From: Fred B. Moseley (fmoseley@mtholyoke.edu)
Date: Fri Mar 14 2003 - 11:27:35 EST
Hi Rakesh, Thanks for your responses. I think I understand better what you are saying. And I think we don't disagree as much as it might seem. 1. You seem to interpret my use of the term "long-run" center-of-gravity prices to mean that these prices do not change for "long periods of time". But that is not what I mean by "long-run". I just mean that center-of-gravity prices CHANGE LESS FREQUENTLY than actual market prices. Actual market prices are short-run prices that generally change every period, with the fluctuations of supply and demand. Center-of-gravity prices change only when there is a change in the productivity of labor (or the real wage), which occurs less frequently, at least in most industries. In other words, long-run center-of-gravity prices change as a result of FUNDAMENTAL causes and less frequently, and short-run market prices change as a result of ACCIDENTAL causes and more frequently. I explain this in my paper on p. 3. Maybe the term "long-run" is misleading, and maybe I should drop it, but that is what I mean. I do not mean that "long-run" center-of-gravity prices do not change over long-periods of time (although that may sometimes be the case). Eatwell expresses a similar definition of "long-term" in the New Palgrave: " `Long-period' does not mean a long period of time, but rather determined by the dominant forces of the system." 2. We may have a possible disagreement over how fast productivity changes in individual industries, and thus how often center-of-gravity prices change, but that is not fundamental. You seem to suggest that productivity is changing in all industries all the time. I agree that, in the economy as a whole, productivity is changing all the time, but not in all industries at the same time. There is probably a wide range of rates of productivity change across industries - with some industries with more frequent productivity change and other industries with less frequent. In the 19th century, when Marx was writing, the rate of productivity change was probably slower than it is today. However, this question of how often center-of-gravity prices change has no bearing on the concept of center-of-gravity prices itself. Center-of-gravity prices are still prices that change only due to the fundamental cause of productivity change. If productivity changes fairly frequently, and therefore center-of-gravity prices change fairly frequently, it is still true that center-of-gravity prices are prices that change only due to the fundamental cause of productivity change. More frequent productivity change certainly does NOT mean that there is ANOTHER CAUSE of changes of center-of-gravity prices - because input prices are not equal to output prices, as in the TSS interpretation. 3. It was not Allin , but John Ernst, who attempted to rescue KM's interpretation of the transformation problem with the argument of "lagged adjustment". John argued that, although KM explicitly assume constant technology in their period of analysis, it is possible that technology changed before their period 0, and thus that the changes in prices of production during their periods of analysis are the lagged effects of this earlier technological change. But there is nothing like this "lagged adjustment" in Marx's texts. Marx argued that when productivity changes, then the price of production would change in that period. There is nothing about a one-time change of technology simultaneously in all industries setting off a series of subsequent changes in prices of production in later periods, while productivity remains constant. KM's articles are about the transformation of values into prices of production, with productivity assumed constant. To then later argue that this transformation of values into prices of production was set off by a prior change of technology is bizarre, and has nothing to do with Marx's theory of prices of production. 4. I think you misinterpret Carchedi. You say: "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." I am not sure what you mean by "interperiodically"? Between periods? In any case, Carchedi assumes that when productivity changes in the production of an input within a given period, then the value transferred to the price of the output in that period will be the new price of the input, not the old price of the input, as in the TSS interpretation. Carchedi says: "The value of A going into the value of B is not the value at which A has been bought at t1, but the value A has at time t2. If, in this period, A has become either cheaper or more expensive, the value of B will accordingly be either reduced or increased." (Frontiers of Political Economy, p. 93) In other words, the value transferred from A to B is revalued in that period as a result of productivity change in the production of A. I agree with Carchedi. This is what I have been arguing all along. And this is different from the TSS interpretation on this crucial point. I have to run now, but I look forward to your response and to further discussion. Comradely, Fred
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