[OPE-L:3833] Re: Re: Re: m in Marx's theory

From: Ajit Sinha (ajitsinha@lbsnaa.ernet.in)
Date: Mon Sep 18 2000 - 03:28:56 EDT

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This hopefully will be my last response!

Fred B. Moseley wrote:

> This is a partial response to Ajit's (3817). I hope to follow with
> another post or two on other issues. This post focuses on one key
> criticism by Ajit of "my theory" (which I insist is an interpretation of
> Marx's theory): because "my theory" does not explain the determination of
> m (money new-value produced per hour of abstract labor), it cannot be a
> theory of surplus-value, or of anything else. I have already explained in
> (3815), which Ajit chooses to ignore, how the main conclusions of Marx's
> theory of surplus-value do not depend on a full determination of m.
> Let my put it another way: As I have summarized several times, the basic
> conclusion of Marx's theory of surplus-value is that the magnitude of
> surplus-value (or dM) is PROPORTIONAL to the quantity of surplus
> labor-time, with m as the FACTOR OF PROPORTIONALITY; i.e.
> S = m Ls
> = m (L - Ln)
> where Ln = V / m.

_____________________Fred, basically your S is equal to (m.L - V), i.e. S =
(m.L - V), where according to you, you know your L and V but not m. Thus your
S is neither known in absolute terms nor to any degree of "proposnality". This
is so simple that i cannot believe I have to explain it to you so many times.


> Fred:
> Now of course it would be preferable to be able to determine the factor or
> proportionality m and thus have a more complete theory of the magnitude of
> S. However, even if we are not able to determine the specific factor of
> proportionality, we still have a theory that S is PROPORTIONAL to
> Ls. Furthermore, since a change of m affects all monetary variables
> proportionally, the ratios among these monetary variables are not affected
> by a precise magnitude of m.
> This is a perfectly acceptable theory, especially in light of its
> impressive explanatory power. Even if a theory is not able to explain
> such a factor of proportionality, this does not mean that it is no theory
> at all, as Ajit asserts. Rather, it means that it is a theory whose
> results are determinant only up to a factor of proportionality (or only up
> to a "scalar multiple"), as are many other economic theories. Indeed,
> many economic theories are not able to be even that specific. Assumptions
> are often expressed in general functional forms (e.g. the neoclassical
> production function Q = f(K,L)), and the theory is not able to say
> anything more precise about the specific functional form. Marx's theory
> of surplus-value is able to be more precise than that about the functional
> form; it is able to conclude that S is PROPORTIONAL to Ls, even though it
> is not able to explain the specific factor of proportionality (at least
> not yet). And on the basis of this theory of surplus-value, one can
> explain many important phenomena of capitalist economies (e.g. conflict
> over the working day, inherent technological change, etc.)


Now you must know all these comments have no meaning in regard to your theory.


> Fred:
> Ajit did not respond to my argument in (3815) about COMPARED TO WHAT? So
> I repeat a part of that argument, and then continue.


I'm not interested in comparing your theory to any theory. Even if only your
theory existed in the world, my criticisms will stand. It basically states
that your theory is inconsistent and does not achieve what it claims to
achieve. It has nothing to do with the strength or weakness of any other

> Fred:
> Ajit criticizes "my theory" because it does not explain the determination
> of m. However, if Marx's theory is weak, COMPARED TO WHAT? Sraffian
> theory cannot even explain money, period; i.e. it can not explain the
> necessity of money, why money must exist in a commodity-producing
> economy. At least Marx's theory can explain, as a logical deduction from
> the fundamental assumption of the theory (the "labor theory of value"),
> that money has to exist, in order to function as the special commodity in
> which all other commodities express their labor-value. This is not an
> ad-hoc explanation of the necessity of money, based on the "difficulties
> of barter", but a deduction from the fundamental assumption of the
> theory. In other words, the necessity of money is explained in an
> integrated way, along with the explanation of lots of other phenomena
> (e.g. conflict over the length of the working day), all derived from this
> fundamental assumption. I think this is a very significant theoretical
> accomplishment that no other economic theory has been able to achieve.


Your theory, and leave Marx out of it please, does not explain money either.
You just make definitional claims and say given given etc. In anycase, the
issue under debate has nothing to do with the explanation of money. You assume
that money is given and I have not raised any problem on that count anyway.
Why not keep the focus on the problem at hand?

> Fred:
> Furthermore, it just occurred to me yesterday: Sraffa's theory does not
> explain absolute prices either, but only RELATIVE prices!


This occurred to you only yesterday! And you have been writing rhetoric
against Sraffa for how many years? You should know that price is a relative
concept. Marx's prices in terms of gold is also relative. It is a ratio of
exchange between two commodities.

> The Sraffian
> system of equations has an extra unknown. The system can be solved if the
> price of one of the commodities is set equal to 1 (i.e. is TAKEN AS
> GIVEN!). This one commodity, called the numeraire, is arbitrarily chosen
> and is not necessarily real money. (Indeed in a system of paper money,
> the numeraire commodity cannot be real money). Sraffa's innovation was to
> take as the numeraire the "standard commodity", which is a composite
> commodity with peculiar characteristics and which has no relation to real
> money at all. Sraffa's relative prices in terms of the ideal "standard
> commodity" have nothing to do with real world prices; they are only a
> solution to a logical problem with Sraffian theory ("the invariable
> measure problem" in order make prices invariant to changes in the
> distribution of income between wages and profits).


So now we know that you opened the PCMC for the first time only yesterday. I
hope i can take credit for making you do so. The book is a hard one to
understand. It will take some time, but will put you on the right track.

> Fred:
> Therefore, we can see that Sraffa's theory is also determinant "only up to
> a scalar multiple", just like Marx's theory. In this respect, so roundly
> condemned by Ajit, Marx's theory is no worse than Sraffa's theory. And
> the fact that Marx's theory is trying to explain real world prices and
> real world profit makes it preferable to Sraffa's theory, which is only
> trying to determine hypothetical numeraire-prices, which have no relation
> to real world prices and profit.


Now you must know that for your theory "only up to a scalar multiple" does not
hold. As far as Sraffa is concerned, it does not matter which commodity you
choose, take gold if you like, the price ratios will remain the same.

> Fred:
> How can anyone who accepts such a highly unrealistic theory like Sraffa's
> criticize Marx's theory for failing to provide a complete explanation of
> the determination of the value of money in his theory of real world prices
> and profit? I think it is far better to have a partial explanation of
> reality than a partial explanation of hypothetical
> numeraire-prices. Especially when Marx's theory has such substantial
> explanatory power of important phenomena of real capitalist economies.


Please leave Marx out of it, because, in my opinion, you don't understand
Marx. So leave the poor guy alone. Your above rhetoric only shows that you
have not understood Sraffa at all. But as i said, it will take time. Nobody
can understand Sraffa in one day. Cheers, ajit sinha

> I look forward to further discussion.
> Comradely,
> Fred

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