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

From: Paul Cockshott (wpc@DCS.GLA.AC.UK)
Date: Fri Feb 03 2006 - 11:35:47 EST

Andrew Brown wrote:

>Yet all these are surely just more concrete phenomena that are assumed
>away in the Transformation Problem. At the level of abstraction of the
>TP, your argument simply assumes what the TP allegedly shows is not the
>case, i.e. that the aggregate equalities hold. Let's put it another way:
>to anyone who accepts that the transformation of ch.9, vol. 3 is a valid
>level of abstraction to work at, then your argument is flatly
>contradictory, absent an argument as to why the prevalent interpretation
>of Marx's transformation is wrong. This brings us back to the initial
>probs you raised with the TP assumptions, and which Michael L.
>amplified. The problem for your argument is that you have to explain
>what you think the correct structure of abstraction and causation is, if
>you reject both Marx's and that in most of the literature. I found your
>argument difficult to fathom because you have an entirely different
>structure of causation and abstraction in mind to the one that I work
>with (I accept Marx's but not the prevalent interpretation in the
My take on it is that Marx carried over an error of the Ricardian school.
They assumed an equal rate of return on capitals of different compositions.
At first sight this appears plausible, and I did not question it until
the 90s
when I found that prices of production were no better than labour values
at accounting for UK prices. Why should that be?

One possibility is that organic compositions were almost the same for
all branches of the economy. It was easy to check that this was not the
It then had to follow that rates of profit did not equate for capitals of
different compositions. When you look at the figures there is indeed
a negative correlation between organic compositions and profit rates.

Podkaminer argues that this is not surprising since s/c and v/c are
related by sharing a common term and this would be enough to introduce
a negative correlation between organic composition and the rate of profit.
In one sense what he says is reasonable, but it ignores the history of the
debate which has for a century and a half assumed that there is a causal
mechanism which enforces a relation


If on the other hand we view s, v, and c as random variables then
the inverse correlation is unsurprising. But as soon as you recognize
them as random variables it follows that organic composition must
be negatively correlated with profit rate. And this in turn undermines
the whole post ricardian and neo ricardian school.

Thus I do not accept that the argument at the level of volume 3 is
a valid level of abstraction, since it abstracts from something that
is not accidental but essential to a capitalist economy - its random
and chaotic character.

The Ricardian argument is not totally wrong. There is some
mobility of capital, and some constraint on the divergences
of profit rate between sectors, but this constraint is much
weaker than they suppose.

I prefer to think of the price vector as having two attractors -
that provided by prices of production and that provided by
labour values. The actual price vector lies in a sense between
the vector defined by prices of production and the vector
defined by labour values.

The lower the rate of exploitation, the more likely it would
be to lie closer to the value vector, the higher the rate of
exploitation and the greater the mobility of capital, the more
likely it would be to lie near the price of production vector.
The empirical data shows that values do have a real effectivity
as an attactor of the market price vector, but so do prices of
production. Neither eventually wins out.

There is a summary of Allin and my thinking on this in

>-----Original Message-----
>From: OPE-L [mailto:OPE-L@SUS.CSUCHICO.EDU] On Behalf Of Paul Cockshott
>Sent: 03 February 2006 14:56
>Subject: Re: [OPE-L] price of production/supply price/value
>Andrew Brown wrote:
>>You wrote: "On the other hand I do not expect that, subject to total
>>price=total value, then total profit=total surplus value. I would
>>them to be related but only loosely."
>>But the way I stated the argument was that, for any individual firm,
>>money costs (money measure of c+v) will be close to labour-time costs
>>(labour measure of c+v). The logic of this argument is that total money
>>costs across the economy must be very close indeed to their labour time
>>You also accept that total prices = total values.
>>Total profit = total prices (money measure of total s+c+v) minus total
>>costs (money measure of total c+v). Both terms of the RHS are also
>>to their labour time measures so surplus value must equal total profit.
>The problem lies in the difference between formal and real appropriation
>the surplus.
>Money profit is an accounting entry and is not equivalent to real
>appropriation unless quite complex additional assumptions are made -
>there being no aggregate workers savings or borrowing, a trade balance
>Real surplus appropriation is the amount of labour required to produce
>commodities actually appropriated by the capitalist class as new means
>production or as personal consumption.
>Money profit and real appropriation are not necessarily identical
>of the existence of money, and the possibility of any circuit c-m-c
>delayed for a longer or shorter period in the m phase.
>>So I cannot have stated the argument you are making exactly correctly.
>>Presumably the problem lies in the treatment of 'v'. Let me know.
>>Many thanks
>Paul Cockshott
>Dept Computing Science
>University of Glasgow
>0141 330 3125

Paul Cockshott
Dept Computing Science
University of Glasgow

0141 330 3125

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