[OPE-L:4630] Re: Re: Re: Re:Fiat money andTransformation

From: Paul Cockshott (paul@cockshott.com)
Date: Thu Dec 07 2000 - 04:42:39 EST

On Wed, 06 Dec 2000, you wrote:
> You're right, in that fiat money is not a produced commodity and
> doesn't participate in any equalization of the rate of profit,
> unlike Marx's commodity money.
> Allin Cottrell.
That is my basic feeling and my response to Steadmans critique
of empirical measures of price/value correspondance where he
claims that these measures are heavily dependent on the numeraire.

However I have been wondering if the use of fiat money as unit
of account in the transformation processes might not be equivalent
to the use of a weighted average of all commodities as unit of account,
and in that sense similar to the use of the basic commodity.

If one puts in the stipulation that the total price of the social product
is invariant under the transformation procedure, one is implicitly equating
the dollar to some fraction of the total national income. The dollar
then becomes a surrogate for a bundle of commodities.

Now it it important to recognise that the transformation is not a real
temporal process but a pair of comparative counter-factuals,
one in which rates of surplus value equalise completely, the other
in which profit rates equalise completely. 

I see no reason why one should not adopt an arbitrary normalisation
procedure for these two counterfactuals and scale the output vector
measured in the two different set of prices to 1. This has the advantage
of focussing on what is important: the exchange ratios of commodities
and the ratios of profit to employed means of production, profit to wages.

What Rakesh is proposing with his opposition to an adding up theory
of prices is essentially a normalisation procedure of this sort.

Paul Cockshott, University of Glasgow, Glasgow, Scotland
0141 330 3125  mobile:07946 476966

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