Andrew
------
I do not have a "theory of value." I don't think Marx had one either. I
do have an interpretation of Marx's value theory.
Paul
----
I assume that you dont intend to contradict yourself within the space of
two sentences, so can you explain how you consider a 'value theory' and a
'theory of value' differ, given that one would normally use these terms
pretty interchangeably - Shannon's information theory would be assumed to
be the same as his theory of information, for example.
I will chase down the book that you have mentioned.
Andrew, responding to my citation of passages from Wages Prices and
Profit where Marx clearly states that values are very good predictors of
average market prices, objects that 'this is a popular lecture with a
specfic intent, to smash the iron law of wages.'
Are we to suppose that Marx had both an esoteric theory of value, that is
revealed only to initiates after prolonged study of Capital, and a quite
different exoteric theory for the working classes. Or can we assume as I
do, that he was more honest, had only one theory, and that what he told
working class audiences, he really believed?
It is true that in Wages Price and Profit, Marx treats value and Smith's
phrase 'Natural Price' as equivalent, whereas in the Theories of Surplus
value and elsewhere he is critical of the way Smith neglects the value
transmited by consumed constant capital in the formation of price. But
this indicates only that Smith had an inadequate notion of the
determination of natural price, not that his operational definition of it
as:'as it were, the central price, to which the prices of all commodities
are continually gravitating', is wrong. For it is clearly this that he
identifies with value in Wages Prices and Profit. Whether Smiths
understanding of the components of natural price was correct, is an
orthogonal question.
Andrew
------
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).
Paul
----
I am not sure that it is fruitful to ask what his psychological
motivationwas, but what the text says is almost the inverse of that. It
says in effect 'because prices closely correspond to values there can be
no profit obtained from selling things above their values'. Whereas
Andrew interprets this as 'let us assume that commodity prices closely
appoximate to values, since that will allow us to show what we want to
demonstrate, that profits must arise from the exploitation of labour'.
But if he believed the premise of the argument to be false, then Marx's
logic would be worthless and deceitful.
Andrew
------
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.
Paul
----
Marx specifically answers this objection:
'It suffices to say that *if* supply and demand equilibrate each other,
the market prices of commodities will correspond with their natural
prices, that is to say, with their values, as determined by the
respective quantities of labour required for their production. But supply
and demand *must* constantly tend to equilibrate each other, although
they do so only by compensating one fluctuation by another, a rise by a
fall and vice versa.'
In other words, there are oscillations but they are damped ones.
He says that if you take a time average of market prices, then the result
tends closer and closer to values as you lengthen the period over which
you take the average. It is in this sense that value is a good predictor
of price. This is what being a predictor means in a stochastic system.
For example, one of the earliest experimentally derived scientific laws
islaw of Pythagoras according to which the frequency of an oscillator
like an organ pipe is inversely proportional to its length. One of the
expriments that we have perfomed on the SPACE machine, a cellular
automatacomputer that I designed, has been to verify Pythagoras' law for
nanovolumes of gas simulated at the molecular level. We determine the
characteristic frequencies of tiny 'organ pipes' excited by white noise.
In a nano-system like this, the stochastic property of the gas - with its
Brownian shot noise is very evident. The underlying Pythagorian law only
becomes evident on time averages.
There remains of course the question of how large the noise is relative
to the signal. I have been pleasantly surprised by how low the
coefficeint of variation of prices versus values turns out to be. I dont
have at hand the figures that we presented to the Bergamo Conference, but
I will look them out tomorrow and post them.
Duncan
------
I don't take the growing empirical evidence that market prices of
commodities are highly correlated with embodied labor coefficients both
in terms of level and change as addressing the labor theory of value
itself, but either a) the profit-rate equalizing theory of competition or
b) the actual structure of production (in terms of input-output tables).
That is, either labor is a dominant cost, so that variations in prices
are closely connected to variations in labor inputs, or profit rates are
not rapidly equalized according to this evidence.
Paul
----
These are certainly interesting hypotheses for why the law of value
exists in capitalist society. But it is a mark of the usevalue of
empirical research that it causes us to ask such questions. These are new
questions outside the century old debate on the transformation problem.