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

From: Paul Cockshott (wpc@DCS.GLA.AC.UK)
Date: Thu Feb 23 2006 - 05:19:15 EST

Ian Wright wrote:

>Simultaneous and sequential determination are intimately related
>because the fixed points of a dynamical system are the solutions of
>the special case simultaneous system in which the input state yields
>the output state. Also, "initial givens", or different starting
>points, become less important when there are dynamic feedback
>relations between the physical quantities and money quantities.
>Distinguishing theories on the grounds of different initial givens or
>exogenous variables, such as, say, how the "surplus school"
>distinguishes itself from neoclassical economics, is, I think,
>ultimately a sign of partial and incomplete theories, rather than
>complete and incommensurable theories. I think the same applies to
>trying to demarcate Marx from other theoretical advances on the
>grounds of having different initial givens. In sum, I don't think it
>is possible to forever separate your interpretation of Marx's
>understanding of capitalism from the neo-Ricardian. The mutual
>infections have already occurred. Once you introduce physical
>quantities and dynamics into your macro-monetary interpretation then
>my guess is that you will be faced with the N-R special case.

It would be extraordinarily difficult to construct a dynamic model
using physical quantities where the least perturbation would not
break the equal rate of profit.
What passes for dynamic models of the transformation problem -
those of Kliman for example, assume what has to be established
and just enforce profit equalisation.

One can not construct a dynamic model including physical quantities
without also modelling stocks of finished products - either held by
a wholesaling sector or by the original manufactureres. You then
need some model of how prices adjust to changes in output stocks.
Deviations of prices from their equilibrium value obviously
cause profit rates to vary. If price falls are sufficiently serious
they cause the sectors to go into a loss, at which point you
need to introduce dynamic equations for how a sectors
employment will vary with its profit/loss status.

 From attempts to build dynamic Sraffa inspired models in the
past I note that it is very hard to get a price adjust ment mechanism
that is stable - i.e, does not produce wild fluctuations in prices that
can lead to whole industries going out of business.

How do prices adjust to changes in stocks ?,
When stocks run out, how is allocation actually done, do wholesalers
in practice operate a rationing - first come first served, or equitable
share-out of available stocks?

Paul Cockshott
Dept Computing Science
University of Glasgow

0141 330 3125

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