Whether there is a vicious circle here or a viscous one depends
upon the relative strengths of the influence that that values effects
and profit equalization effects exert on prices. Suppose that profit
equalization effects explain 100f the variation of prices in
a first round approximation, then their second order effect, through
affecting the choice of technology will be proportional to the square
of this - say 1%, the third order effect 0.1 0.000000e+00tc.
If on the other hand, value effects predominate - ie commodities
sell close to their values, then this will also affect technology
biasing against high organic composition technologies. This in turn
would tend to reduce the significance of the second order price
of production effects.
----------
> From: Ian Hunt <Ian.Hunt@flinders.edu.au>
> To: Multiple recipients of list <ope-l@anthrax.ecst.csuchico.edu>
> Subject: [OPE-L:4942] Re: The High Cost of Prices
> Date: 07 May 1997 01:40
>
> John's point about the 'vicious circle' involved in deriving prices from
> values whenb fixed capital is included is, so far as i understand it, an
> extension of Steedman's point that since technology in use is determined
by
> prices and the profit rate, you cannot say that values determine prices.
> With fixed capital the lifetime of a capital good is paert of the
> technology (just as relative quantities used are for circulating
capital).
> John is correct to say that this aspect of the technology is dependent on
> prices and the rate of profit. Capitalists will tend, though the tendency
> is weaker with the lifetime of capital goods, to choose the lifetime of a
> capital good which gives the greatest return. Similarly, when it comes to
> proprotions of inputs, say more or less labour, capitalist will tend to
> choose less rather than more labour input if that is more profitable.
>