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

From: Ian Wright (wrighti@ACM.ORG)
Date: Mon Feb 13 2006 - 00:12:00 EST

Hi Andy

> Now, I would like to stress that I have not mentioned prices in the
> above. In fact the above is a trans-historical statement. It can and
> must be debated at such a high level of abstraction and when doing so,
> of course, the question of prices (a historical, not a trans-historical
> phenomenon) is quite irrelevant. This is important because you have not
> yet explicitly attacked this statement at such a level of abstraction.

I agree with the Letter to Kugelmann justification of the trans-social
requirement to allocate labour-time. That's the general historical
materialist perspective or background-- but the application of this
principle to capitalism appears to be problematic, from the
perspective of the N-R critique.

> Just to illustrate: it is a trans-historical fact that we need to eat to
> live. This is a truth in all societies. So it is true in capitalism. Now
> if the neo-R critique 'proved' that we do not need to eat to live in
> capitalism, obviously we would not abandon eating. My argument that in
> all societies there is one and only one relevant scalar, SNLT, that is
> necessarily related to feasible reproduction proportions is at exactly
> the same level of abstraction as the argument that in all societies we
> need to eat to live. Your reply apparently to the effect that the neo-R
> critique 'proves' that there is no such scalar is exactly equivalent to
> the reply that the neo-R critique proves we do not need to eat in order
> to live.

In general I agree with you -- but it still leaves the N-R critique to
deal with. The existence of the TP is an obstacle or anomaly for our
belief that the value-form must reflect this trans-social necessity.

Have you read Lippi's "Value and Naturalism" (1976)? I encountered it
recently, and I disagree with the major conclusions. However, it is a
cogently argued attack on the idea that such a trans-social principle
(a "natural" principle in Lippi's terms) must manifest in capitalist
price phenomena. Lippi accepts the N-R critique of Marx's ch.9, and
hence argues against the line of deduction from Kugelmann to a labour
theory of value. Here's a quote (with some of my annotations in square

"Considerations about the natural background of commodity production
[e.g. Letter to Kugelmann] tell us nothing about the way commodities
are actually exchanged. Prices of production and quantities of
embodied labour can be determined from production methods (including
wages, given in terms of physical quantities). But no accurate meaning
can be attributed to the proposition that prices are somehow a
manifestation of values, the result of a `transformation' of the
latter. What counts is not embodied labour but the distribution in
time of the quantities of labour whose sum is embodied labour [an
obtuse reference to Sraffa's reduction to dated quantities of labour,
which mismatches labour values, as I mentioned in earlier posts] .
There is no eternal natural law underlying the capitalist mode of
production [e.g.., not possible to apply historical materialism]. What
do exist are material elements of production which are reflected in
exchange relationships, but on the basis of laws arising from the
capitalist mode of production alone [i.e., strict incommesurability of
value theories between different modes of production]. It is not the
case that a `measure of difficulties' (here embodied labour)
independent of the social mode of production manifests itself under
capitalism; rather it is supplanted by magnitudes that reflect the
need to distribute profits uniformly but that are not related to
embodied labour in the simple way Marx believed. The influence on
capitalist production of production in itself is far more limited than
Marx thought." (p.109).

Lippi arrives at this conclusion due to the existence of the TP.

I agree with you that it is probably implicitly incoherent to hold
Lippi's position, but not obviously so -- perhaps a substance-based
value theory really is a conceptual error. This is a widespread point
of view taken by neo-Ricardians. They hold it because they believe in
the results of their algebra. To argue against their point of view,
requires, I think, an immanent critique of their algebra -- much like
Bortkiewicz's "correction" was an immanent critique of Marx's
transformation algorithm.

> I am not saying this clinches my argument but I am pointing out that
> your reply has not fully addressed my argument. On the other hand you
> are right that it must be shown *how* trans-historical truths are
> actualised (and so *developed*) in specific cases. Thus it must be shown
> how trans-historical truths of any society are compatible with the
> specifics of process of production.

Yes -- this is the challenge/obstacle presented by the N-R critique.

> Your actual reply was
> 'No. That's the N-R transformation problem: it denies that prices are
> "necessarily related" to SNLT. Why? Because the dual-accounting
> systems are mismatched. According to this critique, you cannot explain
> prices in terms of labour-values ("no way" of going from the value
> prong to the price prong, even in the aggregate). So you're begging
> the question here -- or implicitly assuming a response to the TP.'
> *If* you accepted the trans-historical truth that SNLT is the only
> scalar necessarily related to feasible reproduction proportions, *then*
> you couldn't reply in quite the above manner. Instead you would know
> that prices *must* be tethered by SNLT.

Certainly my belief in the former motivates my critical study of the
N-R critique: I do think there must be something wrong with it.
"Tethered" is ok, but quantitatively weak, and does not form the basis
of an immanent critique of Neo-Ricardianism. You say that prices
*must* be tethered by SNLT, but the N-R critique shows that they are
*not* (or at least not in the way that would be necessary for a LTV).
Something has to give.

> But you are of course right that
> there would still be the key task of showing, despite the neo-R
> critique, *how* prices are tethered by SNLT. Moreover, *if* I couldn't
> show this, *then* I would have a fundamental problem is theorising
> capitalism! In other words you are right that I must have some response
> to the TP (implicit or otherwise).

Yes, that's exactly how I see it.

> So far as I know the TP shows, and can only show, that the two aggregate
> equalities do not hold precisely together, under certain assumptions. It
> does *not* show that prices are not dynamically tethered by SNLT.

It does by implication.

> It does *not* show that under reasonable assumptions the two aggregate
> equalities are a million miles from holding simultaneously.

Approximation is not good enough under the theoretically ideal
conditons of the problem.

> It provides
> no basis for determining these latter questions because it provides no
> dynamics, in fact it provides absolutely no basis whatsoever for
> deciding upon the 'given' technological conditions! I mentioned before
> some basic dynamics of bubble and burst that seem to me to mean that
> prices and SNLT will not part company completely, and for long, without
> crisis.

Yes, no disproportionate dynamics to speak of, although as I mentioned
earlier the basic Sraffian model can be viewed as an economy producing
in historical time absent change. But -- and here I am beginning to
repeat myself -- *why* should Marx's price-value correspondences fail
to hold in Bortkiewicz's special case? It is not ok to say that Marx's
value theory is dynamic and hence the N-R framework does not apply.
The fact of the matter is that a state of self-replacing equilibrium
is a special case of a dynamical system that has reached a fixed point
of its dynamics. The N-R special case is therefore intimately related
to the more general cases in which you believe the necessary
connection between SNLT and price will be (or is) revealed. I believe
that the N-R critique must be answered on its own terms because the
special case is legitimate and important. Simply legislating the
special case away is, in my opinion, not an answer.

> Now, you have another, and totally different, line of argument regarding
> the TP. This is that Marx himself thought that the two aggregate
> equalities hold precisely - thus theory should reproduce this aspect of
> Marx. I do, in fact think my theory (derived form Fine at al) does.
> Under the assumption that the inputs are not transformed (level of the
> OCC) then he was precisely correct. What about after the inputs are
> transformed (level of VCC)? Plainly, he did not think this a vital
> question, and never pursued it at any length (though I agree that he
> thought they was a level where they would still hold after the
> transformation of the inputs 'as a never attained average'). I would
> suggest that this is because there are some rather more fundamental
> issues: (1) the value of money; but far more importantly (2) dynamics,
> viz. the TRPF. Marx accordingly goes straight on to discuss dynamics and
> the TRPF.

I think you are totally spot on to emphasise the importance of the
value of money and dynamics. But what makes us think we can run before
we can walk? You answer -- Fine et. al's solution.

I think if we want to take this discussion further the next step is to
critically evaluate Fine et. al's response to the TP. My knowledge of
it is limited to the articles in the "Value Dimension" collection. My
feeling is that it does not address the N-R critique on its own terms
-- it changes the terms of the problem. Hence, it is not a reply.

> You write "Price is related to "feasible reproduction proportions".
> That's not in question. What is contested by his N-R critics is Marx's
> claim that
> those prices *represent* SNLT, even in the aggregate."
> But surely it *is* in question. Here you seem to me to get levels of
> abstraction in the wrong order. First we need to scrutinise feasible
> production relations, even at the very abstract trans-historical level.
> This tells what can and cannot be related to feasible production
> relations. Then we must examine price. In other words, prices cannot
> magically be related to feasible production relations by fiat. We have
> to show *how* they are.

I believe I have done that for the dynamics of simple commodity
production. To show how prices, in capitalism, are related to SNLT
requires the engagement with the TP. All my (very limited) work on
economic value theory has been formulated in terms of dynamic models.
Yet I do take Bortkiewicz's special case seriously. It cannot be
avoided -- it is a part of a more general dynamic theory.

> I hope there is some apparent progress, from your point of view, above.

Yes, I think so. I am expressing dissatisfaction with the existing
responses to the TP. You are maybe telling me not to worry about it !


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