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

From: Fred Moseley (fmoseley@MTHOLYOKE.EDU)
Date: Fri Feb 17 2006 - 11:41:31 EST

Hi Ian, thanks for your reply.  My comments below.

On Sun, 12 Feb 2006, Ian Wright wrote:

> Hi Fred
> Thanks for taking the time to reply.
> > No, there is no reason to expect that Marx's claims would hold in
> > "Bortkieviecz's special case".  Because Marx's claims are based on Marx's
> > theory, and "Bortkieviecz's special case" is based on an entirely
> > differently theory, linear production theory.  Marx's theory determines
> > values and prices in one way (according to a unique logical method, which
> > I have explained many times), and "Bortkieviecz's special case" determines
> > values and prices in an entirely different way (according to the logical
> > method of linear production theory).  So why should we expect that Marx's
> > claims would hold in "Bortkieviecz's special case"?  On the other hand,
> > the fact that Marx's claims do not hold for "Bortkieviecz's special case"
> > SAYS NOTHING about MARX'S theory, because Marx's theory is entirely
> > different from "Bortkieviecz's special case".
> I have a methodological difference with you here, and such things are
> hard to resolve, so it might be a case of "agree to disagree" on this
> one.
> Both Bortkiewicz and Marx are theorising the same economic reality
> and, despite what some might say, there's only one of those.

I agree that there is one reality, but there is more than one theory
of that one reality.

> It is not
> ok to say that two theories are different and therefore
> incommensurable, that there cannot be any "communication" between
> them.

I am not saying that the two theories are incommensurable.
Rather, I am saying that the two theories are different,
and that the conclusions of Sraffian theory do not necessarily apply
to Marx's theory, nor are necessarily correct conclusions about
capitalist reality.

> Marx did not explicitly distinguish between equilibrium and
> non-equilibrium states.

I think that Marx is very clear throughtout that he is assuming
the economy is in equilibrium and that prices of production are
equilibrium prices.  And he clearly distinguishes between equilibrium
prices of production and non-equilibrium market prices.
Why do you say he is not clear on this point?

> His remarks on the failure to transform
> cost-prices are open to interpretation: and reasonable people can
> disagree on that interpretation.

I agree with this.  But why not accept an interpretation that makes
Marx's theory a logically consistent whole, rather than a logically
contradictory mess?

> But that isn't too important. What is
> important is the relationship between Bortkiewicz's special case,
> Marx's theory and capitalist reality. I do not agree that there is no
> relationship between these structures. I do not buy that Kuhnian
> stuff.

Please see my comments above.  Bortkiewicz's special case and Marx's
theory are about the same reality, but the conclusions of Bortkiewicz's
special case do not necessarily apply to Marx's theory, nor to
capitalist reality.

What do you mean by the "Kuhnian stuff"?  That the two theories are
incommensurable?  I am not arguing that.

> > > but you are not directly
> > > addressing the modern form of the transformation problem.
> >
> > But since the "modern form of the transformation problem" is based on an
> > entirely different theory from Marx's theory, there is no reason to
> > address it, except to show that it is a misinterpretation of Marx's
> > theory.  It implies nothing about the logical coherency of Marx's theory.
> Marx's theory is about capitalism. Linear production theory is about
> capitalism. Hence, there are relations between those two theories. One
> important relation is the TP.

please see above.

> > > Yes the Sraffian framework is in many ways unrealistic. (Although they
> > > can deal with different turnover periods).
> >
> > Ian, would you please send me references of Sraffian works that assume
> > different turnover periods.  I don't see how this can be made compatible
> > with the reproduction of physical quantities.
> I am thinking of all the work on fixed-capital in a joint-production
> framework. Although I have not studied this area, as far as I
> understand it, each process produces the output plus fixed-capital of
> different "vintages". The framework is sufficiently general to
> encompass any kind of depreciation schedules. But I am happy to be
> corrected on this point.

First of all, I think it is completely crazy to treat fixed capital
as a "joint product" and this nothing to do with capitalist reality.

More to the present discussion, even though fixed capital is treated
as a joint product, all industries have the same turnover period,
and all exchanges take place at the same time (at the end of this
identical period).  The only addition with fixed capital is that
the "partially used machines" are assumed to be exchanged at the
same time along with the regular products.

> > > Yes, but some Sraffians reject the self-replacing interpretation of
> > > Sraffa's theory -- they view his surplus equations as being more
> > > general than that. But overall I think this is fair comment.
> >
> > Again would you please send references of such Sraffians?   I don't
> > see how they can take the physical quantities as given and at the
> > same time reject the reproduction of these physical quantities.
> Sraffa made this point himself in his reply to Harrod's review of his
> book.

Would you please give the reference for Sraffa's reply.  Thanks.
What point does Sraffa make in this reply?  That one must assume
the reproduction of physical quantities or that one does not have to?

> A recent article by Ravagnani (Notes on a mischaracterization of
> the classical theory of value, Review of Political Economy, 2001)
> rejects the self-replacing interpretation of Sraffa's theory. The idea
> is that the economy need only be viable, rather than the net product
> being such to enable identical production in the next round. Prices
> can still be determined in such cases. I think the possibility of this
> interpretation, rather than a strength, represents an ambiguity in
> Sraffa's theoretical scheme. But this is a side issue.

Thanks very much for this reference.  I will check it out.
Does Ravagnani assume that turnover periods are the same or different?

> > > Yes, the Sraffian model abstracts from many of these things. So what?
> > > Bortkiewicz pointed out quite some time ago that if Marx's theory
> > > doesn't hold in a simple, special case, then there is no reason to
> > > think it will scale-up to more complex situations. (Unless there is a
> > > good reason to think otherwise).
> >
> > But there is a good reason to think that Marx's theory would apply
> > to more complex situations - because Marx's theory is an entirely
> > different theory from "Bortkiewicz's special case" of linear production
> > theory.
> I think we need better reasons to reject simultaneous determination
> other than saying that Marx theory was dynamic or had a different kind
> of logic, particularly as simultaneous determination drops out as a
> special case of a dynamical system at a fixed (equilibrium) point.

I think I have already given several good reasons for rejecting
simultaneous determination - that it requires identical turnover periods
and requires that all commodities to be exchanged at the same time, and
that it cannot deal adequately with fixed capital.

In addition, simultaneous determination assumes that the inputs enter
production as mere physical quantities, without prices, and whose prices
remain to be determined simultaneously with the prices of the outputs.
But in capitalism, the inputs enter production as COMMODITIES (not as mere
physical quantities), with ALREADY EXISTING PRICES, which are determinants
of the prices of the commodity outputs produced.

> > If values and prices are determined as in Sraffian theory, then the
> > neo-Ricardian critique follows, i.e. there is no necessary link between
> > values and prices.  Maybe you can show otherwise.  However, in
> > either case, if values and prices are
> > determined as in Marx's theory, as I have suggested in my work, then there
> > is a necessary link between values and prices - values determine the total
> > amount of profit and the general rate of profit, which in turn determines
> > (in part) prices of production.
> I think there is work to be done relating your kind of interpretation
> of Marx's theory to the N-R interpretation, rather than assuming that
> they are simply written in different languages, and never the twain
> shall meet. I don't think I'm being naive in thinking that rational
> people, Marixsts and neo-Ricardians alike, can mutually learn from
> each other via critical engagement with the other's theoretical
> framework. We are tying to talk about the same object.

I certainly agree that we can learn from each other (I certainly have),
and that we are trying to explain the same reality (actually there may be
some differences here - trying to explain different variables - but I
leave that aside for now).  But it does not follow from these points that
the conclusions of N-R theory apply to Marx's theory or to capitalist reality.

Thanks again for the discussion.


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