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 conclusions. Best wishes, -Ian.
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