Date: Thu, 7 Mar 96 08:58:29 GMT
From: Adam Rose <adam-AT-pmel.com>
Subject: Re: "Value Pump"



> Adam Rose writes 
> >And finally, it is very hard to actually determine the real organic composition
> >of capital in any particular industry, because prices do not reflect values
> >very directly. 
> At the risk of appearing picky I suppose it depends on what you mean by
> very directly,In a number of quantatative works the likes of Shaikh,
> Petrovic, Ochoa, Cockshott, Cottrell and Micaelson have found that the
> correlation between labour content and price is usually well over 90%.That
> is to say, with the exception of a few industries such as the oil industry
> where rents play a major role, that relative prices are almost entirely
> determined by labour content.

Hmm. How do they even know what Labour went into it a particular product ?
I ask this in all seriousness - our management wanted to sell for "Engineering
costs" only and found it very difficult to even begin to work it out. They
just put their fingers in the air and guessed - and that's in a company of
35 people !

First, people here, particularly software people, do "infrastructure"
work - ie their work is essential to providing the environment for 
eveyone else. Some of the Labour embodied in this work goes into
each product - but exactly how much ?

Second, we buy in tools to enable us to produce things - but does this price
genuinely reflect Labour ? The overall price, even in numerical terms , is
not obvious - some of it is for maintainence, some for the product itself.
"Maintenance" is partly a disguised payment for the thing itself,  
partly a payment for actual maintainence, and partly an insurance
policy.

Also, just look at the way prices in the electronics industry change - the 
initial price is very high, but then the price comes down very rapidly. But
surely the Labour required to produce the product isn't changing, or at
least not that rapidly ?

Adam.




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