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

alejandro_agafonow@yahoo.es

1)ZACHARIAH: «No, we are rejecting the very premise of the so-called "transformation problem": that labour values must be transformed into prices of production (or "natural prices"). This is not required in the simpler "vol. 1" theory of labour value. (Btw, it seems to me that your notion of 'transformation theory' is a mistranslation, hence the confusion.).»

That Vol. 1 doesn’t require the transformation doesn’t mean that it doesn’t imply it. Marx’s Capital was incomplete until the publication of the Vol. 3. All the critics waited for this last volume where Marx supposed to demonstrate the statements made in Vol. 1 and 2.

2)ZACHARIAH: «But if you try to estimate labour value of industry outputs and compare with their prices you will indeed find a strong correlation between both and there is an explanation for this which supports a stochastic labour theory of value.»

No Zachariah, you don’t find a strong correlation between labour values and their prices. You find this correlation between labour values and an “artificial variable”, an average monetary profit. If you really compare labour values with real monetary single profits without averaging, this correlation is not so strong. This is part of the methodological tricks I am against. Does this offer an answer to your example of the 2D graph?

3)ZACHARIAH: «Ok, so the trajectory of market prices is determined by "entrepreneurship action and changes of preferences". Now how would you construct predictions that are testable on the basis of this claim? So far you are not able to explain any trajectory of prices even remotely as accurate as in the empirical literature on the labour theory of value.»

You are confusing explanation with prediction. Some times explanations let us make predictions, other times don’t. This depends on the nature of the phenomenon. As Oskar Morgenstern emphasized, how can we demonstrate the stability of market economies if we can not even demonstrate a much more simple system, that of the moon’s orbit around earth.

No one is able to predict the trajectory of prices because entrepreneurship action and changes of preferences introduce non tractable uncertainty in the system.

Kind regards,A. Agafonow

----- Mensaje original ----
De: Dave Zachariah <davez@kth.se>
Para: Outline on Political Economy mailing list <ope@lists.csuchico.edu>
Enviado: sábado, 5 de julio, 2008 12:44:55
Asunto: Re: [OPE] Market socialism [the false assumption of the law of value]

on 2008-07-05 00:15 Alejandro Agafonow wrote:
>
> Have you put your critique to the transformation theory in any paper? 
> What I have read so far only expresses support.
>
>  
>
> What do you mean by the transformation theory as taking a simpler vol. 
> 1 of Capital?
>
>  
>
> What is the transformation theory but prices being determined by 
> labour content and that transformational effects are relatively small?
>

No, we are rejecting the very premise of the so-called "transformation 
problem": that labour values must be transformed into prices of 
production (or "natural prices"). This is not required in the simpler 
"vol. 1" theory of labour value. (Btw, it seems to me that your notion 
of 'transformation theory' is a mistranslation, hence the confusion.)

Paul C asks whether you are advancing a scientifically testable theory 
of price, to which you reply:
>
>                              
>
> Our predictions are the opposed of those predicted by transformation 
> theory, that is, that prices are not determined by labour content and 
> that transformational effects are large.
>
>
>

This is a very odd answer indeed. What is this theory about, value? 
Certainly not. You have given a "theory" about the falsehood of the LTV, 
it is just a negative rejection of another theory, nothing else. Anyway, 
on some basis, which is not clear, you make a testable prediction: "that 
transformational effects are large". This claim is later repeated:

> You, or the transformationists, inevitably have to make the assumption 
> of the fixation of the cost structure. If you don’t make this 
> assumption you would realize that transformational effects are 
> relatively large and then prices can never be proportionate to labour 
> values.

The latter is a logical assertion, not based on empirical evidence. But 
if you try to estimate labour value of industry outputs and compare with 
their prices you will indeed find a strong correlation between both and 
there is an explanation for this which supports a stochastic labour 
theory of value.

Moreover, nobody has assumed that the cost structure is fixed. Please 
demonstrate this.

In the end of your post there are some hints that you are indeed 
advancing a theory of price:

> We think that the most important thing to explain the trajectory of 
> market prices, are factors that introduces non-tractable uncertainty, 
> that is, entrepreneurship action and changes of preferences. With this 
> factors being determinant, we are able to explain the trajectory of 
> prices. What we can not discover in advance in the direction of this 
> trajectory.
>
>  
>

Ok, so the trajectory of market prices is determined by 
"entrepreneurship action and changes of preferences". Now how would you 
construct predictions that are testable on the basis of this claim? So 
far you are not able to explain any trajectory of prices even remotely 
as accurate as in the empirical literature on the labour theory of value.

>  
>
> This point relates the former point by IAN and you are right 
> ZACHARIAH, but my worry is that the transformationists say that prices 
> reach indeed proportionality.
>

Your worry is unwarranted, nobody who subscribes to a stochastic LTV 
says that prices are proportional to labour values.

Btw, you missed to engage in my example of the 2D graph which 
demonstrated that the notion of "labour value gravitating around market 
price" is nonsensical.

//Dave Z
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