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

From: Ian Wright (wrighti@ACM.ORG)
Date: Mon Feb 20 2006 - 13:32:51 EST

Hi Andy

I don't think our differences have got anything to do with formal
logic vs. dialectical materialism.

>I suspect you are basically doing what Ricardo did and trying to
solve a >problem that, as Marx puts it, is more difficult than
squaring a circle. You are >trying to present as actually existing
(the two aggregate equalities) what does >not actually exist (these
equalities do not hold beyond a very abstract level).

No. It is Marx who claims, correctly in my opinion, that the two
aggregrate equalities must hold. We are now disagreeing at what level
of abstraction this claim should hold. Ricardo was reconciled to
approximations and "closeness" of labour-value and price, but not

> I disagree that it is absent. To the contrary I think it is blatant. Prices of >production and SNLT are close relative to market prices, and this is clear from >the Sraffian calculation. You seem to me to be conflating 'necessary relation' >with 'exactly proportional relation'.

At the given level of abstraction, Marx claims there is quantitative
*identity*. Not "closeness", not "approximation", but identity (which
is an exactly proportional relation under the assumption that MELT is
not equal to 1). If Marx had claimed that labour-value was a
reasonable approximation to price then he really would have been a
minor post-Ricardian, because, as far as I understand it, that is the
position of Ricardo and his immediate followers.

> I do not find it 'tiresome'. Rather I think your intuition is one of someone who
> is well trained in formal logic (and in maths) but not in dialecical logic. The
> whole point Marx was making, his essential critique of Ricardo's 'formal
> abstraction', was that reality does not conform to your intuition.

The remarks on tiresomeness were not directed at you (I was worrying
that others on the list might be getting tired of the TP). Sorry for
not expressing myself clearly.

Marx is arguing that *prima facie*, reality appears to contradict the
law of value. But in fact, after theoretical work, we see that
labour-value is the substance of value, and the conditions of
capitalist income distribution do not alter this. Again, neither of us
disagree on the necessity of quantitative identity -- we are
disagreeing now at what level of abstraction this relationship should

But your belief that "reality does not conform" to quantitative
identity, under the conditions of the N-R critique, is based on your
wholesale acceptance of the results of the N-R critique. You are
giving this "formal logic" or "mathematical" argument far too much
respect. A mathematical model can contains all kinds of conceptual
errors and omissions. For example, and without going into detail,
Sraffa's price theory does not determine positive prices for arbitrary
sub-ranges of the wage/profit trade-off. For example, Sraffa's deduced
theoretical rate of profit is conditional on an essentially arbitrary
classification of wage goods into either subsistence or those that are
a share of the surplus. For example, interpreters of Sraffa cannot
fully agree whether Sraffa's system represents a self-replacing
equilibrium or a novel distributional event. So I am suggesting that,
given these real problems with Sraffa's theoretical scheme (and they
get worse under conditions of joint production), the uncritical
acceptance of the results of applying Sraffa's system to the TP might
well turn out to be problematic. And further, and more importantly, I
do not think that there good reasons for thinking that quantitative
identity should *not* hold under the abstract conditions of the modern
formulation of the TP (simultaneous determination, absence of
technical change etc.). You say they do not hold, but you base that
assertion on the N-R critique. Rather than accepting those results, I
am thinking they represent an anomaly.

> You have not replied to my point (in my previous posts) that once technical
> change is introduced then it becomes clear that the deviations between
> SNLTs and prices of production are small relative to fluctuations in market
> prices.

I am sorry if I have not addressed your point. But I do not think you
have  explained why the presence of technical change is necessary for
the quantitative identity of labour-value and price.

> But I agree with this too and have set out clearly the level of abstraction at
> which they hold. You are essentially disagreeing with me at what the
> appropriate level of abstraction is. In fact you must be saying more than this, > you are saying that the level of abstraction that I propose does not tackle the
> TP's challenge to the LTV.

Your interpretation of Marx may well be very innovative and a real
contribution -- it is certainly a reading that I would want to immerse
myself in if I were trying to understand the relationship between
labour-value and the value-form under dynamic conditions of technical
change. But to consider this a full response to  the modern TP you
need to better explain why quantitative identity does not and should
not hold under the conditions of the problem. I do not think you have
done that.

> No conditions are externally imposed on the OCC. To the contrary the OCC is
> examined and found to have no structural relation to the relevant categories
> of goods hence a random relationship will actually hold. This is obvious from
> a probablistic point of view. To challenge it theoretcally you would have to
> argue for a strong structural relation between OCCs and the relevant
> cataeories of goods (this is an essentially qualitative task foreign to the
> formal mindset of many economists). To challenge it empirically you would
> have to demonstrate this relation. Frankly, while one might argue for a
> relatively weak relationship one could not argue for a strong relationship and
> keep a straight face. (The terms 'strong' and 'weak' are defined relative to
> real effects on capitalistic reproduction).

Whether the relationship is "strong" or "weak" is irrelevant. The
point is that, once you admit logically that the presence of
capitalist profits *alters* the quantitative identity between
labour-value and price, no matter whether the alteration is
quantitatively small, large, weak, strong, only happens once in a
while etc., then it follows that there must be either *another*
determinant of the value-form other than labour-time, or perhaps that
labour-time is *not* the determinant at all. Labour-time therefore
cannot be *the* substance of value in capitalism. Perhaps it no longer
applies in civilised times? This is what is at stake over the issue of
quantitative identity. In fact, it would follow that it would be
possible to make profit (even if the profit were small, unlikely,
etc.) without extending the length of the working day or increasing
the rate of exploitation, even when we hypothetically abstract from
market prices ...

It seems to me that Marx knew this, and therefore was concerned to
demonstrate quantitative identity. You are suggesting, however, that
the quantitative identity only holds given conditions on the
composition of capital (despite the fact that it was well-known to
Marx that under some conditions on the distribution of the OCC the
contradiction does not arise, and by implication  he was not satisfied
with a theory in which quantitative identity only holds if conditions
are imposed on the OCC). You have conceded that even with a weak
relationship between OCC and "the relevant categories of goods" then
quantitative identity breaks down under conditions of capitalist
income distribution. Isn't this a regression to Ricardo's view that
the LTV is a reasonable approximation? Implicit in your interpretation
is the idea that  labour is not the substance of value in the presence
of capitalist profits.

You may have explained why you think that quantitative identity should
not hold under the modern conditions of the TP. If so, I am sorry if I
have not grapsed your argument. If so, you could try again.

Best wishes,

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