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

From: Andrew Brown (A.Brown@LUBS.LEEDS.AC.UK)
Date: Tue Feb 14 2006 - 12:12:37 EST

Hi Ian,

There are rather a lot of things going on at once - I am beginning to
lose track! Perhaps I should start with my take on the TP (since I
promised to) then I will try to paraphrase your position to see if I
understand it and to give me something to aim at. My own view is
influenced by the Fine/Saad-Filho take on the TP but I stress that they
may strongly disagree with most, if not all, of the propositions below:

(1) I do not attack the Sraffian calculation (really it is a definition,
not a calculation) of prices of production.

(2) I think the Sraffian 'value system' is bogus because it assumes
homogenous labour. However I do not think this affects the key Sraffian
conclusion that the two aggregate equalities cannot hold together. It
does affect how we interpret Marx and how we comprehend capitalism.
Marx's development of the concepts of TCC, OCC, and VCC arises in part
because Marx cannot assume homogenous labour in the manner of the
Sraffian value system. These concepts are vital to understanding
capitalism because they are central to the grasp of technical change.
For now let me just say that the OCC is supposed to reflect only the
TCC, if you like it is an 'index' of the TCC (though 'index' is not
quite the right concept). However, I do not think I need outline this
any further at this stage because it may not be crucial to our concerns
in this discussion. 

(3) Given (1) and (2) then an important question arises concerning both
the interpretation of Marx and the comprehension of capitalism: why does
Marx find, at the level of abstraction of Vol. 3, Ch.9, that the two
aggregate equalities hold? Given (1) and (2) the only answer must be
that the assumptions of the Sraffian calculation are not the same as
those of Vol. 3, Ch. 9. Indeed, that is my answer. In fact, as is clear
from the text, one obvious point is that Marx does not transform inputs.
This is obviously the key reason that Marx gets the aggregate equalities
holding precisely. Traditionally this has been deemed a logical error on
Marx's part. I don't think it is but I will not pursue this because it
may not be vital to our discussion (it involves discussion of TCC, OCC
and VCC).

(4)I think the Sraffian calculation is correct at a lower level of
abstraction than that of Vol. 3, Ch. 9. Therefore this calculation is
still of interest to me as it is to you. If the calculation really did
'disprove' the LTV than I would abandon the LTV.

(5) I also agree that there is a (still very abstract) level where Marx
transforms the inputs and where he claims that the aggregate equalities
still hold 'as a never attained average'. However, Marx never pursues
this line of argument very far. His concerns lie elsewhere.
Incidentally, so far as I know, neither Fine and Alfredo S-F have
pursued this level very far either.

(6) How then can the aggregate equalities hold, even given that the
inputs are transformed? Once again, the answer must lie in introducing
assumptions not present in the Sraffian calculation. I would
speculatively look at as follows. We know that total value = total
prices = c+v+s (by assumption regarding the value of money). Furthermore
we know that *if* the average composition of capital of all means of
production is equal to the social average *then* total value of c =
total price of c. Likewise for those goods that are in the 'wage bundle'
[traditionally the subsistence bundle plus moral and historical element,
but I would think in terms of consumption norms etc... alas this is a
difficult issue], i.e. *if* the goods that make up the 'consumption
basket' have the same average OCC as the social average OCC *then* then
total value of v = total price of v. It would follow automatically that
total value of s = total price of s. Therefore I speculate that Marx
makes these requisite assumptions when he claims that the aggregate
equalities hold together after the transformation of the inputs.

Marx's reference to a 'never attained average' could suggest that he
proposes that the distribution of OCCs of individual commodities is
independent of the categorisation of commodities as wage goods
(underlying v), means of production (underlying c) and so-called
'luxuries' (to the extent that they underlie s). This assumption is not
dissimilar to Paul's 'random variable' argument, though I am making
explicit that it is the OCC which is a random variable, therefore making
price-value deviation a random variable. Under this assumption then it
would indeed be the case that the two aggregate equalities will hold 'as
a never attained average' [in the static case they are actually attained
but realty is not static so they are not actually attained]. The
Sraffian argument, in these terms, would simply be that there is no
reason for the assumption to hold.

(7) But the key to comprehending capitalism does not rest on point (6),
which is why Marx never pursues it. It rests, instead, on the dynamics
which must be analysed after point (3). It seems to me that by vol. 3,
ch. 9, it is clear that OCCs are not going to have such a strong
correlation with the different categories of goods (underlying c, v and
s) so as to distort the price expression of SNLT catastrophically. The
price-value deviation will be small *relative* to the deviation caused
by the cyclical fluctuations (bubbles) that keep dragging capital away
from productive activities entirely. It is significant here that profits
require a physical surplus and so surplus value (measured in SNLT) and
profit are going to be 'close' together through time *relative* to
fluctuations that try to drag capital away from surplus production

OK. That's me. How does your argument look from my point of view? You
are arguing that, even considering dynamics, the neo-R calculation shows
prices and SNLT have no necessary relation. Well, it seems to me that
this calculation shows the opposite. It shows that the two aggregate
qualities will not usually precisely hold together but Marx's LTV does
not propose that they should, at the level of abstraction at which the
Sraffian calculation is pitched. With the Sraffian calculation, then
prices deviate from values only in so far as OCCs are correlated with
the three main categories of goods (i.e. with means of production, of
consumption, and so-called 'luxuries' - point 6 above). And the Sraffian
calculation shows that surplus product is required for profit, which in
general means that surplus labour is required for profit. This will mean
that deviations of SNLT from price are going to be small relative to the
amplitude of dynamic fluctuations of price away from SNLT, where capital
continually tends to be sucked away from surplus producing sectors
entirely, only to be dragged back towards them in crises (point 7
above). (The key to the dynamic context is that capital is allowed to
pursue new lines of investment, unlike in the static context.) The
obvious neo-R critique of the LTV is then that SNLT is *redundant* or
that the two aggregate equalities do not *precisely* hold (the LTV is
*inconsistent*). But you are not offering that critique at all. You are
offering a 'no necessary relation' critique which I don't think holds
water in a dynamic context (I do not think it implicit in the redundancy
or inconsistency critique). 

Many thanks,


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