[OPE-L:3941] value of money

From: Rakesh Bhandari (bhandari@Princeton.EDU)
Date: Mon Oct 02 2000 - 17:33:26 EDT

Ajit's refusal to allow Marx to hold the value of money constant arises out
of not only his incomprehension of Marx's method but scientific method in

He would have saved us all a lot of time if he simply had taken some time
to read Grossmann, instead of ridiculing my discipleship to him (Fred, I
also don't understand your reluctance to ever draw from Grossmann since
Mattick Sr's work assumes his accomplishments). 

In his magnum opus Grossmann writes in what should be a well known passage:

"Through prices the fluctuations of a given capital in the course of its
circuit become expressed in money, which serves as measure of value
required for accounting. And with respect to this measure of value marx
proceeds from teh assumption, which is purely fictitious and which forms
the basis of his analysis, that hte value of money is contant. At first
sight this appears to be all teh more suprising in the sense that, in his
polemic with Ricardo's 'invariable measure of value,' Marx emphasizes that
gold can only serve as a measure of value becuse its own value is variable.
But science needs invariable measures: 'the interest in comparing the value
of commodities in different historical periods is, indeed, not an
*economic* interest as such, but an academic interest.' (Marx)

"From the historical surveys of the development of thermometry we know that
a reliable measure of heat variations was established through the
fundamental work of Amonton, with the discovery of two fundamental points
(boiling point and the absolute null point of water) for liquid used as the
measure of heat variations. This alone could establish the constant
reference points with which it became possible to compare the variable
states of heat (Mach)

"There are no such constant reference points for gold as the measure of
value. So an exact measure of the value fluctuations of commodities would
be impossible. On the one hand changes in teh value of the money commodity
may differ from the changes in the value of individual commodity types. In
this case we hav eno exact measure to ascertain how far, say, the rising
prices of a given commodity have been caused through changes in its own
value and how far through changes in the value of the money commodity. In
this case, suppose we were studying variations in the magnitude of surplus
value; ten, with a variable value of money, it would be difficult to tell
whether a given increment in value (or price) was not something merely
apparent and caused purely by changes in the 
value of money.

"'In all these examples there would however have been no actual change in
the magnitude of capital value, and only in th emoney expression of the
same value and the same surplus value...there is, therefore, but the
appearance of change in the magnitude of employed capital.' (Marx)

"Alternatively the value of money varies in the same proportion as the
values of other commodities, for instance due to general changes in the
productivity--a limiting case that is scarcely possible in reality. In that
case there would have been enormous absolute changes in the real relations
of production and wealth, but these actual changes would be invisible on
the surface, because the relative proportions of individual commodity
values would remain the same. The price index wold not register the actual
changes in productivity.

"Thus it was entirely valid for Marx to substitute the 'power of
abstraction' for the missing constant reference points, so falling into
line with Galileo's principle: "measure whatever is measurable, and make
the nonemeasurable measurable.' For instance to ascertain the impact of
changes in productivity on the formation of value and surplus value, Marx
is forced to introduce the assumption that the value of money is contant.
This assumption is therefore a methodological postulate that equips max
with an exact measure for ascertaining values of industrial capital during
its circuit. It is an assumption underlying all three volumes of Capital."

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