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

From: Ian Wright (wrighti@ACM.ORG)
Date: Sat Feb 18 2006 - 19:50:11 EST

Hi Andy

Thanks for taking the time to describe your response to the TP. Sorry
for the delay in replying.

> (2) I think the Sraffian 'value system' is bogus because it assumes
> homogenous labour.

This is also Ulrich Krause's position ("Money and Abstract Labour", Verso, 82).

> However I do not think this affects the key Sraffian
> conclusion that the two aggregate equalities cannot hold together.

OK. Just to give some background, my current interest is in developing
an internal critique of Sraffa. That's why I'm separating the
"classical context" (pre-Bortkiewicz) from the "modern context"
(post-Bortkiewicz) of the TP. The modern form of the TP, rather than
Marx's ch.9, is currently my main focus. At your prompting I read
Saad-Filho's 1997 paper, and I think it is very interesting. But I
don't want to comment on it. For two reasons: (i) I am not fully
competent, and (ii) the relations between VCC/TCC/OCC are not
immediately relevant to the modern form of the TP. Rather than
avoiding or criticising the conditions of the modern form of the TP I
want to tackle it head on, and enjoy the contradiction.

For instance, I very much agree with you that the trans-social
necessity to allocate labour implies that prices must have a necessary
relation to labour-time (we have agreed on this point a number of
times in previous OPE-L exchanges). This point is particularly clear
in Rubin. The fact that this relationship is absent in Sraffa's system
is very odd. Unlike Lippi, who therefore concludes that there is
something wrong with Marx's value theory in particular and historical
materiaism in general, I am inclined to think there must be something
wrong with Sraffa's framework. The existence of the modern form of the
TP is an anomaly that requires explanation, rather than a result that
requires the rejection of the LTV. That's the hypothesis I have
applied to the N-R literature.

The narrow question I want to answer is therefore: why does Marx's
value theory appear to break apart under these specific, "modern"
conditions? This question, is, I think, different to the questions you
are asking. This question is also perhaps not so interesting from your
point of view because, I think, you do not believe that the modern
conditions of the TP are crucial for value theory and for
understanding capitalism.  Here we differ, because my intuition is
that the following kinds of assumptions:

- simultaneous determination
- homogeneous labour
- uniform profits
- self-replacing equilibrium
- simple reproduction etc.

are conditions under which the value-price relations should hold,
"ideal" conditions so to speak. Many people over many years have
focussed attention on this contradiction and have formulated various
responses to it. But I am at the stage where I am still struggling
with it. I can very much understand, however, if
those who have moved on from it find the whole thing pretty tiresome
by now. My excuse is that the problem is new to me, so I still find it

> 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.

In the modern context of the TP, technical change is abstracted away,
and it is legitimate to do so, just as Marx, say, abstracts away from
unequal exchange in vol I. On the other hand, I do think technical
change and dynamics are essential to a complete understanding of value

> (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.


> (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.

Yes of course.

> (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.

But I agree with Saad-Filho when he says that the "aggregrate
equalities are essential for Marx". They are essential because price
is meant to be a form of value and, at a certain level of abstraction,
price must represent labour-time and there must be quantitative
identity (via a MELT, and given the abstractions).

> (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.

I see. Marx does not make these assumptions (granted, they are
unfinished notes).

Also the implication is that when these conditions do not hold (which
in general they do not) then, in general, the aggregrate identities do
not hold.

I think it essential that Marx's conservation claims hold generally,
without conditions on the composition of capital. Otherwise Marx's
value-theory cannot form a basis for understanding the laws of motion
of capitalism, for as soon as the system moves away from these ideal
conditions, the necessary relation between labour-time and price is

> 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.

I am not sure about that. As you know, in the Sraffian framework,
Marx's aggregrate equalities hold under conditions of (i) zero
profits, (ii) uniform organic composition of capitals, and (iii) when
the economy is in `standard proportions'. (The latter might be
connected to your reasoning in terms of averages).

Also, compared to the interpretation you are providing, I think the
the simultaneous reading of the TP, in which Marx admits he should
have transformed the cost-prices of inputs, is more likely and
conceptually simpler.

> 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).

I have been discussing the N-R critique -- I haven't added or changed
anything about it, at least not intentionally. I mentioned that the
"no necessary relation" between the dual accounting systems of
labour-value and price, in the Sraffian framework, generate the
redundancy (cannot go from labour-values to prices) and inconsistency
(value rate of profit is not the price rate of profit) critiques. This
accounting mismatch between labour-time and price is the common
element that underlies Steedman's redundancy and inconsistency

You do not expect Marx's equalities to hold under the Sraffian
conditions. I do expect them to hold. According to the N-R critique
they do not. So I have a theoretical headache, but you are less
troubled. I think that's about the sum of it!

Best wishes,

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