[OPE-L:4640] money and the transformation

From: Allin Cottrell (cottrell@wfu.edu)
Date: Thu Dec 07 2000 - 17:02:34 EST

On Thu, 7 Dec 2000, Rakesh Narpat Bhandari wrote:

> >>  Well, let's assume that each monetary unit simply represents
> >>  .5 labor hours.
> >
> >That's precisely what you "simply" cannot do, if there's a
> >transformation going on and money is a commodity.  As Paul
> >suggests, maybe you can do it with fiat money.
> But if money is a commodity, its value is variable; yet it remains
> invariable even though technical change is going on. So, having made
> this heroically fictitious assumption earlier,  why can't Marx
> continue to assume that the money commodity invariably commands, say,
> .5 hours of labor in the transformation as well?

It's a different order of assumption.  He can continue to assume
that the quantity of the money commodity corresponding to the
monetary unit takes .5 hours to produce, but if he assumes it
continues to command or "represent" .5 hours in exchange he's
appealing to the deus ex machina of a commodity that's immune to
the transformation.

However, I think it's quite legitimate to analyse the
transformation in terms of a fiat money (although Marx himself
probably wouldn't have liked that; he was very insistent on the
claim that money ultimately has to be a commodity).

The commodity money business is why -- I think -- Bortkiewicz
and Sweezy held to the equality of total profit and total
surplus value.  In the toy example I gave earlier there are 3
departments and simple reproduction is going on.  If one of the
departments is producing the money commodity, it must be dept 3.
Now, this money is taken as the numeraire: its price is
identically 1.0.  But dept 3 has an organic composition below
the average, and in the transformation a department in such a
position would ordinarily see its price fall.  Since the price
of money _can't_ fall, the only way to have the profit rate
equalized for all 3 sectors is for the _general_ level of prices
to rise.  Money "stays put" at a price of 1 while the rest of
the economy adjusts around it.  Since money production = dept 3
= the surplus, total profit remains equal to total surplus
value, while total price comes to exceed total value.

This analysis is perfectly coherent, on the (of course,
unrealistic) assumptions given.

Allin Cottrell.

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