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

From: Andrew Brown (A.Brown@LUBS.LEEDS.AC.UK)
Date: Fri Feb 03 2006 - 05:24:39 EST

Hi Ian,

By taking the time to lay out a Neo-R perspective (despite your own views) you force me into doing something I should do more - think about things from such a point of view. These thoughts below:


       Andy: 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."


Ian:  This is a fair point, but I don't think it quite does the job you
think it does (see below). As an aside, an implication of your
        argument -- which you may agree with -- is that a third thing, `value'
        must exist, whenever there are *prices* (i.e., not just under the
        domination of the capitalist firm). So value predates capitalism, and
        Marx's opening chapters of Vol.I are a historical-logical exercise.
        For what it's worth, I don't think Engels was foolish to talk of the
        pre-capitalist history of value."



I now reply:


This is a standard interpretation but more or less the opposite of what my argument implies. The argument concerns the distribution of productive activity across society.  Only when commodity production is generalised across society do prices have a decisive influence on the distribution of productive activity across society. In non-capitalist societies other relations dominate so the argument doesn't apply to them. Which is not to say that value doesn't exist in other societies - rather that the argument above is about value in capitalism. Marx puts it in terms of value being 'fully developed' only within 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.
        Some neo-Ricardians will reject this reasoning. They recapitulate the
        history of the Ricardian school in the sense that objective
        value-theory is finally abandoned. Ajit, who I think has thought very
        deeply and thoroughly about the implications of Sraffa's critique for
        value-theory, argues, if I understand him correctly, that any scalar
        measure of real-cost is a chimera because, for example, the standard
        commodity is a function of an economic configuration, rather than
        something that can persist through time and serve as an invariable
        measure of value. So this third thing, this scalar that you are
        looking for, is impossible.
        The assumption in your argumentative step is this: you assume that for
        prices to be constrained there must be a scalar quantity that does the
        constraining. According to some neo-Ricardians, the only scalar
        quantities worth talking about are price phenomena. The actual
        constraints are structural -- technique, real wage, distributional
        variable. No need to posit an underlying value measure. And these
        structural constraints persist through time.

I now reply: 


Your point is well put. My argument stems from the observation that prices and profits are prime proximate determinants of production and investment. Producers and investors are forever responding to prices and profits. Any given set of prices and profits has a set of production relations logically (simultaneously) related to it (through a Sraffian calculation based upon ‘given’ technology, and wages) but it is the prices and profits that directly affect production and investment, not the production relations. To put it another way, the ‘given’ technical relationships are actually the results of a prior process, and this prior process is dominated by prices and profits. Now, it is self-contradictory, or miraculous, for something with no necessary relation to feasible reproduction proportions to continually cause feasible reproduction proportions. It is price (a scalar) and profit that cause production proportions. Hence it is self-contradictory to argue that there is no scalar, necessarily related to feasible reproduction proportions, tethering price and profit. *If* there were no such scalar possible *then* capitalism could not possibly reproduce. This self-contradiction manifests itself in actual practice because, in practice, the path of ‘growth’, of ‘capital stock, ‘profits’, ‘wages’, etc. has to be studied by Neo-R’s as by all economists but how can this be done, absent the aforementioned scalar?  Maybe it is done with a one good economy (or some such) so now a scalar is introduced after all as standing for the entire output of the economy - albeit, and absurdly, a use-value! Or precise proportions have to be maintained, with no change in goods produced, i.e. no real growth, with new investment, new goods, is really studied after all.

        > 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']
        Everyone knows labour must be allocated. That is not in question.
        Even granting that you have established there must be an underlying
        scalar `value' measure, it does not follow that it is SNLT. Perhaps if
        we assume that social labour is the ultimate scarce good (on the
        heroic assumption that all other scarcities are eventually in
        principle resolvable via the application of human ingenuity) then
        maybe labour is special, the real "limit" or "buffer", rather than
        corn, steel, oil etc.


I now reply: 


Given that there must be a scalar, we need to find one. There are lots of particular and individual costs of producing any product but none of these give a basis to sum to a scalar. As you imply, production must weigh up these costs all together – reducing everything to ‘oil’ costs (‘valuing’ everything in oil – direct and indirect) is silly because it just ignores everything except one input. Doesn’t this apply to labour input? It does not because costing in labour-time is costing in overall production time. That is, it is costing in terms of time taken for production. One cost of any product is the time it has takes to produce that product. There are many other particular and individual costs. But there is also this general time cost. There are two reasons why this time cost is also called labour-time: (1) the available labour-time is the sole determinant of the available production time – labour-time and production time are the same thing; (2) labour and other factors do not play the same role in production. Means of production are *given constraints* upon the allocation (determination of the kinds and proportions) of labour, the latter determination is simultaneously the determination of the production process as a whole. In other words, the economic problem is primarily a labour allocation problem since it is only labour about which society has any ‘choice’ at any given point in time (I posted on this some months back).


Production time, i.e. SNLT, costs products in a way that necessarily relates to feasible reproduction proportions, allowing the self-reproduction of capitalism to be comprehended as something other than a miracle. Of course, the fact that society is organised so that the only socially recognised aspect of production is one single paltry scalar, is labour time, stripped of all qualities, is itself bizarre and disturbing, leading to commodity fetishism and alienation but that is very different from being the flat contradiction that no scalar exists.  


Many thanks (and I look forward to your promise of 'more later')




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