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

wpc@dcs.gla.ac.uk

I think that you are mistaking the viewpoint of David and I in this matter.
We are opponents of the transformation theory, taking a simpler vol 1 of Capital
theory of price : that prices will be largely determined by labour content
and that transformational effects will be relatively small.

This theory, like any scientific theory, makes testable predictions. 
David in particular has published very comprehensive econometric tests validating the theory.

I want to ask you Alejandro,  are you advancing a scientifically testable
theory of price?

If so what predictions does your theory it make that are not made by the labour theory
of value, and what observations could be performed to validate or falsify
your theory?

Paul Cockshott
Dept of Computing Science
University of Glasgow
+44 141 330 1629
www.dcs.gla.ac.uk/~wpc/reports/

-----Original Message-----
From: ope-bounces@lists.csuchico.edu on behalf of Alejandro Agafonow
Sent: Thu 7/3/2008 2:55 PM
To: Outline on Political Economy mailing list
Subject: Re: [OPE] Market socialism [the false assumption of the law of value]

ZACHARIAH: «What you originally said was "one has to face the fact that market economies are never able to reach "natural prices"", so I asked who has claimed that market economies do reach natural prices? Nobody.»

When WRIGHT speaks of "social error signals" referring to "deviations of prices from values", he is not but speaking of an outcome that in one way or another is going to or should be achieved. COTTRELL & COCKSHOTT make something similar when approve the alleged empirical studies proving the proportionality of prices and labour values y capitalists economies.

ZACHARIAH: «What is claimed is that labour values of commodities are attractors to market prices. It says nothing about actually reaching "natural prices", what ever natural prices are.»

To proclaim the attractor function, you have to believe in the feasibility of natural or production prices. You don't have to mention it to mean it. I suppose that you are not going to deny that, what Marx priced as a fruitful research is this imaginary equilibrium where 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 crucial point is that this "attractor function" is fatally damaged when we comprehend that "deviations of prices from values" ARE NOT "social error signals".

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.

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

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.

ZACHARIAH: «Think of a 2D graph, with time on the x-axis and magnitude on the y-axis. Suppose we take a single commodity-type and plot a price proportional to its labour-value over time. It is a single curve, that is varies fairly slowly. If we look at a short timespan the curve is just a horizontal line.»

To obtain this result you have to cover the fact that some entrepreneurs are actually obtaining extraordinary proceeds. You force reality to adopt Marx's assumption that market really generalizes methods of production until a point which nobody is able to obtain extraordinary proceeds.

Unless you arbitrary select a single commodity in a stage of the production cycle when have entered too much competitors in this market, your are not going to obtain this "single curve". This is not but a temporary and strange situation.

Kind regards,
A. Agafonow

----- Mensaje original ----
De: Dave Zachariah <davez@kth.se>
Para: Outline on Political Economy mailing list <ope@lists.csuchico.edu>
Enviado: jueves, 3 de julio, 2008 13:39:58
Asunto: Re: [OPE] Market socialism [the false assumption of the law of value]

Alejandro Agafonow wrote:
>
> ZACHARIAH: «But Alejandro, a stochastic labour theory of value never 
> makes the claim that market economies reach some set of "natural 
> prices". You can't find that in Ian's paper either. Could you please 
> point to a quote where such a claim is made, implicitly or explicitly?»
>
>  
>
> WRIGHT wrote following Marx that "[.] deviations of prices from values 
> are social error signals that function to redistribute labour." (pp. 
> 18) This is not but the wrong thesis of labour values spinning prices. 
> Wright's paper is based on this assumption!
>
>  
>

Perhaps we should slow down a bit. It feels as if I'm missing some 
information from your posts. You give me a quote by Ian Wright who 
suggests a mechanism by which markets can reallocate social labour.

But this is not what I asked for. What you originally said was "one has 
to face the fact that market economies are never able to reach "natural 
prices"", so I asked who has claimed that market economies do reach 
natural prices? Nobody. What is claimed is that labour values of 
commodities are attractors to market prices. It says nothing about 
actually reaching "natural prices", what ever natural prices are.

>
> Voila! You have prices matching labour values. You have your so worthy 
> natural or production prices.
>

Nobody has mentioned "natural or production prices".

>  
>
> My single price is not but an analytical simplification that doesn't 
> make any harm to the right understanding of real markets.
>

It does harm to the very concept of "labour values spinning around 
prices", turning it into nonsense. Your following analogy about planet, 
suns and satellites seems so forced that we should break it down into 
something simpler:

Think of a 2D graph, with time on the x-axis and magnitude on the 
y-axis. Suppose we take a single commodity-type and plot a price 
proportional to its labour-value over time. It is a single curve, that 
is varies fairly slowly. If we look at a short timespan the curve is 
just a horizontal line.

Now, we face the problem of plotting price. In a real capitalist 
economy, at any point in time on the x-axis there is a large number of 
different prices. There is no consistent curve over time. Ok, so let's 
try to follow each seller (assuming it has a single individual price at 
any moment in time) of the commodity-type, this results in large number 
of discontinuous curves varying all over our 2D graph. There is no 
meaningful way to say here that labour-value oscillates around market 
price.

//Dave Z
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