[OPE-L:3774] Re: Re: Re: Re: NI and all that

From: Ajit Sinha (ajitsinha@lbsnaa.ernet.in)
Date: Thu Sep 07 2000 - 02:37:17 EDT

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Duncan K. Foley wrote:

> Some followup on Ajit's "small comments":
> >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.
> This point has been made explicitly by Dumenil and me many times. The
> NI is, of course, consistent with prices of production and equalized
> profit rates, or any other model of competition and price formation.


So you will accept Sraffian prices as Marx's prices of production as well?
Now, in theory, if you take these prices to measure the 'money' value of net
output, then the total 'money' value of net output would depend on the choice
of the money commodity. And to that extent your "m" will become arbitrary. If
you say that "m" is an empirical measure and could not be determined by the
theoretical prices, then it is compatible with any theory of prices under the
sun since it has nothing to do with theory of prices. This is my problem. I
don't think the transformation problem can simply wash its hand off having a
specific theory of prices. A theoretical analysis of capitalism requires a
theory of prices, and thus Marxian economics needs a theory of prices if it
wants to be serious about analyzing capitalism. And for Marx it is important
to link the rate of exploitation, which is determined at the level of
production independently of prices, to the bourgeois accounting that is
conducted in terms of prices. This is the crux of the transformation problem.
May be we can accept the Sraffian prices. But then the question is that what
importance we attach to labor and labor-time as a unit of measure in Marx's
analysis of capitalism? As I have suggested in my 1996 RPE piece, the answer
may be sought for in a dynamic context of a theory of technical change in
capitalism. I also think that A.K. Sen's suggestion that labor is selected by
Marx for "descriptive" purpose should also be taken seriously by serious
minded Marxists. (This is also a response to Paul Z's latest call for
abandoning all attempts to have a theory of prices for Marxian economics.)

> >
> >(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
> >distribution.
> I don't understand why the definition of profits as representing a
> surplus value which corresponds to unpaid labor time is not rooted in
> production and distribution. When you say that the rate of
> exploitation is "dependent on the allocation of labor", you seem to
> be assuming that there is some other set of more fundamental
> variables that are being held constant. The NI just looks as a
> real-world capitalist system ex post.


Sure, you can do the empirical analysis ex post. But when we try to translate
such empirical analysis to some kind of theoretical understanding, then the
problem crops up. Marx's rate of exploitation should not change because of
change of allocation *only*. Cheers, ajit sinha

> >
> >(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.
> I wouldn't say Marx wants to show that competition "vitiates" price
> accounting from value accounting. He needs, however, to reconcile the
> appearance that profit is distributed according to capital employed
> with what he regards as the reality that profit arises in the system
> as a whole from the exploitation of labor. The notion that
> competition redistributes a given mass of surplus value answers this
> point.
> >
> >(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
> I don't know that the insight is "analytical", but it does establish
> an immediate connection between Marxist concepts like the rate of
> exploitation and measured empirical data, like the national income
> accounts.
> 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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