> I think the basis of this distinction comes down to value theory. Is the
> price regulated by the amount of labour-input in the production sector or
> does it "free-float" in the consumption sector? I'm with Doug on this one,
> consumption is just as much a determinate as production. But one thing I
> have been thinking about since the crisis is whether back in
> Marx's/Ricardo's time prices WERE in fact set majorly by production costs
> while in our time they're set increasingly by guesswork and consumer
> sentiments. If this were the case and if most theories of political economy
> rely heavily on notions of clean information and equilibrium this could
> introduce serious distortions... Maybe...
Hey Philip,
Demand _does_ have a role in determining both the value and price-of-production of commodities in Ricardo and Marx. In Marx it enters through the 'socially necessary' part of 'socially necessary labour-time'. Because the cost of production per unit changes with the amount produced: economies of scale etc.
Marshall recognised this re: Ricardo and defended him against other marginalists who claimed that demand had no price-determining role in classical economics.
Marx is pretty explicit about this in Vol 3. At times he even anticipates Marshall's concept of price elasticity. I don't have my copy at the office but can dig out the relevant passages when I get home if you like.
One commentator who emphasises this aspect to Capital is I. I. Rubin; it's in the later chapters of 'Essays on Marx's Theory of Value'.
Cheers, Mike Beggs