[OPE-L:7424] [OPE-L:956] Re: Re: value and price and heat

Paul Cockshott (clyder@gn.apc.org)
Fri, 7 May 1999 10:58:51 +0100

-----Original Message-----
From: Ajit Sinha <sinha@cdedse.ernet.in>
To: ope-l@galaxy.csuchico.edu <ope-l@galaxy.csuchico.edu>
Date: Friday, May 07, 1999 7:29 AM
Subject: [OPE-L:955] Re: Re: value and price

>Jerry continues...
>> Re Ajit's [OPE-L:952]:
>> > When you say "input prices", what
>> > are they? Aren't you defining your "input price" at a point in
>> > time--that is the point of time when inputs were bought.
>> Jerry:
>> Why must all of the inputs be purchased at a single moment in
>> time? Why
>> can't the purchasing of inputs, so long as it occurs before the
>> start of a
>> production period, be staggered in time?
>Who said that all the inputs must be bought at the same time etc.?
>It is you who said that there was something called input prices and
>output prices and they differed from each other due to lapse of
>time between the two. Now, you are saing that there is lapse of
>time for "input prices" itself, so you don't have *an* input price
>for a commodity but several. This should create serious problem for
>your own formulation and bring to you the problem with your
>understanding of the concept of prices. As far as my position is
>concerned, it creates absolutely no problem. Price is defined only
>for a point in time. Whether the commodity is bought to be used as
>input or whatever is not even the concern for the definition of
>price. In a well defined "market" one price prevails for a
>commodity at a given point of time. And that's all there is to this
>problem. Once we have defined what prices are, then we proceed to
>how these prices are determined.

I have to agree with Ajit here. If you are serious about dynamics
jerry you have to accept that prices are defined at any point
in time and that they may also have derivatives with respect
to time at any point in time.

Conceptually one should distinguish between the price field
and its time derivative. The Sraffian model defines a function
for calculating an equilibrium price field at any instant as a
function of technology and the real wage under the assumption
that in equilibrium the rate of profit equalises.
In the Sraffian view, as technology or the real wage change,
the equilibrium price field changes too. The tracking of this
equilibrium price field by the market price field is a separate

I have objections to the concept of equilibrium in the Sraffian
model, since I think that equilibrium in a disorganised system
can not have the low level of entropy implied by a single rate
of profit. The assumption of a single rate of profit is equivalent
to a zero temperature model - in the sense of zero first derivatives
of prices. To show that the system could have such an
equilibrium one would have to demontrate a mechanism by
which heat ( the square of the rate of change of price ) could
be removed from the system. This could be done by introducing
a damped adjustment function somewhere in the system,
relating either to price change or capital movement.
This could be considered as analogous to black body
radiation towards a thermostat at absolute zero.

If this is done then, one might, theoretically be able to
justify the assumption of a single rate of profit.
However one also has to take into account the fact
that there are external heat sources - shocks as economist
refer to them - whether due to sunspots, technical
change population growth. If we assume that these
are non-zero, this amounts to assuming that our
thermostat is not at zero. Under these conditions
equilibrium consists not of a zero entropy level
but a zero rate of change of entropy. A zero
rate of change of entropy corresponds to a stable
distribution of rate of profit rather than an equal
rate of profit.

However, this does not invalidate the usefulness of
the Sraffian model for determining the mean rate
of profit as a function of technology and real wages.
It should be understood, of course, that a mean rate of profit
exists even under non-zero entropy.