[OPE-L:3766] Re: Re: NI and all that

From: Ajit Sinha (ajitsinha@lbsnaa.ernet.in)
Date: Wed Sep 06 2000 - 06:57:36 EDT

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Duncan K. Foley wrote:

> Since there's been some further discussion of the "New
> Interpretation" on the list, I'd just like to clarify a couple of
> points.
> The NI consists of the following observations. If you think that
> money represents labor time quantitatively, there has to be a
> coefficient relating money to labor time in any commodity-producing
> society at any particular time (the Monetary Expression of Labor
> Time, or its inverse, the Value of Money). If you believe that value
> is created by the expenditure of living labor, this ratio has to be
> the ratio of value added to labor expended. If you further want to
> regard money profits as representing unpaid labor time, then
> mathematically you must regard the value of labor power as the money
> wage multiplied by the value of money: the two ideas are logically
> equivalent.


Four small comments:

(1) But this cannot be taken as either as a "solution" to or an
"interpretation" of the transformation problem. The transformation
problem, I think, is fundamentally about a theory of prices of production
and a relation of labor exploitation to profits. In your interpretation,
the theory of prices of production is simply not addressed.

(2) Though your theory defines a relationship between labor exploitation
and total profits, your rate of exploitation is dependent on the
allocation of labor, and so not rooted in production and distribution, as
i have explained in my 1997 piece in RRPE. And this is in conflict with
Marx's notion of exploitation which is rooted in production and

(3) Moreover, Marx's transformation was interested in showing that though
the competitive process of capitalism vitiates the price accounting from
value accounting, this takes place only on account of the redistribution
of surplus value among the capitalist class. As far as the relationship
between capital and labor is concerned, no change takes place. In your
theory this aspect cannot even be discussed because it simply ignores the
problem of prices of production.

(4) Frankly, I don't understand what analytical insight one gains by
converting labor units to money units and vise versa by using the
converter "m", the value of money? Cheers, ajit sinha

> None of this constitutes a discussion of what determines the value of
> money or the value of labor-power. The value of money might be
> determined by the cost of production of a money-commodity, and the
> value of labor-power might be determined by the price of a socially
> and historically determined subsistence standard of living
> consistently with the NI, but in and of itself it doesn't imply or
> require those theories to hold.
> My interest in this line of argument was to link Marxian categories
> more closely to directly observable economic statistics, so that
> Marx's ideas could be developed as a framework for analyzing
> contemporary political economic problems. At the time I wrote my
> original RRPE piece, most Marxist empirical work started by trying to
> re-value everything in terms of embodied labor coefficients derived
> from input-output matrices. This was terribly cumbersome, and slowed
> down and limited Marxian empirical work. Furthermore, it raised the
> very good question of why anyone should care about the flows of
> "value" in this alternative accounting scheme, when it seems as
> though political economy is mostly about flows of money. Finally,
> Shaikh, Ochoa, Cockshott and Cottrell, and others showed that the
> quantitative difference between the key ratios in embodied labor
> coefficient accounts and price accounts was pretty small anyway.
> One doesn't have to buy the quantitative relation between value added
> and living labor time, of course. Many traditional Marxists are quite
> content with the "dual" interpretation that envisions labor flows and
> money flows coexisting, but not in a strict quantitative
> correspondence. (I think David Laibman, for example, adopts this
> position.) "Value-form" theorists argue for an interpretation of
> abstract labor that makes the determination go the other way (value
> added in price terms determines abstract labor), which I must say
> seems to be close to some passages of Marx.
> I think it is very difficult indeed to establish from purely
> theoretical principles what the "correct" approach to the
> transformation problem and the treatment of constant capital is, and
> almost as difficult to figure out "what Marx really meant", in the
> sense of which contemporary formulations of these issues he might
> endorse. I get more interested in these debates when they lead to a
> discussion of what difference the interpretations make to the
> understanding of the fundamental problems of contemporary political
> economy.
> Duncan
> --
> Duncan K. Foley
> Leo Model Professor
> Department of Economics
> Graduate Faculty
> New School University
> 65 Fifth Avenue
> New York, NY 10003
> (212)-229-5906
> messages: (212)-229-5717
> fax: (212)-229-5724
> e-mail: foleyd@cepa.newschool.edu
> alternate: foleyd@newschool.edu
> webpage: http://cepa.newschool.edu/~foleyd

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