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

From: Fred Moseley (fmoseley@MTHOLYOKE.EDU)
Date: Wed Feb 22 2006 - 11:26:22 EST

Hi Ian, thanks again for your most recent message.
A few quick comments below.

On Sat, 18 Feb 2006, Ian Wright wrote:

> I am not so focussed on an interpretation of Marx, but an
> understanding of LTV and capitalism. The Sraffian framework is a tool
> to reason about capitalism; despite its many drawbacks it has many
> advantages. It is odd that Marx's LTV breaksdown in this framework.

Again, I insist that it is not MARX'S LTV that breaks down,
but a different LTV, based on linear production theory.

> > Would you please give the reference for Sraffa's reply.  Thanks.
> Sraffa, P. Production of Commodities: a comment. The Economic Journal,
> 72 (1962).
> > What point does Sraffa make in this reply?  That one must assume
> > the reproduction of physical quantities or that one does not have to?
> That one does not have to. Although, as usual, he's a bit obtuse about it.
> > Does Ravagnani assume that turnover periods are the same or different?
> The same I think. He also seems to think that Sraffa's theory can form
> the basis for dynamics, which seems unlikely to me.

Thanks for these references, which I will check out.

> > I think I have already given several good reasons for rejecting
> > simultaneous determination - that it requires identical turnover periods
> > and requires that all commodities to be exchanged at the same time, and
> > that it cannot deal adequately with fixed capital.
> Yes, but rejecting it on grounds of "realism". But in contrast, and in
> the context of the LTV, we need to reject it on the grounds that we
> *expect* Marx's aggregrate equalities to *not* hold under these ideal
> and simplified conditions. In general, we expect theoretical
> relationships to be clearer under ideal and simplified conditions. For
> example, this is the form of Andy's response: he gives some reasons
> why we shouldn't expect the equalities to hold under the conditions of
> the modern form of the TP, but nonetheless he finds the Sraffian
> calculations/models etc. of potential interest.

I am not rejecting Sraffa's theory because it makes simplifying
assumptions that could later be dropped.  Rather, I reject Sraffa's theory
because it makes simplifying assumptions that can never be dropped
(and for other reasons too).

Marx's theory does not require the assumption of equal turnover periods in
all industries.  Marx may make the simplifying assumption of equal
turnover periods, but this simplifying assumption could be dropped
and a more realistic formulation with unequal turnover periods could
easily be developed.

However, Sraffa's theory requires the assumption of equal turnover periods
because of the assumption of simultaneous determination.  This assumption
could never be dropped as long as simultaneous determination is assumed.
A more realistic formulation with unequal turnover periods cannot be
developed as long as simultaneous determination is assumed.

This would seem to be an important advantage of Marx's theory over
Sraffa's theory.

> > In addition, simultaneous determination assumes that the inputs enter
> > production as mere physical quantities, without prices, and whose prices
> > remain to be determined simultaneously with the prices of the outputs.
> > But in capitalism, the inputs enter production as COMMODITIES (not as mere
> > physical quantities), with ALREADY EXISTING PRICES, which are determinants
> > of the prices of the commodity outputs produced.
> Yes, capitalism is a dynamic system in which prices at t-1 affect the
> prices at t. Simultaneous determination is a special case of this --
> prices at t-1 do "affect" prices at t, but they happen to be the same
> because the system is in price equilibrium. I'm not sure you can
> sharply separate simultaneous determination from general dynamics in
> the way that you want (at least you can't mathematically).

Simultaneous determination is not a special case of Marx's theory of
sequential determination.  I have emphasized that these two methods of
determination have entirely different initial givens.  The initial givens
for simultaneoud determination are physical quantities and the initial
givens for Marx's sequential determination are quantities of money capital
(and the quantity of current labor and the MELT).  Also the rate of profit
is determined differently in the two logical methods.  In the simultaneous
determination method, the rate of profit is determined simultaneously with
the prices.  In Marx's sequential determination, the rate of profit is
determined prior to prices and is taken as given in the determinatio of

One can easily separate out these two methods mathematically, as I have
done in several papers.  I would be happy to discuss this point further.

Ian, thanks again for the discussion.


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