  (p. 28)

I am not interested in defending KM's version but rather (major 
aspects of) Carchedi's which you do not accept though Carchedi 
has prices of production for the inputs which differ from prices of 
production for the output for the sole reason that the productivity of 
labor changes interperiodically. 


> 
> 	"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.  

It does seem to me as Allin remarked long ago that KM are only 
referring to a process of lagged adjustment here. Only in the 
process of lagged adjustment do prices of production change for 
reasons other than two which you have specified. In completing 
Marx's transformation in an equilibrium context, KM  seem to take 
exception to Marx's theory in what seems a minor, unexceptional 
way 


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. 

Yes but this concedes again implicitly that prices of production 
could change period from period not due soley to the continuation 
of profit rates but due to some other factor, viz. improvements in 
productivity due to on-going techno-organizational change. 



 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)

I do not accept that Marx defined prices of production as long run 
center of gravity prices, as you are defining the latter term. 


Yours, Rakesh
> 



> 
> Comradely,
> Fred
> 
> 


This archive was generated by hypermail 2.1.5 : Sat Mar 15 2003 - 00:00:01 EST