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

wpc@dcs.gla.ac.uk

 Jurrian

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(2) the Ochoa/Shaikh methodology (also used by Kliman) for obtaining the
"labor-content" of output, itself still relies on an assumed
relationship between price aggregates and a quantity of labour-hours
worked, i.e. using this methodology, we cannot obtain the magnitudes of
the (direct and indirect) labor-content without reference to price data,
or independently from price data.

----------------

Greg, Allin and I tried to partially compensate for this in our paper in
Capital and Class

a decade or so ago by using sources from outside the i/o table to
compute the actual hours

expended. We used the New Earnings Survey to obtain the hourly wage
rates in the sectors

and divided the wage bills in the i/o tables by these to obtain actual
input hours.

Paul Cockshott

Dept of Computing Science

University of Glasgow

+44 141 330 1629

www.dcs.gla.ac.uk/~wpc/reports/

________________________________

From: ope-bounces@lists.csuchico.edu
[mailto:ope-bounces@lists.csuchico.edu] On Behalf Of Jurriaan Bendien
Sent: 12 July 2008 13:04
To: ope@lists.csuchico.edu
Subject: [OPE] Market socialism [the false assumption of the law of
value]

Ian Wright wrote:

"The high correlation between aggregated market prices and labor-values
(and not other real-cost measures, such as oil-value, corn-value etc.)
is an established empirical fact". 

I think the reference to "established empirical fact" is too strong. At
most it is an empirical corroboration, since the same data can be
interpreted in various different ways using different statistical
assumptions (see e.g. Kliman 2002 for example, who finds that the strong
price-value correlation discovered by Ochoa/Shaikh/Cockshott disappears
if variations in the size of industries - which he defines according to
their aggregate input costs - are controlled for; I can send you a pdf
of the article). 

And, among other things, 

(1) the input-output table is itself a stylized construct, founded on
numerous price and computational assumptions, as well as classification
criteria (which often differ from industry to industry) 

(2) the Ochoa/Shaikh methodology (also used by Kliman) for obtaining the
"labor-content" of output, itself still relies on an assumed
relationship between price aggregates and a quantity of labour-hours
worked, i.e. using this methodology, we cannot obtain the magnitudes of
the (direct and indirect) labor-content without reference to price data,
or independently from price data.

An alternative, simpler methodology (using fewer assumptions) might be
to establish average unit-prices for particular types of product cited
in the CPI regimen, estimate the average labour-time necessary to make
them from business operations, and trace out the correlations between
the prices of different products, and comparative costs in labour time,
across a long time interval. 

Using a somewhat similar idea, W.M. Cox, WM and R. Alm ("Myths of rich
and poor: why we're better off than we think". New York: Basic Books,
1999, p. 43) estimate for instance how long an average American had to
work (in selected years 1920-1999) in order to earn the money to buy
half a gallon of milk, a three pound chicken, 100 kilowatt hours of
electricity, and a 3 minute coast-to-coast telephone call. 

Using those kinds of sources and others, it may be possible to derive
the three relationships essential to the argument: the relationship
between changing product prices across time; the relationship between
changing product prices and average labour-time; and the relationship
between the changing quantities of average labour-time used to make
different products.

In Marx's theory, labour-values constrain production prices (set upper
and lower limits for them) and production prices regulate market prices
(set upper and lower limits, and determine the direction of longer-term
market price movements). However the problem there is, that no
distinction is drawn between unfinished, semi-finished and finished
goods, and between the factory-gate price, and the final consumer price.
Consequently different production prices and product prices can be
computed using different assumptions; presumably the fully-formed
production price (the economic production price in an integrated market)
regulates the final product price. The way these problems are overcome
in the input-output table is by making some standard accounting
conventions (about producer's prices, and the mark-up in wholesale and
retail) but one ought to be aware that they are accounting conventions.

Jurriaan 

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