[OPE] Market socialism [the false assumption of the law of value]

alejandro_agafonow@yahoo.es

Ok Ian!

You say in “The Emergence of the Law of Value in a Dynamic Simple Commodity Economy”:

«A key insight of Marx’s theory of the law of value is that prices refer to amounts of labour time and deviations of prices from values are social error signals that function to redistribute labour. Only in the hypothetical situation of balanced supply and demand in which labour is efficiently distributed are prices proportional to labour values.»(pp. 18)

The question is if market really generalizes methods of production until a point which nobody is able to obtain extraordinary proceeds and, according to Marx: 1) prices oscillations end, 2) supply and demand are not useful anymore to explain anything and 3) the individual values of commodities match their social values.

The last is the most important point, because the state of coincidence between “individual values” & “social values” implies that prices equals labour time content in the long run. But this is allegedly so because labour operates as gravitational centre among which prices rotate.

This is not good. Not even as a hypothesis. If this would be true, why C&C devised a planner that consciously reallocates labour time following supply and demand signals?

Because labour rotates around prices, as I agued here some time ago. The reallocation of labour time doesn’t happen spontaneously. You need planners or entrepreneurs consciously reallocating labour.

Once understood this, we know that deviations of “values from prices” are not social error signals, but chances for reducing opportunity costs. In a rivalrous market this deviations produces “false prices” that let more efficient capitalists or socialists entrepreneurs take advantage of the mistakes committed by competitors. If we use this devise in a socialist economy, citizens are the benefited.

Don Lavoie had a good understanding of the functioning of the market. Unfortunately, he never was able to understand the socialist instrumentation of the market:

«If, on the other hand, production activity proceeds during a rivalrous trial and error process, then we would have trading at false prices, which would, as it does under capitalism, prevent the system from ever attaining general equilibrium. The failure of the capitalist system to ever reach equilibrium is not fatal for its trial an error process of equilibration, since decision makers can orient themselves to one another by using the decentralized guide of money profits or losses […]»(pp. 130)Rivalry and Central Planning. The Socialist Calculation Debate Reconsidered, Cambridge: Cambridge University Press, 1985.

Kind regards,A. Agafonow

----- Mensaje original ----
De: Ian Wright <wrighti@acm.org>
Para: Alejandro Agafonow <alejandro_agafonow@yahoo.es>
Enviado: miércoles, 2 de julio, 2008 1:27:17
Asunto: Re: [OPE] market socialism

> Nevertheless, Ian’s understanding of market mechanism is biased by the
> labour theory of value. This limits his understanding of the usefulness
> of the disequilibria dynamics.

I don't understand your point, perhaps you could expand, especially as I
can (unfortunately) only understand English. I've mentioned before that
Marx's labour theory of value is essentially about disequilibrium dynamics.

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