From: Rakesh Bhandari (bhandari@BERKELEY.EDU)
Date: Sat Dec 02 2006 - 12:16:13 EST
> >This has led Professor Stiglar (1958) to characterize Ricardo’s theory as 93% labor theory of value. >As far as the divergence of value ratios from >their labor ratios due to differences in time >structure of capitals is concerned, it could be >considerable. It should also be noted that Ricardo’s >results have no general validity and are the products >of his particular example. The variation in values >could be much larger if Ricardo started from much >higher rate of profits and thus allowed a larger fall >in it. Furthermore, the variations in value would be >much larger the two goods were far apart in terms of >their composition of the direct and indirect >labor-time. As a matter of fact, Ricardo was well >aware of it and in the first edition of the Principles >he had worked out examples of variations in relative >values of two commodities produced by equal amount of >capital investment but one produced by labor only and >the other produced by machine only. Ricardo showed >that a fall in rate of profits from 10% to 3% would >cause the relative values to vary “68% if the machine >would last 100 years; 28% if the machine would last 10 >year; 13% if the machine would last 3 years; and >little more than 6% if the machine would last only 1 >year” (Works I, p. 60). It appears that Ricardo’s >comments in the third edition relate to the relative >value deviation from his chosen ‘money commodity’, >which was supposed to be produced by a capital >composition close to the average of the ‘most of the >commodities produced’, leaving out the extreme cases.] > Ajit, I think you mean George Stigler, no? The way you present Ricardo he sounds more as a precursor to neo classical economics than Marx? Why don't you agree with Samuel Hollander's interpretation as I am sure you don't? I remember Peach's challenge to him. And even if Ricardo did not hold to LTV, didn't Marx read Ricardo as reluctantly allowing for and minimizing the other putative factors, viz capital structure, in the determination of value only because the mediations between the law of value and observable economic phenomena escaped him? Didn't Marx think Ricardo was correct that changes in labor productivity are the key factor for the observable changes in exchange ratios over time? It's overstating the case to say that Ricardo had no special place for labor in his theory of value. But even if Ricardo is misread as an exponent of LTV, Marx seems to have read Ricardo as a frustrated and honest exponent of the it, no? So I think it remains a possibility that Marx's arguments for the labor theory of value are undeveloped at the beginning of Capital because he thought it was widely accepted on the authority of Ricardo. He thus set himself the task of explaining why if LTV is true, commodities do not come with announcements of the labor time embodied but seem to be in possession of the enigmatic property value which is expressed in price. Rakesh
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