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

From: Ian Wright (
Date: Thu Jul 03 2008 - 14:13:14 EDT


You mix up too many things all at once.

> To proclaim the attractor function, you have to believe in the
> feasibility of natural or production prices. 

What do you mean by "feasibility" here? It is important for me to know
in order to respond.

> The crucial point is that this “attractor function” is fatally damaged
> when we comprehend that “deviations of prices from values” ARE NOT
> “social error signals”.

Under the assumptions of my model -- which is not a model of capitalism
and it explicitly assumes a fixed objective cost structure -- prices are
"error signals" in a very precise sense: the formalization of the
dynamics in terms of a system of differential equations can be
interpreted as a negative feedback control system in which labour-values
are "reference signals".

One could interpret the switching of agents between branches of
production as motivated by their subjective understanding of opportunity
costs as indicated by the current price structure. Basically an agent
will switch if they think they will do better by producing something

Why do I think it is important to make these simplifying assumptions?
The simple answer is that empirical phenomena, such as market prices,
are multiply determined. Therefore we need to abstract in order to
analytically isolate the separate mechanisms that determine the phenomena.

For example, consider a bird flying through the air. Does this empirical
fact negate the law of gravity?

No, because the law of gravity does not say "things will fall to earth".
It says "things will fall to earth if the law of gravity is the only
mechanism that is operating".

In fact the law of gravity explains why birds need wings to fly.

Think of the "law of value" like that. It does not claim that "prices
will be proportional to labour values".

So in one sense you are right -- we need to consider much more than the
"law of value" to explain the trajectory of market prices -- but you are
also very wrong, since we will never be able to explain the trajectory
of market prices without it.

As Marx says, "If there was no difference between essence and
appearance, all science would be superfluous". Think of Newton's laws of
motion -- they are not empirical facts about appearances. In fact, they
are deep and important precisely because they are so counter-intuitive
and contradict the senses.

> A comprehension of the dynamics of real markets would let you recognize
> that these deviations are the norm indeed. This is the case because
> costs (labour values) don’t constitute a fixed variable like your
> “transformation trick” suggests.

Why do you think that any economist, Marxist or otherwise, would claim
that in reality the cost structure of an economy is *fixed*?

Marx was very much aware that deviations are the norm. Quotes can be
marshaled if you require them.

> Costs constitute a feasible frontier constantly broken by the
> entrepreneurial action of managers acting in a catallactic market and by
> the change of preferences.

Austrians love their managers and entrepreneurs! So much so they want to
justify giving them lots of money!

But in general, *workers* of all kinds break cost structures. This is
one reason why Marx distinguished between variable capital (which does
not simply transfer its cost to the product) and constant capital (which

> If entrepreneurial action is missing in C&C’s model, what disturbs the
> feasible frontier of costs is the changes of preferences, due to the
> freedom of choosing consumers have. It is more difficult to understand
> it, but the question is that if preferences change, the feasible
> combinations of actual factors of production is disturbed and the
> feasible frontier of costs too.

Why do you think that any economist, Marxist or otherwise, would claim
that an alteration in consumer demand cannot result in a change of

You think you are arguing against the labour theory of value. But you're

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