[OPE-L:6972] [OPE-L:464] Re: New evidence on sectoral prices and values

Allin Cottrell (cottrell@ricardo.ecn.wfu.edu)
Mon, 22 Feb 1999 01:23:20 -0500 (EST)

On Sun, 21 Feb 1999, Alan Freeman wrote:

> (a) No-one disputes that labour values tell you something
> about prices.

I think you'll find that Andrew does!

> The argument which Andrew and I are criticising doesn't
> merely say that value is a good guide to price. It says that
> the difference is so small that things like the
> transformation problem don't matter.

What Paul and I have argued is that a "partial transformation"
occurs in actual capitalist economies -- that the vector of
market prices lies "between" those of labour values and prices
of production.

> Allin says that the amount of steel in an object isn't as
> good a predictor as the amount of labour in it. Sure,
> because Pizzas don't have any steel in them.

Of course they do! Think of the ovens, the knives, etc, etc.

> In some sectors, an hour of labour will sell for say $20 and
> in other sectors, for $10. But on the other hand, the
> sectors are just different sizes.

Different sizes in terms of hours of labour embodied,
presumably? In that case when one "corrects" for size there can
be no question of correlation or regression (there's only one
variable, P/V). Although I disagree (for reasons expressed in
another posting), I think this is the most coherent version of
the critique. If accepted, it would lead one to focus on the
dispersion of price-to-value ratios across sectors (which is a
sensible thing to do anyway and is common in the literature).

> This confirms that labour time is a good predictor of price.
> If, for example, we looked at price compared with 'quantity
> of steel' I guess that we would find the price of an
> embodied ton of steel varied a lot more than the price of an
> embodied hour of labour. We should report this fact as it
> stands...

Hello! We do report this fact as it stands (CJE).

> However, it does not confirm that labour time is identical
> to price. A variation of 30% is NOT insignificant and does
> NOT justify ignoring the theoretical problem of
> transformation.

A variation of 30% is not insignificant, no. Whether or not one
is justified is ignoring the transformation problem does not
depend on the size of this variation, however, but on its
source. If the divergence of prices from values had nothing to
do with equalizing profit rates (relative to a situation of P =
V) then one could happily ignore the transformation. But it
doesn't, and so one can't. Much of the variation is random, but
there's a certain amount of "transformation" in there.

Allin Cottrell.