From: Rakesh Bhandari (bhandari@BERKELEY.EDU)
Date: Sat Mar 31 2007 - 18:51:17 EDT
Fred wrote: "Furthermore, Marx emphasis in these pages is that prices of production change IF AND ONLY IF the values of commodities change, either in final goods industries, or in industries that produce means of production. You seem to have in mind a situation in which prices of production change from period to period, because input prices are not equal to output prices, even though the values of commodities remain the same." Well when does value change if not between the production and realization of the inputs and the production and realization of the outputs? This is question Guisanni has put forth. I put it to Allin. What is the answer? Fred, just to be absolutely clear: Marx does have prices of production changing interperiodically because value is indeed changing interperiodically. Marx shared that assumption with Ricardo. There are continuous output and price responses to the disequilibrium effects on the profit rate from the ceaseless and differential productivity growth in the economy's branches. Some of the responses may even compound the disequilibrium (Paul C gave an interesting example of how responses to disequilibrium can compound disequilibrium, the most important example being of course that oversupply tends to encourage even more supply through large scale technologically advanced investments--think of how oversupply is handled in the DRAM market). But the point is that there is no reason to assume that what would have been the prices of production for the inputs are the same as the prices of production Marx calculates in his tables. For this reason it would not have occured to him that he should have transformed his input prices into the same prices of production as the outputs. There is of course other reasons he would have rejected Bortkieweicz's solution. Marx did not think simple reproduction was compatible with capitalism, so he would not had prices determined under such conditions. Foley on the other hand thinks Marx was trying to establish the conditions of simple reproduction in terms of interdepartmental exchange and the size of the gold reserves needed. But Marx showed that simple reproduction was not possible under capitalism, so what is the point of a theory of price in those conditions? Of course Winternitz showed that simple reproduction did not have to be assumed, but he also rightly thought that there was no transformation problem. Second, Marx would not have accepted gold as a third sector whose exchange value allowed for no more than average rate of profit. Rakesh
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