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

From: Ian Wright (wrighti@ACM.ORG)
Date: Tue Feb 21 2006 - 12:50:46 EST

Hi Andy

Thanks for replying. I think perhaps we should stop here for now, if
that is ok by you. Undoubtedly we'll return to this in the future. I
think the disagreement between us is reasonably clear: we currently
disagree at what level of abstraction the quantitative identity
between labour-value and price should hold. Our debate will be almost
unintelligible, I think, to a neo-Ricardian theorist. The point we
agree on -- and I think it is really important and key -- is that
there *must* be a necessary, quantitative relation between labour-time
and price *because* capitalism (abstracting from non-market allocation
mechanisms) allocates social labour-time via price signals. Although
you do not fully agree with my presentation of the N-R critique, I do
believe it shows that such a necessary, quantitative relation does not
exist, in the special case of simultaneous determination and no
technical change etc. I conclude there must be something wrong with
the N-R critique, on its own terms, at its level of abstraction.

For example, in a dynamic model of simple commodity production (SCP)
that I developed, the quantitative identity between labour-time and
price is necessary for price signals to function to allocate social
labour (subject to some qualifications due to disequilibruim dynamics
which is not important now). Although I haven't pursued this, I think
it is possible to show that the fixed point of the dynamic equations
that describe this system are identical to a (static) Sraffian model
of SCP, in which the quantitative identity between labour-time and
price holds (which is a well-known result).

The failure of this quantitative identity to hold in (static) Sraffian
models of capitalist simple reproduction (the modern TP) therefore
implies that the prices in a dynamic model of capitalist simple
reproduction cannot function to allocate social labour. I do not mean
that prices may not function quite as well, or that the presence of
capitalist profit "distorts" the allocation of social labour in some
way. I mean something stronger than that -- that there cannot be any
necessary causal relation between price and labour-time. (This is
echoed, I think, in Ajit and Paul's paper on how the arbitrary choice
of numeraire affects the direction of price movements).

Capitalism has lots of faults, but it does reproduce over time, a
point you have emphasised. I really do think there must be something
odd/anamolous/erroneous in the N-R results because they lead to absurd

Best wishes,

This archive was generated by hypermail 2.1.5 : Wed Feb 22 2006 - 00:00:01 EST