[OPE-L:4644] Re: Re: Re: Re: Re:Fiat money andTransformation

From: Ajit Sinha (ajitsinha@lbsnaa.ernet.in)
Date: Fri Dec 08 2000 - 06:52:51 EST

Paul Cockshott wrote:

> 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.


But the logic seems to be incomplete. The question, first of all, is how is the
value of fiat money determined? If you determine its value by taking the GDP
and dividing it with total money supply, the problem you will have is that you
cannot claim the the GDP measured by the prices assumed to be proportional to
value and the GDP measured by the prices of production have any reason to
remain the same. So, in effect, it amounts to the imposition of the same old
condition that total values equal total prices of production-- thus no more
mileage is gotten by this. Cheers, ajit sinha

> 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
> paul@cockshott.com
> http://www.dcs.gla.ac.uk/people/personal/wpc/
> http://www.dcs.gla.ac.uk/~wpc/reports/index.html

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