# [OPE-L:4645] Re: Re: Re: Re: Re: Re:Fiat money andTransformation

From: Rakesh Narpat Bhandari (rakeshb@Stanford.EDU)
Date: Fri Dec 08 2000 - 14:02:12 EST

```re 4644

>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?

Ajit, the constancy in the value of Marx's unit of account and the
labor it commands is fixed by Marx. You find this bloody artibrary,
but  Marx's assumption regarding the constant value of money is
arguably similar to Newton's inertial frame of reference: that is,
Marx's law that the same quanta of value can show no change in price
no less assumes "an inertial frame of reference" than Newton's first
law that free bodies subject to no force show no acceleration. If we
do not assume an inertial frame of reference, a free body itself free
of forces can indeed undergo acceleration and thereby undermine the
first law; if we do not assume a constant unit of account, the mere
redivision of total value in the transformation tables could have
indeed changed the price expression of a fixed and given quantity of
value. Marx of course is not arguing that the value of money or the
labor commanded by a unit of account can indeed ever be constant; he
assumes such however for the purposes of a theoretical investigation.

Yours, Rakesh

>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
>
```

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