This is to continue my dialogue with Allin C. concerning the results
he and a coauthor recently obtained, which are consistent with
earlier work by Shaikh and others, to the effect that values diverge
very little from prices of production in fact. I am not denigrating
this work by the way, in pointing out that it doesn't really support
the validity of the LTV, just the conclusion that compositions of
capital do not as a matter of fact diverge significantly across
sectors. Rather this is potentially a happy finding for those, like
me, who are not willing to go the whole route with Roemer's non-value
theoretic restatement of exploitation as a normative concept.
Allin responds:
> This statement seems to imply a strange requirement for a successful
> theory of value: it should not just be true in our world, but it should be
> true in all possible worlds.
No, not at all. The indictment of the LTV is that 1) it is based on
invalid logic (if based on any logic at all; many, for example,
disavow Marx's _C_, VI, Ch. 1 argument as an attempt to establish a
logical ground for the LTV); and 2) labor values, at best, are
superfluous constructions. If prices of production are the question
(about which more later), then one can go directly from production
and market conditions to production prices; there is no need, even in
principle, to go from production and market conditions to values to
prices of production.
No one is arguing that as a matter of fact, values don't closely
approximate prices of production. Of course they might. But it is
well to remember on this score that even prices of production, while
necessarily more fundamental than values (since surface capitalist
reality, the reality to which capitalists and workers respond, is
composed of prices, not values), are themselves a construction. They
don't correspond necessarily with absolute prices out there, thanks
to monopoly power, market failures, unequalized profit rates, etc.etc.
> Besides, the studies I cited show that
> there is very little to choose between labour values and prices of
> production as predictors of market prices: it is not as if p's of p
> were "correct" and labour values only an approximation.
This is basically just a corollary of the results originally reported.
Neither prices nor values are "correct" (see above), but labor values
are *superfluous constructions*, and not logically grounded. Using
labor values is akin to using sunspots to explain macroeconomic
changes. It works, but that doesn't mean it is theoretically
coherent.
> And finally,
> Farjoun and Machover (Laws of Chaos, Verso 1983) have put forward
> the argument that the limited dispersion to the distribution of the
> composition of capital across industries is *not* accidental -- there
> are forces working to limit that dispersion that are as effective
> (if not more so) as those working to limit the dispersion of profit-
> rates.
I happily agree with this. It is the sort of argument I would make.
Once again, it doesn't address what's wrong with the LTV. One need
not advert to the LTV to explain the "forces working to limit that
dispersion" of compositions of capital [in fact, it's not obvious
that the LTV even predicts such forces]. On this score recall
Roemer's point that in a world which admits of at least some degree
of factor substitution in production, it is much more valid to say
that prices determine values, rather than vice-versa.
>Am I tired of the presumption on the part of "sophisticated"
> economists that of course the LTV is naive, quaint, an item
> in the dustbin of history (of economic thought)? Yes.
If Allin means to include me in this broadside, he's probably picked
the wrong target. For one thing, I don't know of anyone who calls me
a "sophisticated" economist (the term isn't on my business card; come
to think of it, I don't have any business cards). And I don't think
that the LTV is "naive, quaint...", etc. I think it's wrong, based
on my reading of Marx and the Marxian literature.
For what it's worth, I think Marx should be taken very seriously
(which is why I spend so much time on the net arguing about what he
wrote!).
> Am I willing to back this up with a posting of specific
> criticisms of Roemer-Elster arguments, plus specific positive
> theoretical arguments for the LTV? Well, maybe. Would anyone
> be interested? Well, would they?
>
Great. Go for it. I will if you will. And the place to start is
Marx's story in Chapter I, Vol. I of Capital.
Gil [[EMAIL PROTECTED]]
