Jerry said:
Fred argues that whereas Marx held that there can be changes in
prices of production due only to changes in the productivity of
labor and/or the real wage, Andrew and Ted have argued - in
effect- that there is a third cause: "the ongoing process of
equalization of profit rates from period to period." I don't
really understand Fred's reasoning here. Isn't the process of
the equalization of profit rates an ongoing process in Marx's
theory? ... Indeed, isn't this idea of the equalization of
profit rates as an ongoing process embodied in the concept of
price of production serving as "center or gravity" prices?
Doesn't one have to show - if one is asserting a long-run
tendency - not only how a tendency is brought about but also
how it continues to act and manifect itself? Furthermore,
doesn't a long-run tendency require a short-run adjustment
mechanism.
MY RESPONSE
I certainly agree that "the process of the equalization of profit rates an
ongoing process in Marx's theory" and that "idea of the equalization of
profit rates as an ongoing process [is] embodied in the concept of price of
production serving as 'center or gravity' prices". But this process of
the equalization of profit rates has to do with the fluctuation of markey
prices around independently determined prices of production. The process of
equalization of profit rates, or the fluctuation of market prices around
prices of production, has nothing by itself to do with the determination of
the prices of production themselves. Marx's prices of production change
if and only if productivity or the real wage changes.
By contrast, in Andrew and Ted's numerical examples in their published
works, productivity and the real wage are assumed to remain constant,
but their prices of production continue to change from period to period,
because their input prices are not equal to their output prices and hence
the equalization of profit rates in subsequent periods will require further
changes in their "prices of production", even though productivity and the
real wage remain constant. There is nothing like this in any of the texts in
which Marx discussed his concept of prices of production. Hence, I
conclude that Andrew and Ted's interpretation of Marx's concept of price
of production is erroneous.
Jerry, does this help to clarify my point? I would be happy to discuss
further.
Comradely,
Fred