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

From: Paul Cockshott (wpc@DCS.GLA.AC.UK)
Date: Mon Feb 20 2006 - 16:56:47 EST

 Fred wrote
Hi Paul, thanks for sketching this out.  I certainly do not want you to
spend weeks trying to work this out (especially since I don't think it can
be done!).  I don't see how your "work in progress" method adequately
deals with the problem of unequal turnover times, but I will think about
it some more.  In the meantime, I have a few questions for clarification:

1.  Are you suggesting that there separate equations for those
sub-industries that produce "works in progress"?

2.  Are the "works in progress" assumed to be sold at prices that are
determined simultaneously with the prices of the regular output (similar
to Sraffa's method of treating fixed capital as "joint products")?
I am influenced by the fact that each day I pass the 
shipyards of Glasgow and see the 'work in progress' growing.
In shipbuilding you have two processes - the ship is initially
constructed on the stocks and then launched and fitted out.
Thus one can think of splitting the industry into two
one which builds hulls, the second of which fits them

The work in progress is not normally sold, but if a new
purchaser wanted to buy the yard, the value of the work
in progress would be included in the value of the yard.

This separation is evident in the shipbuilding industry,
but one can imagine a similar process on a shorter time
scale in other industries whose turnover is shorter.

In my understanding the existence of work in progress
is why turnover time varies between industries.

3.  Or, alternatively, are the "works in progress" not sold and thus do
not have prices that are determined; i.e. the prices of the "works in
progress" are not unknowns in these additional equations?  But, in this
case, wouldn't there be more equations than unknowns?

4.  It seems to me that your method still assumes that the overall
turnover period - the time elapsed from the purchase of inputs to the sale
of outputs produced with these inputs - is still the same for all
industries (as in Sraffa's formulation), and also seems to assume that the
subperiods into which the identical turnover period is divided are also
all the same, so that the exchange of all commodities for each other still
takes place at the same time.  This all-round exchange happens more
frequently, but it is still a simultaneous all-round exchange of all
commodities for each other.  Do I understand your correctly?
No you don't fully understand my point.

There would be no turnover time in the Sraffian sense but a set of
differential equations expressing the flow rates of production, and
associated with these a set of standing stocks - of raw materials
and work in progress. 

The effect of different turnover time is achieved by the ratio
between output flow and the stock of work in progress.

Turnover time is just another way of looking at the real
continuous process of production with standing stocks.
5.  It also seems to me that the all-round exchange of all commodities at
the same time is necessary for the simultaneous determination of the
prices at which commodities exchange.  Is this not correct?

What one requires is a rate of transfer of outputs
between industries such that the rate of consumption of
each product equals the rate of production. This is not
really an exchange of commodities, since there would be
a parallel set of banking entries, so it is purchase
and sale rather than barter.

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