Re: [OPE] Reply to Paul Cockshott on Ochoa indirect labour methodology

From: Paul Cockshott (
Date: Thu Jul 17 2008 - 06:06:36 EDT

Those are some reasonable questions:
> - There must be fixed labour/output-value ratios which apply to all 
> transacting sectors involved with a given output.

--- the above is actually the hypothesis being tested
> - It is assumed all producers' input-purchase and output-sale 
> prices given are final prices, valued in the same way.
-- I agree that this is a source of error
> - In reality, the official sectoral I/O totals are all not valued and 
> estimated by sector in the same way.
--- as is this
> - At least a quarter of inputs by value are imported, and often 
> revalued in resale.

-- given trade data one could in principle do some compensation for 
this, but
the difference between relative values in different countries does imply 
in any one country with an open economy, import effects will produce a 
of prices from domestic values.

> - Certain operating expenses or revenues of business are excluded or 
> imputed in the I/O table (due to the gross output valuation definition).
-- another souce of error
> - Abstraction is made in the I/O table for a year from variations in 
> production time.
-- this can be compensated for by using capital stock data
> - The iteration procedure aiming to converge on the "true 
> value" assumes empirically that all labour-content estimated for the 
> product-chain is attributable to the labour-content of the output 
> value being estimated.

--- do you mean joint production?
> - The accuracy of I/O tables may not be very great, since many sectors 
> are not subject to a direct annual enterprise survey, and due to 
> response error in poorly designed questionnaires, and figures may 
> be extrapolated, inferred indirectly or imputed.
-- I agree here

However, what is interesting is that despite all these difficulties, the 
actual correlations between sectoral prices
and values remains so strong. It explains well over 90% of the 
variation. If one used any other
input the explanatory power would be much lower.

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