[OPE-L:4611] Re: Re: Re: Re: Re: Re: Part of My Confusion ontheTransformation

From: Ajit Sinha (ajitsinha@lbsnaa.ernet.in)
Date: Tue Dec 05 2000 - 07:58:52 EST

Rakesh Narpat Bhandari wrote:

> re 4600
> >
> >
> >Rakesh, to measure something you need to have something to measure it with.
> >Now, if the measure of the thing that you are measuring is changing, then
> >how much it is changing and whether it is changing or not crucially depends
> >upon whether whatever you are measuring it with remains constant or not. Let
> >us suppose that you want to measure the length of an iron rod over different
> >seasons. Our theory suggest that its length should be relatively larger
> >during summer and smaller during winter. Let us suppose that to measure the
> >length of the iron rod we have chosen a copper rod. Now, if the length of
> >the copper rod itself is affected by the variation in temperature, then we
> >lose the ground to establish the fact that the length of the iron rod has
> >changed by so much or if at all. Thus to prove our hypothesis about the iron
> >rod we need to first establish that the copper rod will not be affected by
> >the change in temperature. If we could do that then we have an invariable
> >measure for our purpose in this context. Otherwise, our theory about the
> >variation in the length of the iron rod becomes baseless. Note the point
> >that assuming that copper rod remains invariant through changes in
> >temperature is not satisfactory in this case. So now you can understand that
> >you or fred or Marx or even God has no power to fix the monetary expression
> >of value. You have to have a theoretical argument that proves that when
> >prices of all the commodities are changing, how could your monetary
> >expression of value remain constant. This is your first theoretical problem,
> >unless you establish this first, all your subsequent moves on the board are
> >baseless. This is true for you, Fred, and TSS, etc. as well.
> Ajit,
> I already took up this problem, and as you know you did not respond.
> Marx agrees that that there is not, and cannot be, any invariable
> measure of value. Yet 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 the assumption, which is purely fictitious and which forms
> the basis of his analysis, that the 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)


Be careful. Don't make Marx look like an idiot by saying all kinds of things in
his name. The question of a measure and its invariance depends upon the
problematic one is dealing with. Ricardo was interested in establishing a
relationship between rate of profits and wages. His problem was that changes in
distribution (everything else remaining constant) would in general affect all the
prices in all sorts of ways including the money commodity. The variability of the
money commodity in this case implied that the size of the cake changes by how do
you cut it. This of course is unsatisfactory for the theory and does not allow
Ricardo to establish any precise relation between wages and rate of profits. Thus
it becomes a theoretical requirement for his theory to find the condition under
which a commodity or a bundle of commodity will not vary in prices due to changes
in distribution. If this theoretical commodity could be found than he could use
it as the money commodity for his theoretical purpose. Ricardo could not find
such a commodity in his life time, but Sraffa's standard commodity is a solution
to this problem. Ricardo was also interested in finding an invariable measure
over historical period so that he could tell which commodity and by how much has
changed in prices under the condition of diminishing returns in agriculture. This
problem now we know has no solution.

The problematic of the transformation problem is of different nature. Marx works
out his analysis of the capitalist economy on the assumption that commodities
exchange in the same proportion as their labor-value ratios. On this assumption
one can easily determine what is the labor-value of a unit of the money commodity
(say gold). Or how much of labor-time is represented by one unit of money or
gold. This is your 'monetary expression of vlaue'. The problem now is that once
you relax the assumption of value-price proportionality, and say that
equalization of profit rates require that value-price proportionality must be
broken for all commodities, there is no way of knowing how much of labor-time a
unit of gold would represent in the market when rate of profits is equalized.
Thus to insist that my earlier 'monetary expression of value' must remain
unaltered is to simply insist on a nonsense. And if you think that marx was
insisting on this then, in my opinion, you are insisting that marx was an idiot.
But, of course, I don't think he was such an idiot, and that you are simply
misinterpreting him.

>  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)


Exactly my point. It is not arbitrary. And heat variability in any other matter
does not affect the measuring rod.

> 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 have no 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.


Exactly my point again.

> '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)


There will, of course, be no change in capital value measured in labor-time
units. However, as the monetary expression of the same value and surplus value
changes, no claim here is made that certain aggregates in terms of labor-value
and their monetary expression must remain equal. All he is saying is that for him
real measure is the labor-value measure and monetary measures are apparent only.
Instead of labor-value measures some one may prefer to take the physical measures
and call them real and monetary measures as apparent or nominal. Of course, the
real ones will not change in either case. All your quotations only go to prove my
points and also that marx measured value the way I argue he did. By the way what
was there in the ellipsis?

> 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.


No problem. All Marx is saying here is that if there is a proportional change in
technology in all the sectors, say productivity of labor has doubled in all the
sectors. This would mean a great change for society as a whole. However, the
monetary prices or the relative prices of the commodities will not show any
change because the production conditions of all of them have changed in the same
proportion and in the same direction. This statement may not be precicely
correct, but for the general kind of argument Marx is trying to make here, it is
perfectly fine. This, however, has nothing to do with the transformation problem
or your problem.

> 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.


This is simply mumbo-jumbo.

> ___________________
> >
> >>
> >>
> >>  You said you want go any further unless I drop this assumption; will
> >>  you reconsider since I am simply beginning with the same assumptions
> >>  and equations Sweezy gave us. I don't think Paul C or Allin think
> >>  that the assumption regarding the unit of account is terribly
> >>  unreasonable, especially as an interpretation of Marx's own procedure.
> >
> >_____________________
> >
> >You don't seem to understand Sweezy's point. If you measure value in
> >labor-time units, then of course values don't change during the
> >transformation procedure, since they are independent of prices of
> >production.
> I do understand Sweezy, and he says that the only reason that he does
> not keep the unit of account as an hour of labor time, as Marx he
> thinks has done in his own incomplete transformation, is that he is
> left with four equations and four unknowns. By turning dept III into
> the producer of the unit of account, he can set its transformation
> multiplier at 1, and have just three equations with three unknowns.
> He gives no theoretical reason for pursuing this way other than
> mathematical tractability. Read it yourself.


I don't have to rewrite my Ph.D. again for you. Everybody knows that taking one
commodity as the money commodity and putting its price multiplier equal to one
solves the prices of production problem. But it in general does not satisfy
Marx's two invariant conditions. Moreover, it has nothing to do with your
invariability of the 'monetary expression of value'.

> >  But you are imposing a price value relationship in terms of your
> >monetary expression of value at the outset, and then you go on to suggest
> >that during the transformation procedure all the prices are changing but
> >your initial price-value relationship in terms of monetary expression of
> >value remains constant. This is illegitimate.
> No it is not. Marx rules out changes in prices due to changes in the
> value of the medium in which price is expressed. Ricardo does the
> same thing in the first chapter of his Principles, I have recently
> discovered.


Then Marx was an idiot, according to you! Cheers, ajit sinha

> Yours, Rakesh

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