[lbo-talk] revisiting the FROP and the Brenner hypothesis

Mike Beggs mikejbeggs at gmail.com
Sun Apr 12 02:50:05 PDT 2009


On Sun, Apr 12, 2009 at 11:34 AM, Philip Pilkington <pilkingtonphil at gmail.com> wrote:


> What I'm saying is: that baseline products which are produced (i.e. basic
> inputs) probably don't play into the cycle of competition. In fact their
> cost/value doesn't really mean much because they're submitted to the demand
> of those companies that buy them.
>
> Okay, we're in a hall of mirrors here... and I think that economists should
> recognise this problem... its not really about supply and demand (hello
> Marx...)... its about how the "dialectic" between supply and demand play
> into profit rate.
>
> I mean really... I'm shocked that Leftists don't see the gap here...

OK, I'm still not sure I get what you're trying to say here, but I'm sure you'll correct me if I'm wrong.

I am sensing that you take 'value' to mean something like cost-of-production, and that you think this neglects the influence of demand on price. Because of this neglected influence, you think, (Marxian?) economists fail to see that 'baseline products' or 'basic inputs' don't have much influence on the prices for the goods for which they are inputs, because the price of the latter goods has more to do with demand for them.

Even if it were true that a marxian theory of value and price neglects the influence of demand, which it certainly isn't, this has nothing to do with the issue at hand regarding whether a falling profit share in one sector must increase some combination of profit shares in other sectors and real wages. Because this is true no matter what you think determines prices.

A profit share in one sector falls either because of (1) rising wages, (2) rising input prices, or (3) falling output prices. (1) means higher real wages. (2) means a higher profit share elsewhere. (3) means cheaper inputs for whoever buys the outputs, which means either a higher profit share or higher real wages. Ceteris paribus of course.

Mike Beggs scandalum.wordpress.com



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