I have argued that Marx's concept of prices of production assume equal
rates of profit across industries (as a tendency, not as an actual fact in
every period).
Paul asked.
> 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.
>
My main concern at the present time is not the empirical validity of this
assumption, but ratrh to attain greater clarity on Marx's logic in his
theory of prices of production. I agree of course that the empirical
question is an important one. If the empirical evidence is contrary to
Marx's assumption, then Marx's theory should be further developed to
explain this more concrete phenomenon. But I still then the theoretical
question is important for two main reasons:
1. Marx's "faulty logic" in his theory of prices of production is
probably still the most common reason given by economists (and others) for
rejecting Marx's theory. So far as I know, the failure of profit rates to
equalize is seldom if ever given as a reason for rejecting Marx's theory.
If it could be demonstrated that Marx's logic is not faulty, then I think
this could ultimately have an impact on the way Marx is regarded within
the economics profession. I think the theoretical battle within the
economics profession, which is also a battle for the minds and hearts of
students, is important. Not the only important thing to do, nor even the
most important, but at least one important thing to do among many.
2. In my view, the extension of Marx's theory to explain unequal rates of
profit should be based on a further development of Marx's theory of prices
of production, or his theory of the distribution of surplus-value. In
other words, it should be based on Marx's overall logical method, applied
to a more concrete level. I don't think the way to go is to revert back
to the more abstract level of value analysis. But in order to further
develop Marx's theory, based on his logical method, we first need to
understand as thoroughly as possible just what Marx's logical method was.
I realize this is a slow and sometimes tortous road, but I hope it will
ultimately prove to be worthwhile.
So I don't think it is a "waste of time" to try to gain a better
understanding of Marx's logical method in his theory of prices of
production. But I am not asking Paul to do it either. To each his own
concerns. There are many worthwhile things that need to be done.
Comradely,
Fred