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

From: Paul Cockshott (wpc@DCS.GLA.AC.UK)
Date: Sat Feb 11 2006 - 18:20:02 EST

Ian wrote
F&M wrote "Laws of Chaos" as a response to the TP. They are both
highly technical mathematicians (amongst other things). So no doubt
they had a good hard look at the neo-Ricardian critique of Marx's
value theory. Indeed, Emmanuel in the collection "Ricardo, Marx,
Sraffa" has a good work-out with the Sraffian theoretical framework,
and points out how sensitive the results are to the assumption of
uniform profits. But as far as I can tell, F&M do not reject the N-R
critique on its own terms. They accept what it says. Their response
is, IMHO, groundbreaking, because the alternative theoretical
framework they sketch -- probabilistic political economy -- is
original, very promising and still under-developed to this day. This
much we know.
I agree with all of the above

However, I have always thought that their defence of the labour theory
of value is the weak part of their book. They derive the results
regarding correlation between labour-content and price. They note that
other real-cost measures, e.g. oil-content, might have similar
properties. However, they decide labour-content is the appropriate
theoretical measure because (i) other commodity-types may come and go,
but labour persists, and (ii) political economy is essentially about
people. You also show that other commodity real-cost measures aren't
as well correlated with price. So empirically the labour-content
theory is a best fit to the data.

The problem, in my mind, with this defence of the LTV is that it is
ultimately about empirical correlations. Marx's value theory (which
may be wrong -- I am not begging the question only pointing out a
difference) is intended to explain how or why social labour
*necessarily* manifests in "dazzling money-forms", or how labour-time
acquires a value-form via objective, causal relations. In my view, the
semantics of representations (e.g., the meaning of the hour-hand of a
clock, the meaning of a temperature on a thermostat, the meaning of
the dollar in my pocket etc.) can only be explained via (loop-closing)
causal theories of objective semantics, and not simply correlational
I disagree at this point, the theory of F&M is a causal theory,
just as much as atomistic accounts of thermodynamics are 

 So, at best, F&M's correlational theory provides strong
evidence and strong reasons for holding a LTV (and a promising
re-representation of economic relations), but it is not the whole

I am not sure if the conclusion you draw regarding value-theory really
does drop out of F&M's model (it may do -- you may be drawing out what
is implicit in it). 
It is implict rather than explicit.

But given that I do not think F&M have established
a LTV in the strong sense (causal, objective etc.) then it might not
be too surprising that their version of the LTV can't sustain the
concept of an objective value-theory for capitalism, invariant over
class perspective.

Stretching the analogy a bit: although it's conceivable that the
semantics of clocks depends on who's reading the hands, it is a fact
that the semantics of clocks is fixed and invariant in our society.
There aren't proletarian clocks and capitalist clocks. 
But there most definitely is a capitalist and a working class
political economy. - economics is not physics - yet.
Is there a
proletarian meaning of 1$ and a capitalist meaning of 1$?


At one level there certainly is. To a worker a dollar is a
means to live, to a capitalist it is a means to exploit others.

To return to the original point about the prices of production
and labour values - these reflect the differences in meaning of
a dollar above. 

Labour values reflect a principle of equality based on the 
exchange of labour time between producers and as such are
an expression of a commonsense petty producers view of production.
Smith puts it forward dating from a time when the preponderance
of production in Scotland was still by independent producers
rather than modern capitalist industry. Here we get the transfer
of the operational ideology of petty commodity producers into
political economy ( the schoolmans theory of the just price 
obviously preceeded this and provided the route ).

Ricardo both expresses the labour theory most rigorously but
also is pulled by the antagonistic principle of equality based
on equal rates of return to capital. This contradiction between
two principles of equality lies at the heart of the crisis of
the Ricardian school in the  19th century. The rigorous
assertion of the principle of equality of labour value led
to Ricardian socialism and Owenism. 

Marx was, I think, mistaken to believe that one could within
a single theoretical structure reconcile these two principles
of equality. If, as Sraffa does one makes the capitalist principle
of equality of return central, then labour value appears irrelevant.
To the conciousness of the rentier, labour is irrelevant,
capital is innately self expanding. The Neo -Ricardians do 
demonstrate that the two principles are irreconcilable.

What is original in F&M is that they break with the ideological 
obviousness of either labour values or prices of production and
uncover actual stochastic mechanisms regulating prices.
The mechanism they uncover indicates that so long as the rate
of surplus value is not very high indeed, then prices can not
deviate very far from values. This acts as restraint on the
extent to which the capitalist principle of equality embodied
in prices of production can operate. Hence the transformation
from values to prices of production can not complete, because
the power of capital over labour is not complete, Capital is
still forced to share half or more of the product with labour.
This means that it has to account for labour and the scarcity
of labour continues to restrict it.

The lower the rate of surplus value, the greater the power of
the working class, the more effective will the law of value be.
Conversely if, as today, labour can be had very cheaply in
newly industrialising countries, then it appears that the
capitalist principle of equality based on equal rate of return
to capital prevails.

This archive was generated by hypermail 2.1.5 : Tue Feb 14 2006 - 00:00:01 EST