Of course we realise that actual prices will not exactly correspond to prices of production, the issue is how wide the dispersion is. The whole tenor of the debate in the past was that prices of production were closer to real prices than labour values are. The point that the empirical work brings out is that there is surprisingly little difference between them. In the UK the correlation of prices of production to market prices is marginally better than that for labour values but the difference is not big enough to be statistically significant. More importantly the key assumption of prices of production theory - that the rate of profit on capitals of differnent compostitions will be the same is invalid. There is a systematic tendency for capitals of high organic composition to earn lower rates of profit.
________________________________________ From: [email protected] [[email protected]] On Behalf Of Shane Mage [[email protected]] Sent: Saturday, March 12, 2011 12:58 AM To: Progressive Economics Subject: Re: [Pen-l] Marginalism wrong or not even wrong On Mar 11, 2011, at 5:26 PM, Joseph Green wrote: Paul Cockshott wrote: I think that the theory of prices of production, like the labour theory of value has to be put to the test. The test indicates that both are about equally good at predicting actual monetary value added. "Price of Production" Is nothing but what Marshall called "Long Run Average Cost" and it is entirely dependent on the assumption of perfect competition. Marx, like Marshall, makes that assumption with the clear realization that it does *not* apply to price-formation in the "Real World," where monopoly effects and barriers to entry dominate. It is simply an *abstraction* from the actual market mechanisms, justified by the fact that the dynamics of capitalism as a system are determined by profits and expected profitability, not by market prices. To query whether "prices of production" (let alone "labor-time values") can be used to "explain" market prices is a gross misunderstanding of Marx (and even of Marshall!). Shane Mage "All things are an equal exchange for fire and fire for all things, as goods are for gold and gold for goods." Herakleitos of Ephesos, fr, 90 The University of Glasgow, charity number SC004401 _______________________________________________ pen-l mailing list [email protected] https://lists.csuchico.edu/mailman/listinfo/pen-l
