[OPE-L:7430] [OPE-L:963] Re: value and price

Gerald Levy (glevy@pratt.edu)
Mon, 10 May 1999 06:45:33 -0400 (EDT)

Ajit writes in [OPE-L:961]:

> So you think at one time in one market different units of the same
> commodity have different prices? And how do you theorize this?

I would say that in one market different units of a *similar* commodity
can have different prices. For instance, two cars could be sold, one with
the name "Ford" on it and one with "Mercury" on it. I used to work at a
Ford plant so this is a real life example that follows. The Mercury that
we built had a price tag about $500 more (in 1978) than the Ford
("Pinto"). Yet, both were the exact same car with the exception of
about $3 worth of chrome, 1 minute of labor-time/car, and the name
"Mercury" on the rear end of the Merc.

This is an example of brand loyalty, created through advertising and
marketing, by oligopolies.

Since this type of market is much more prevalent in our time than in the
18th and 19th centuries, it is quite understandable that it wasn't
theorized by classical political economy and Marx. We don't have the same

Marxists typically, without a whole lot of investigation or interrogation
of empirical evidence, assert that the additional "surplus profits"
received by oligopolies represents a re-distribution of surplus value
among capitalist firms. Thus, the "surplus profits" would really be a
form of rent.

I agree that this is the simplest explanation that seems like it can be
neatly married to the rest of Marx's theory. Yet, I think there are
circumstances where the "surplus profit" received by oligopolies might be
better explained as a redistribution of income from workers to oligopolies
that occurs following production and *in the market*. I.e. it can
represent a type of rent paid *by workers* to individual capitalists
which has the consequence of lowering the real wages of workers.

> You and I stand on opposite poles, Jerry. I'm for clarifying
> things, and you are for muddling things. I thought that we were
> discussing the theory of determining all prices at a given point in
> time. This is not a typically microeconomics problem. Now you
> introduce oligopoly market, which is typically a partial
> equilibrium micro economics problem. As I have said before, for the
> whole system, the rate of profit is embedded in the system.
> Oligopoly or Monopoly in certain markets cannot change that.

Maybe it's just that we want to discuss different topics.

Let's both recall that when this discussion began, Fred and I were
discussing whether there were circumstances *independently of what Marx's
theory of prices of production was* in which input prices might not equal
output prices.

In that context, Fred suggested that in situations of disequilibrium where
supply doesn't equal demand, then input prices would not equal output

This is one of the topics *I* am interested in -- perhaps you are not. I
am also interested in how best to theorize oligopolies -- perhaps this
isn't a major interest of yours. If that is the case, I understand: after
all, we all don't have to have the same interests and focus.

I wanted to pursue Fred's suggestion that we move beyond Marx. Indeed, I
had made that suggestion many times myself. Indeed, that was an essential
aspect of why this list was founded to begin with (i.e. to begin the
process of "extending Marx" by writing an "outline" in which the various
topics that needed further explanation and conceptualization would be
identified and logically ordered by level of abstraction).

In solidarity, Jerry