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

From: Fred Moseley (fmoseley@MTHOLYOKE.EDU)
Date: Fri Feb 24 2006 - 11:41:34 EST

On Wed, 22 Feb 2006, Ian Wright wrote:

> > I think it is an interesting and worthwhile question why Bortkievicz's
> > theory breaks down under these conditions.  But it has nothing to do
> > with Marx's theory.
> It is interesting and worthwhile because Bortkiewicz's algebra has
> something to say about the theory of economic value. Marx has a lot to
> say about the theory of economic value. How can you then declare that
> there is no relation between them? I don't understand.

Because what Bortkiewicz and Marx mean by "value" are two different
things.  There is not a shared meaning of "economic value" between them.

Bortkiewicz means the quantity of labor embodied in commodities:

        value = (lamda) A  +  L

Marx's concept of value has three dimensions:  the substance of value
(abstract labor), the magnitude of value (socially necessary labor-time),
and the form of appearance of value (money or price).  The dimension of
value that is most directly relevant to the two aggregate equalities
is the form of appearance of value.  I argue that the direct price of
commodities, as analyzed in Volumes 1 and 2 is:

        price  =  C  +  mL

Therefore, what Marx means by the form of appearance of value is different
from Bortkiewicz's concept of value not only because of different units of
measure, but also because Marx's simple price is not even proportional to
Bortkiewicz's "value" because C is not proportional to (lamda)A.

Therefore, Bortkiewicz's conclusion about the two aggregate equalities
between values and prices do not apply to Marx's theory of value and
prices, because Marx's concept of value is different (and different in
magnitude) from Bortkiewicz's concept of value.

Do you see what I mean?

> We are blind-men around the elephant, and each is a partial view. The
> full view requires critical synthesis. So I am in simple disagreement
> with you on this methodological point.

Yes, I think the fundamental disagreement is that you think that Marx's
theory and Sraffa's theory can be "synthesized", and I do not think so.
Sequential determination (within a single period I am talking about,
not a dynamic analysis over more than one period) is not compatible with
simultaneous determination.  And quantities of money as the initial givens
are not compatible with physical quantities as the initial givens.
And Marx's concept of value is not compatible with Bortkiewicz's concept
of value.

I read Ravagnani's article that you mentioned in a previous post.
You are right that Ravagnani drops the assumption of "reproduction" and
simply assumes "viability".  But he continues to assume equal turnover
times in his two industries (wheat and iron).  This latter assumption
cannot be dropped in Sraffa's theory because simultaneous determination
of prices requires simultaneous exchange of commodities, and because the
rate of profit is calculated over the same period for all industries.

Another point of Ravagnani's article is relevant to our discussion.
He argues that the key difference between Sraffa's theory and neoclassical
theory is that the two theories have a DIFFERENT SET OF GIVENS (pp. 355-56
and 361-62).  Sraffa's theory takes the physical quantities as the
initial givens, and determines relative prices.  Neoclassical theory takes
utility functions and productionl functions as given and determines both
the physical quantities and prices.

I argue Marx's theory takes another set of givens - the initial  money
capital M (along with the quantity of current labor and the MELT) and
determines the final greater amount of money capital M' and the increment
of money dM.

Thanks again.


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