From: Rakesh Bhandari (bhandari@BERKELEY.EDU)
Date: Wed Apr 11 2007 - 06:04:46 EDT
Hi Fred, you called our attention to this passage--I think the strongest textual evidence you have in favor of your idea of long term equilibrium price (quoted at the bottom). You write about this passage: >There is one passage from Chapter 50 of Volume 3, in which Marx >comments on the fluctuations of market prices around prices of >production as long-run center-of-gravity prices, and this passage seems >to suggest that Marx thought that changes in values certainly do not >happen continuously, and probably do not happen frequently. > > > >Therefore, in order to conduct this kind of empirical analysis of the >fluctuations of market prices, there must be some industries in which >the actual value of a commodity DOES NOT ALTER "over a prolonged >period". Futhermore, the implication seems to be that such alterations >of value would happen in only a few industries over this "prolonged >period". Fred, Well first this passage is not actually about the infrequency of changes in unit values. The constancy in prices of production for any branch of production is compatible with changing unit values in the respective branches. As long as productivity growth is fairly proportional across branches, their prices of production may remain fairly stable in both absolute and relative terms, and the periods of excessive market prices for any one branch may well be balanced by periods of weak market prices, such that over time the respective branches will all have made an average rate of profit. In using this passage as proof of the constancy of unit values, you are ignoring your point that prices of production should not be conflated with unit prices and values! Secondly unit values are not affected only by or even mainly by changes in labor productivity to which Marx refers in the passage below but by changes in the unit values of the means of production. But Marx focuses on only one reason for a change in unit values in the passage below--change in direct labor productivity. Why? Well, it is quite possible that changes in the absolute and relative level of prices of production for any one branch would change if there were explosive growth in direct labor productivity. In other words, if a branch were all of a sudden to leap from a low OCC to high OCC, then one would see the sum of the market prices of that branch's produced commodities changing both absolutely and as a relative portion of total prices. Market prices would not be seen to be hovering around stable prices of production in that case. But it does not follow that Marx thinks unit values are constant in all the other branches as the unit values of the goods which are consumed as means of production will have tendentially continued to decline, bringing about a constant reduction in unit values. The prices of production--which are defined at the branch level--can remain stable with market prices hovering around them while unit values and use values continue to move in inverse direction. As far as I can see this is the only passage from volume 3 that either you or Allin has quoted to demonstrate that Marx believed that unit values were even roughly constant over time. And I don't see how it does that. Moreover, the assumption of constant unit values is not realistic and makes changes seem as if they appear by magic, sleight of hand or through a deus ex machina. Here is the passage which you cited: "If we call the surplus-value thus limited and calculated on the advanced total capital - the profit, as I have done, then this profit, so far as its absolute magnitude is concerned, is equal to the surplus-value and, therefore, its limits are just as much determined by law as the latter. On the other hand, the level of the rate of profit is likewise a magnitude held within certain specific limits determined by the value of commodities. It is the ratio of the total surplus-value to the total social capital advanced in production. If this capital=500 (say millions) and the surplus-value=100, then 20% constitutes the absolute limit of the rate of profit. The distribution of the social profit according to this rate among the capitals invested in the various spheres of production creates prices of production which deviate from the values of commodities and which are the real regulating average market-prices. But this deviation abolishes neither the determination of prices by values nor the regular limits of profit. Instead of the value of a commodity being equal to the capital consumed in its production plus the surplus-value contained in it, its price of production is now equal to the capital, c, consumed in its production plus the surplus-value falling to its share as a result of the general rate of profit, for instance 20% on the capital advanced in its production, counting both the consumed and the merely employed capital. But this additional amount of 20% is itself determined by the surplus-value created by the total social capital and its relation to the value of this capital; and for this reason it is 20% and not 10 or 100. The transformation of values into prices of production, then, does not remove the limits on profit, but merely alters its distribution among the various particular capitals which make up the social capital, i.e., it distributes it uniformly among them in the proportion in which they form parts of the value of this total capital. The market-prices rise above and fall below these regulating prices of production, but these fluctuations mutually balance each other. If one examines price lists over a more or less long period of time, and if one disregards those cases in which the actual value of commodities is altered by a change in the productivity of labour, and likewise those cases in which the process of production has been disturbed by natural or social accidents, one will be surprised, in the first place, by the relatively narrow limits of the deviations, and, secondly, by the regularity of their mutual compensation. "
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