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Thanks very much for all the interesting posts from Rakesh, Ajit, Alfredo,
Andy B., John E., etc. I returned to Massachusetts over the weekend and
will respond to these posts as soon as possible (with classes starting
I will start with Ajit's (3715), which lists 10 problems with my
interpretation of Marx's theory. I will first reply in this post to the
last 9 points and then reply in a subsequent post to the first point,
which requires a longer response.
On Thu, 24 Aug 2000, Ajit Sinha wrote:
> (2) You say that in your system (which is supposed to be Marx's) the *givens* are
> C (in money terms), V (in money terms), m (the value of money), and L. Whereas in
> the "Sraffian" system it is the physical means of production and the real wages
> are taken as the *givens*. Now, I have just a simple question here. What do you
> think L is doing in your *givens*. Are laborers supposed to be counting money for
> the time period L or jumping up and down in the air? If you say that L is given,
> then by implication technology (i.e. the physical input-output system) is given
> whether you see it or not--L is the part of the technology, if it is given then
> technology is given too. I simply don't understand how can you say things like
L is a given because this is Marx's version of the "labor theory of
value". I do not say that ONLY money-capital is taken as given, but
rather that constant capital and variable capital are taken as given as
quantities of money-capital. In addition, the quantity of current
abstract labor (Lc) and money-value-added per hour (m) are also taken as
The technology indeed exists, but that does not mean that Marx's theory
must begin with physical inputs and outputs. The quantities of
money-capital also exist, but linear production theory does not take these
as given. The totality of the capitalist economy exists, and each theory
chooses a different starting point as its initial givens.
> (3) By the way, how do you measure the socially necessary abstract labor L, which
> you have taken as *given*?
Socially necessary labor-time is defined in terms of hours of simple labor
(with reductions assumed for unequal skills and unequal intensities).
> (4) You had stated earlier that "Marx's theory of surplus-value, presented in
> Chapter 7 of Volume 1, is expressed in terms of money, that are determined by
> quantities of labor-time." I'm still waiting to hear your explanation of how is
> this expression in terms of money is *determined* by the quantity of labor-time.
> (5) You say that the purpose of volume one is to determine dM in money terms. But
> all your writings only state that this is how it is rather than determining dM in
> any sense of determination.
Ajit, in my last post and in several papers I have summarized Marx's
derivation of the determination of dM, or surplus-value, as Marx presented
it in Chapter 7 of Volume 1, which concludes that: S = m Ls. This
equation says that the variables on the right-hand side DETERMINE (i.e. as
their product) S, or dM, the variable on the left-hand side. What more
determination do you want?
What is your interpretation of Chapter 7? What is the main variable
> (6) Furthermore, as i had pointed out, this would mean that one must have a
> theory of money supply which explains that after every production cycle total
> money supply must increase by dM. Now, I don't see any such theory in Marx. How
> do you explain this? Moreover, even you haven't tried to come up with any such
> theory. Why?
I did indeed discuss in (3629) Marx's theory of the supply of money.
Maybe you missed this post when your server was down. I wondered why you
didn't reply. So I will send it to you again in a separate post.
> (7) As Paul Zarembka made a very pertinent observation, how do you explain a
> total absence of M-C-M' etc. in his 1865 lecture. You think Marx had not
> developed his basic understanding of value and surplus value till then?
*Wages, Prices, and Profit* does not explicitly discuss the circulation of
capital because this is a lecture and not a formal presentation of his
theory. But the lecture is all about PRICES - as indicated by the
title! It is about the effect of an increase of wages on prices. Most of
the lecture is a brief summary of Volume 1 of Capital. The summary of
the basic theory of surplus-value is presented in the same way uses the
same numerical example as Chapter 7 (surplus-value = 3 shillings). There
is also a one-section summary of Volume 3 (Sec. 11: "The Different Parts
into which Surplus-value is Decomposed"), which also discusses the
division of surplus-value into profit, interest, and rent. All these
variables are defined in terms of money and the total surplus-value is
determined prior to its division (= 100 in Marx's numerical example).
Ajit (and Paul Z.:) how do you explain the monetary nature of this entire
lecture? What do you think the lecture is mainly about?
> (8) Where did you get such weird ideas about the Sraffians from? I had given you
> the reference to Eatwell's papers, so you must have read them. Do you think
> Eatwell is arguing for given real wages interpretation? Is he a Sraffian or not?
> In my critique of the 'New Solution' I made the argument that the 'New Solution'
> is very close to the Sraffian interpretation. One major difference happens to be
> that the new solution takes any commodity as money, whereas Eatwell argues for
> the Standard commodity to be taken as money--and to that extent Eatwell's
> position is superior. You not only ignore my paper but you also ignore Eatwell
> completely. Why?
I will save a discussion of the Sraffian interpretation of Marx's theory
for another occasion.
> (9) By the way, you must be aware that all classical economists including Smith
> and Ricardo give their example in terms of pound sterling, all their examples are
> in money terms, as in Marx. If we use your kind of interpretation, then we will
> have to conclude that the whole of classical economics is singing 'money money
> money ...'.
Right, the classical economists were also, like Marx, trying to explain
prices and money variables (especially the distribution of income), and
some of them, especially Ricardo, were trying to explain these money
variables as determined by labor-time variables. If their theories are
not about money variables, why are their examples in terms of money (the
same question of course that I have asked about Marx's theory)?
> (10) By the way, I hope you are aware that the attempt to interpret classical
> economics, including Marx, in the framework of the neoclassical economics
> crucially depends on the argument that it is the money wages that is given and
> not the real wages in the classical system.
I am not trying to interpret Marx in the framework of neoclassical
economics. I am trying to interpret Marx in Marx's framework.
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