Total mass of prices = total mass of values?

[Comrade #138672]

Supposedly, the total mass of prices is always equal to the total mass of values, even though price is not value, but is derived from it. But is this an assumption / axiom, or something that can be derived from something else? If the latter is the case, then what is it?

If this is true, then a capitalist that prices a commodity above its value, must necessarily result in another capitalist pricing a commodity below its value. But why would this be? I can see that if both capitalists would sell their commodities above their values, that not all commodities can be sold. So from that you can conclude that there will be tendency to sell commodities at their values, which causes the total mass of prices to be equal to the total mass of values on average. But prices fluctuate around their values all the time, so generally you would expect that the total mass of prices also fluctuates around the total mass of values.

Can anyone explain this?

[Thirsty Crow]

If this is true, then a capitalist that prices a commodity above its value, must necessarily result in another capitalist pricing a commodity below its value. But why would this be?

I'll just offer my take on this specific problem.

There could very well be contingent reasons for selling commodities below their value, and indeed I think this drive is clearly visible in times of economic distress when market demand contracts for specific reasons. If commodities do not sell at certain prices, then it becomes viable to plunge the prices (especially for consumer goods, I'd say, and especially if protracted payment in the form of credit - depending on the "health" of the financial sector - is lacking as well; connected to this, I remember reading about the crisis during the last quarter of the 19th century, when I suppose consumer credit was far less developed, which saw a spectacular plunge towards the bottom in pricing).

[FSL]

A simple example:

Company A has capital of value 100 and labor of value 20
Company B has capital of value 40 and labor of value 40.

Now it is assumed that the rate of exploitation in a given economy is 100%, the most common.

So company A has a final product with a value of 100+20+20+140. That is c+v+s, s being surplus value
Company B has 40+40+40=120 final value.


The things is company A has more capital and employs less workers. It's a technologically up to date factory whereas company B is small and with outdated equipment. Therefore, company A is more productive and the value per unit will always be smaller (to give you an idea if value per unit is close to 0, the economy is advanced beyond the point of scarcity, it means very little labor needs to be put into each product).

So company A produces 200 units and company B only 100.
These are sold in the same market and they have the same price.
Because total prices=total values, a unit's price is 260/300 or about 87 cents.

Company A gets 173.33 dollars. Its profit rate is high, 44%
Company B gets 86.66 dollars. Its profit rate is low, 8%.



Why is company B having such a small profit rate? Because of its outdated production model. This is the reason all companies want to invest more in constant capitai and become more productive, to push their competition out of the market. And as they do, profit margins decrease (because it's labor that creates new value, constant capital, machines, buildings and the like just depreciates) and this eventually leads to a crisis.

If the numbers were a bit different in the example, company B might have even been selling at a loss.


TL;DR version is that strong companies with modern equipment and high productivity can earn more per product than poor companies. A product's value is based on all the companies that are produding it, but some are more efficient in doing that. These "steal away" value from the less efficient ones.



PS There is also a problem because the example above uses values and not prices for capital and labor as it should. This can be fixed by separating the economy into two sectors, one producing means of production (corresponding with investments) and one producing means of consumption ( corresponding with... consumption and being a statement of the value of labor power.

These two sectors will form their current prices based on the equalization of profit rates, as it happens with two different sectors in the economy, and doing so you can track back to the values.


If you took marxism 101, these would all be explained better

[RedMaterialist]

But prices fluctuate around their values all the time, so generally you would expect that the total mass of prices also fluctuates around the total mass of values.

Can anyone explain this?

Over time, the aggregate of prices should equal the aggregate of values. There is a table in the GDP (table 1.15, i think) which says that total non-labor costs plus labor costs plus profit = price. In Marxian terms I think this means constant-capital + wage-labor + surplus value = price. Thus, value = price, over a long enough period of time.