> Fred what is your attitude as to whether or not this assumption is
> empirically valid.
> Allin and I have presented evidence that in the US and the UK there is
> a systematic negative correlation between sectoral organic compositions
> of capital and rates of profit. This is directly counter to the key
> assumption above.
There are many issues involved at the same time. I will try to address
them simultaneously and this might be confusing.
I start with the issue of equalization.
If one tries to test empirically Marx's proposition of the tendential
equalization of the interindustry profit rates (in a period of fat and
lean years) by just examining the long run tendencies of interindustry
_average_ rates of profit it is likely to find convergence of
interindustry profit rates around the general rate of profit. This
appears to contradict the tendential equalization of profit rates
argument.
The trouble, however, with these studies is that they do not really test
Marx's idea. In Marx the equalization of profit rates takes place only
for the regulating capitals (see also Botwinick 1993), which in general
differ from the average. An example could be in agriculture where the
regulating capital is the marginal capital which of course differs
substantially from the average.
The operationalization of the concept of regulating capital and the
associated with it profit rate is discussed in (Shaikh: The Stock Market
and the Corporate Sector, 1995) but also in Christodoulopoulos
(dissertation 1996) where it is found that there is equalization of
profit rates for the regulating capitals for several industries
internationally. In a book published recently in Greek (Issues in
Political Economy: The Case of Greece. co-authored by Maniatis, Tsaliki
and Tsoulfidis. It is shown that there is interindustry equalization of
profit rates for the regulating capitals and not necessarily for the
average capitals.
> >In the 18th and 19th centuries, during which Smith and Ricardo and Marx were writing, the fundamental productivity of many industries remained more or less constant over longer periods of time. Therefore, the"long-run" in many industries was a longer period of time. I think this
> >is how Marx (and Smith and Ricardo) conceived of prices of production (or
> >"natural prices") - that they would change only slowly and that actual
> >market prices would fluctuate much more rapidly around these relatively
> >stable "centers of gravity"
> Surely this can not be true. The 18th and early 19th centuries were when
> the industrial revolution and with it the rapid increase in the productivity
> of labour got under way. A large part of Capital I is devoted to just
> this issue.
> >In the 20th century, the pace of productivity change has probably increased
> >in most industries, so that the "long-run" is now a shorter period of time
> >in most industries.
> >
> I am by no means convinced that the long run rate of productivity growth
> in the UK has been faster in the 20th than in the 19th century, but this
> is an empirical matter which is ammenable to test.
I agree that changes in productivity and changes in wages affect prices
of production, however it is essential to see how and to what direction.
Clearly, changes in wages lead to sign (directional) changes in prices
of production _in general_ according to the organic composition of
capital of each industry. As we know from Sraffa, these changes are very
complex and to the extent that I know the literature it cannot be proved
mathematically the direction of the change. So Marx's (also Ricardo's)
claim in vol.iii that changes in wages lead to predictable changes in
prices of production _in the general case_ has not been (or cannot be?!)
proved!
Changes in productivity lead to qualitative changes in prices of
production. We have, in other words, a new center of gravity, as opposed
to the above sign changes. In econometric terms we have a shift in the
trend so to speak.
On further consideration, however, changes in productivity can be
thought of as changes in the values of commodities and that implies that
prices of production will change too. But what is important to consider
is that changes in productivity take place, by and large, on the type of
capital where the expansion or contraction of accumulation takes place
that is say the regulating capital and that leads, at a more concrete
level of analysis, to the following kind of connections:
Regulating values->regulating prices of production -> market prices.
If productivity changes faster or slower nwadays is something that we
cannot tell apriori. It is true that in the post-1973 years there has
been a slowdown in the productivity growth however estimated and that, I
think, lends some additional support to the claim that we are rather
dealing with an empirical question which, however, is not as important
as the question of the change in productivity itself.
Lefteris Tsoulfidis