From: Diego Guerrero (diego.guerrero@CPS.UCM.ES)
Date: Mon Feb 26 2007 - 06:05:20 EST
Fred: I would say Marx mentioned market prices a few times in Capital, mostly to deemphasize their importance, compared to prices of production, which are long-run equilibrium prices. ________________________________________ Diego: Marx often uses the same terms for different concepts. It is true that he uses "market price" as you say in most cases. But when I say "market price (m)" I am thinking in long-term prices too, and I believe that Marx sometimes does the same. The 'm' include the prices of the commodities of the sectors where many reasons make their actual rates of profit differ-year after year and in average terms!!-from the uniform rate of profit included in their production prices. 1) Think of the influence of the ground-rent. When analysing the absolute rent Marx writes that "it is possible for agricultural products to be sold above their price of production and below their value, while, on the other hand, many industrial products yield the price of production only because they are sold above their value". He is clearly thinking of a long-term price, I believe, not in short-tem fluctuations. 2) Think of taxes. Many sectors use gasoline as an input: the price of the gasoline is persistently over its production price, not due to short-term fluctuations of any kind, but due to the tax system of almost all actual societies where the State is present. In the other pole you have a lot of agricultural products that systematically receive subsidies from the State that lower their market prices compared with their production prices . 3) And think of the following as a general reflection: "if there are taxes, payments to unproductive labor, rents, or interest payments, the tendency may be to equalize net profits after deducting these items" (Foley, 1982, p. 46). It is clear that it is a "tendency", not a short-term fluctuation, and also that the resulting prices, that include gross profits, not just net profits, would be different from production prices in all those cases. However, I think now that I should perhaps call my 'm' prices "actual prices" instead of "market prices" even if the ambiguity could remain in this case too. I was aware of this problem and I mentioned it in a footnote of my paper. W hat do you think? ___________________________________________ Fred: Nowhere that I know of did Marx suggest that the initial inputs in the determination of values and prices of production should be market prices. Please correct me if I am wrong. The one sentence that you quote from Chapter 10 of Volume 3 does not suggest that that the initial inputs in the determination of prices of production should be market prices; rather it suggests that we should also examine the process through which rates of profit are equalized (i.e. the process of competition and the mobility of capital). Again, it seems to me that what you are suggesting is your extension of Marx's theory to market prices, not Marx's own theory of prices of production and treatment of market prices in Capital. ________________________________________________ Diego: I agree that Marx assumes m = p in Capital III. But I would add: 1) We should go beyond and develop a more finished theory in order to capture 'closely' the reality of the market. 2) In many places Marx opens the door to doing so and substituting market prices for production prices, since he says simply "price", not "production price", and the extension you say I am doing could be plainly done. Think for example of the following quotation from Capital I: "The values of the means of production, i. e., the cotton and the spindle, which values are expressed in the price of twelve shillings, are therefore constituent parts of the value of the yarn, or, in other words, of the value of the product". Or: "A portion of value replacing constant capital, or representing past labour, which was used up in the form of means of production in making the commodity; in a word, the value, or price, which these means of production carried into the production process of the commodities" (C.III, ch. L). Or: "It is the labour necessary for the production of particular articles, for the satisfaction of some particular need of society for these particular articles. If this division is proportional, then the products of various groups are sold at their values (at a later stage of development they are sold at their prices of production), or at prices which are certain modifications of these values or prices of production determined by general laws" (III, ch. 37). ________________________________________________ My disagreements with you have mainly to do with the role of market prices in Marx's theory, as explained above. I would hope that we could agree about Marx's theory of prices of production in Volume 3 (inputs valued at p, not m; m is your extension of Marx's theory). Comradely, Fred ________________________________________________ If you insist that this is only the "extension" I do of Marx's theory, then I think we agree in most of the rest. But I think that, as May said, this is only "a preliminary" issue. Let's go beyond. Cheers, Diego
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