Lakshmi Rhone <[email protected]> wrote: >.. a pure production model proposed by PIero Sraffa. It seems quite powerful, >so I am thinking here we have equilibrium prices determined by the objective >conditions of production, once distribution is settled. OK let's say we start >there. But then I am thinking that the objective conditions of production are >going to change, and the rates of change will differ in sectors due to their >respective rates of labor productivity growth (or rates at which productivity >is growing in the sectors that supply their respective means of production). >So then if I am to understand how exchange ratios are changing I can't but >refer to labor productivity and thus abstract labor time, no? So how does >value become redundant? <
Though the Sraffa model is an interesting story about the determination of prices, I don't think it's realistic. (It _is_ more realistic than Walrasian fables, but that's another story.) Profit rates tend to equalize between sectors, but they don't attain equality, not only because of barriers to mobility of capital but because capitalism is an inherently dynamic system, regularly shaking up production conditions and causing profit rates to deviate between sectors. It's a mistake to assume that issues of distribution can be "settled": these days, capitalists are working pretty hard to raise the average rate of profit by lowering wages relative to labor productivity. Further, the Sraffa model ignores important aspects of production, i.e., class struggle, so that we can't take the total product that's distributed among classes and individuals for granted. Sraffians assume that technical coefficients are given. But the amount of labor actually done does not have a fixed relationship with the amount of labor-power hired or the number of workers that need to be reproduced between periods. Nor can we see the amount of output as having a fixed relationship with the amount of labor done. In both cases, the internal organization of workplaces and the labor process play crucial roles, as does workers' resistance to their employers' efforts to extract labor. In contrast, Marx's value theory doesn't make these kinds of assumptions. In my humble opinion, it's not a theory of price determination at all, but a theory of social relations within capitalism. It zeroes in on the issues that Sraffa elides. Marx didn't think that profit rates actually equalized. Rather, he wanted to highlight the deviation between prices and values that arises because of the tendency toward equalization (given assumptions of a positive rate of surplus value and equalized rates of surplus-value). That deviation was not a mathematical problem: rather, it's a fact of life of real-world capitalism and plays an important role in capitalism, as part of the "illusions created by competition" (volume III's version of commodity fetishism). The fact that prices and values deviate in the normal operations of capitalism helps hide the macro-level exploitation of labor by capital from the participants inside the system. Looked at from the inside, we see that relative prices are not proportional to relative amounts of labor done, so how can we think that labor is the souce of value? This helps stabilize the system, by hiding exploitation. Looked at from a social perspective (Marx's), on the other hand, we can see there's a link, since total value = total price (net of raw materials) and total surplus-value = total property income, when both sides of the two equations are measured in the same units. Marx's analysis made the role of exploitation clear. That said, if we want to predict changes in relative prices over time, I'd use relative changes in labor productivity, so that abstract labor plays crucial a role. It's not a perfect predictor, but better than any other simple formula. BTW, this is my summary of a large literature of Marxist political economists' critiques of the Sraffa system. Also: > There is another thing that is confusing me. Varoufakis gives me these > equations about an economy made up of a grain sector and a cattle sector. He > sets the wage at one and the grain sector [price?] at one and then gets > cattle prices that are 1.3x higher than grain and determines a rate of profit > too. This is amazing. Then he doubles labor productivity in the cattle > sector and tderives new relative prices and a new profit rate, which is > higher. But how do I know that I can stay solvent as long as it takes the > economy to get to the higher profit rate. There could be an outbreak of > competition among firms in the cattle sector and prices could fall relative > to costs especially for the non-innovative firms, so the profit rate could > fall for most of the firms for some time before we arrive at a new > equilibrium profit rate, no? Is this called traverse analysis? Why is the new > equilibrium profit rate more important than the experienced profit rates in > the traverse especially if we'll never get to that equilibrium profit rate > given that the objective conditions determining it will have changed before > we get there? There seems to be something oddly Platonic about equilibrium > profit rates, no? < Sraffa's system is not dynamic at all as far as I can tell. It's about an abstract equilibrium (and extremely Platonic!), an equilibrium which looks quite unstable (a "knife-edge"). The idea of moving between points on a wage/profit frontier or between points on different wage/profit frontiers (the "traverse") is not part of standard Sraffian work. The Sraffian model is quite good at critiquing the neoclassical aggregate production function and such ideas that the aggregate marginal product of capital determines the profit rate. (The neoclassical fable suffers from a serious aggregation problem, which has become obvious to serious economists, including some Walrasians.) However, the Sraffian story really does not present much of an alternative to the neoclassical production function. That's one reason why the Sraffa vs. the neoclassicals "capital controversy" has almost completely faded from economists' memory. (More important has been the rise of neoliberal IMF-style economics, however.) -- Jim Devine / "Segui il tuo corso, e lascia dir le genti." (Go your own way and let people talk.) -- Karl, paraphrasing Dante. _______________________________________________ pen-l mailing list [email protected] https://lists.csuchico.edu/mailman/listinfo/pen-l
