Re: Falsifiability and the law of value

["Devine, James" <jdevine@xxxxxxx>]

Title: RE: [PEN-L] Falsifiability and the law of value

I wrote:
>  "(In my opinion, MFP is a bogus concept. It's based on adding
> apples (labor-power hired) and oranges (means of production) using
> weights that assume that each factor is paid its marginal
> product.)"
>
> Marx's notion of "labor productivity" refers to total labor, dead
> plus living.  I didn't use the BLS labor productivity series
> because it refers to living labor only.  I thought that MFP would
> be a better proxy for Marx's notion.  Perhaps not, in light of
> your comment.  Do you think the marginal productivity assumption
> causes sizeable distortions?

One of the contributions of the so-called new neoclassical growth theory (relative to the old version) is that they reject the assumption that inputs are paid their marginal products. They think this is a big matter, but I'm not an expert here so I can't comment.

I remember in senior year of college, I took a graduate econ. course that included a lot of stuff on Multifactor Productivity. The prof -- a flexible Chicago-schooler named Robert Evenson -- went through all of the assumptions behind the concept. I was simply amazed. The only reason I would use the concept would be out of obedience to social norms of the profession. That is, I wouldn't use it.

I remember that Ochoa used "vertically-integrated labor-values" (for entire industries) as a way to get around the fact that the BLS data refer only to living labor. If you do this for the economy as a whole the connection between value and price becomes pretty tautological.

Jim