Andrew here, replying to Paul C's post (ope-l 1031). I had argued that
nothing in Marx's theory implies that values are good predictors of
either production prices or market prices. Paul has come back with a quote
from Value, Price, and Profit.
My response: first of all, this is a popular lecture with a specific intent,
to smash the iron law of wages. So Marx equates value and "natural price,"
which he of course distinguished in _Capital_. (I hope this isn't overly
sophisticated.) Second, it made sense to do so in that specific context,
because he was just trying to show that profit doesn't come from selling
continually above the average price (or the value). Note that this is
extremely similar to the end of the now-much-debated Ch. 5 of Vol. I. Marx
assumes sale at value simply in order to show how profit can arise with
exchange of equivalents--either equal values OR exchange at average prices,
which he says are not the same as values.
Thus, third, there is not theoretical reason for values to be good predictors
of market prices because market prices, in Marx's theory, fluctuate around
the production prices, given competition, etc., etc.
Fourth, and most importantly, even production prices should not be good
predictors, necessarily, of market prices. If you'll notice your own quote,
Marx says, as he does elsewhere, only that market prices over a long
period fluctuate around the natural prices. Even if I were to concede that
he thought they fluctuate around values as well (which I don't), that does
NOT imply that the correlations between market prices and production
prices, or between market prices and values, should be small. If that is
what your work tries to show, which I think is the case, though I couldn't
quite tell from your C&C article of last year, then I have to say that it
is interesting work, but it has no significance for the validity, relevance,
etc. of Marx's value *theory*. If the production price is 7, then the
series of market prices 10, 4, 10, 4, 10, 4 --a cobweb cycle--will give
an average price equal to the production price, even though the
coefficient of variation is rather large (43%, if I'm not mistaken). On
the other hand , the series 8, 8, 8, 8, 8, 8 is always much closer to the
production price, though the average is further away, and the deviations
around the production price aren't there. The same is true if the
production prices over time are 4, 5, 6, 7, ... and the market prices
are 5, 6, 7, 8, .... You'll have a very good predictor, but the wrong
average and no fluctuations around the average. Similarly for values
and production prices.
Andrew Kliman