Re: [OPE-L] price of production/supply price/value

From: Andrew Brown (A.Brown@LUBS.LEEDS.AC.UK)
Date: Thu Feb 02 2006 - 06:45:55 EST

Hi Ian,
Please do keep your Neo-R hat on, it makes for very fruitful conversation!
(1) Refutation of Neo-R critique of the LTV:
Your response is effectively two arguments, and these two arguments contradict one another! First you agree that there must be constraints on prices due to the needs of social reproduction, inclusive of the proportional distribution of labour. The only issue you have is that not only labour but all other factors of production must be proportionally distributed. Now, this effectively means you are agreeing that a third thing, 'value' must exist, insofar as you are agreeing that prices must be quantitatively constrained by something throughout the existence of capitalism. For me, 'value' is that 'something' which does the constraining, and the quantity of value is then the quantity which sets these constraints. The question you are then left with is just what are these constraints? And here you have no answer. You can see what sets them, *all* factors of production, but have no idea how they combine to form a single quantity, separate from, and constraining, prices.
Well, this is what SNLT is all about. Any society has to determine ('choose') its current and future productive activity. It only has a finite amount of such activity per day, per week, per year, which it has to allocate. The social cost of producing any product is therefore to be reckoned in the total time of productive activity it takes up, relative to the social total to be allocated. The amount of steel, or peanuts, or more plausible candidates like land or energy, used is relevant only in terms of the time of productive actvity it represents. If you ridiculously tried to cost according to 'quantity of steel used up' you'd just run into the buffers, the limits, set by the real cost which is that of time of productive activity taken. Another phrase for 'time of productive activity taken' is SNLT [Alfredo S-F correctly calls it RSNLT, where R stands for 'reproduction'] 
Your *second* argument contradicts your first. It is that the whole move to 'value' is redundant - why take the detour etc.? Well, this is answered by your first argument: there *are* constraints on prices, it is hardly a 'detour' to enquire into them.
(2) Growth vs. levels constraints etc.
The general argument is formal. Assume that a variable (call it price) is bounded by limits set by another variable (call it value). It can deviate from value but only within set limits. Now these limits of deviation may look very wide in levels. But now assume a growth process whereby there is a tendency for any small deviation to grow larger (e.g. financial bubbles sucking in previously productive capital). Then consider that there is also a 'bubble bursting' mechanism bringing prices much closer to values when thy actually touch their extreme bounds (e.g. financial bubble bursting). Then suddenly what looked like wide limits turn out to be narrow and contstraining because small deviations quickly grow into large ones and large ones quickly collapse into small one again.  If you never look at the growth process you'll never see this. Alas I do not know the literature which is why my maths is primitive. I hope I'm not just wasting your time!
(3) Fine/Saad-Filho on TP
Marx plainly does not transform the inputs. On this argument he doesn't because he is working with the OCC, which is supposed to reflect only the TCC. Marx's reference to the need to transform the inputs are perfectly in tune with the argument because they signal the fact that the OCC analysis is abstract and needs to be concretised. On the question of interpretation I agree with, say, Fred, that there is certainly a sense in which Marx belives that after allowing for transformation of the inputs you still get aggregate equalities holding, though this seems to me to be only as a 'never attained averge'. But the key point is that there are far more important matters than transforming the inputs. For one thing, the considreation of the value of money would seem far more threatening to the aggregate equalities than transformation of the inputs. But more important still, is considreation of the dynamic case, of changes of the TCC/OCC/VCC through time. Indeed there is little point in the static case except as a prelude to this dynamic case, a case where OCC and VCC are both crucial. 
Many thanks

	-----Original Message----- 
	From: OPE-L on behalf of Ian Wright 
	Sent: Wed 01/02/2006 19:22 
	Subject: Re: [OPE-L] price of production/supply price/value

	Hi Andy
	Yes, two separate points. On the second point -- refutation of N-R critique.
	>This rests on the propostion that social reproduction requires
	labour, and its >product, to be allocated in certain proportions. The
	set of feasible proportions is >certainly large but much smaller than
	that of non-feasible proportions. These >proportions can only be met
	if exchange of products is bounded by limits set by >SNLT. If they
	aren't the economy collapses. I don't have to 'show' anything more
	>than this to refute Steedman.
	I'm sure Steedman would agree that labour must be allocated in certain
	proportions. So do all kinds of commodities. But he'll shrug his
	shoulders -- because, according to him, labour-value accounting is not
	adding anything to the analysis. What's the point of taking the
	detour? Quantitatively, we cannot say, along with Marx, that, for
	example, the profit-rate is primarily explained by labour-value
	accounting, that total profit is a nominal representation of an amount
	of surplus labour, or that the essential distributional variable is
	the rate of exploitation etc. Of course the economy will collapse
	without labour in proportions for reproduction. But we want to
	understand economic value. Real-costs measured in corn, iron, cake
	etc. also set constraints and limits.
	>However we can fruitfullly ask why he has been led astray, and how
	labour-times >actually take effect. The answer lies, inter alia, in
	the fact that he deals with the >static case. If you look at the
	dynamic case then it becomes much clearer how >labour-time keeps
	prices in check: whenever capital tries to move away from the >source
	of its life-blood, surplus value production, it finds it cannot do so,
	in crisis. >Maybe a primitive mathematical way of putting it is that
	the effect of growth rates >serves to magnify that of levels, yet the
	static case examines only the latter. What >look like wide and trivial
	limts in levels suddenly become narrow and constraing >limits once
	growth rates are studied (cumulative causation). By 'growth' I mean
	>changes cause by new investment through time, not 'steady state
	growth' (which >is not really growth at all).
	OK, what quantitative relation obtains between labour-value and price
	accounting when there is non-proportional growth? What work are you
	referring to? Is it a kind of "contraint" much like Morishima's FMT
	for the static case? Morishima, if I recall correctly, argued that
	labour-value accounting is conservative with price-accounting under
	conditions of growth in "standard proportions" (plus some conditions
	on capitalist consumption, I think). Another special case in which
	Marx's conservation claims hold. But not a general case. Ollin-Wright
	in the "Value Controvery" outlines a constraint-based theory of
	labour-value constraining the profit-rate, but it is effectively
	rebuffed by Hodgson, I think.
	> An aside re. simplest vs more complex cases: For me the simplest case is where the value and price of inputs is held constant through the transformation (the OCC case, not VCC case, employing Fine/Sadd-Filho interpretation of Marx's definitions), where conservation laws hold perfectly at the aggregate level, as shown in vol 3 ch 9.
	If you get the time to explain Fine/Sadd-Filho's reaction to TP I'd be
	grateful. At first glance, the interpretation doesn't square with
	Marx's remarks on the need to transform cost-price.
	I wonder on what grounds should we *not* expect Marx's conservation
	claims to hold under conditions of simultaneous determination and
	uniform profits? -- I'm not sure anyone has really answered this.
	TSS, for instance, has rejected simultaneous determination, and
	attempted to elaborate simple dynamic cases in which conservation
	holds. They seem to be saying that "input prices=output prices" is
	simply impossible, and reject equilibrium analysis altogether. This is
	an implicit admission that under the conditions set down by
	Bortkiewicz, Marx's conservation claims don't hold.
	F&M, for instance, have rejected uniform profits. They explicitly
	concede that under the conditions set down by Bortkiewicz, Marx's
	conservation claims don't hold.
	Others have rejected one of Marx's conservation claims under the
	conditions set down by Bortkiewicz (e.g. Foley/Dumenil).
	Sorry to temporarily put on a neo-Ricardian hat!

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