At 05:10 PM 4/1/97 -0800, Andrew Kliman wrote:
>Ajit is going around in circles. This was the original question he asked me,
>and which I answered. My answer was yes, if *all* the determinants of the
>output prices of 1996 and 1997 are the same, then the output prices of 1996
>and 1997 must be the same.
>
>But the input prices of 1996 are NECESSARILY given, already existing, at the
>start of 1996, and not determined during 1996. That is because the output
>prices of 1995 were determined during 1995, and, since the output prices of
>1995 ARE the input prices of 1996, the input prices of 1996 were determined in
>1995.
_____________________
If you dance around a question, then I will have to go around the circle.
What else can a man do? Okay, I'm going to try it again. Wouldn't you agree
that in a capitalist economy we find that prices of most of the commodities
remain more or less stable for reasonable amount of time? When prices begin
to fluctuate drastically, it amounts to some kind of crisis. In normal
situation people, i.e. producers and consumers, capitalists and workers, go
about their daily business with a sense of stability in the prices. This
particular empirical fact has led most of the economic theorists to ask the
question: what is it that determins these prices, because they don't seem to
be arbitrary. This is fundamentally a question of a theory of prices. Now,
in your example, do the initial prices of all the previous year you are
quoting remain the same or differ from each other? In either case, you need
to answer *why* they either remain the same or differ. If you have an answer
to the *why* question then you have a theory of prices (good or bad). But if
you don't have an answer to the *why* question, then you don't have a theory
of prices. That's my basic point. Cheers, ajit sinha