On Fri, 10 May 1996, Gilbert Skillman wrote:
> I agree [w. Paul C] that consistent and close correlation of values and
> empirically based production prices suggests a _prima facie_
> case for the explanatory significance of labor values.
>
> But I also think something significant is lost when the empirical
> correlation is severed from any (necessary) theoretical underpinning.
> Because then the explanatory status of labor values can be challenged
> by any other "value" measure which can be shown to be as strongly
> correlated with such prices.
>
> Example 1: Take any good which is either part of the wage bundle or
> used in the production of goods which are part of the wage bundle.
> One can then calculate an alternative value measure based on this
> good--e.g., "corn values" or "steel values". If labor values are
> strongly correlated with prices, then so must these alternative
> values, since they reflect the same underlying data.
Might, not must. It turns out that alternative 'value-bases'
such as steel, oil and electricity perform _much_ less well than labour
values in predicting market prices. Paul and I show this in an
article that is forthcoming in the Cambridge Journal.
Allin Cottrell
Department of Economics
Wake Forest University