# Re: (OPE-L) Re: Dynamic value and natural price

From: Paul Cockshott (wpc@DCS.GLA.AC.UK)
Date: Mon Nov 10 2003 - 05:34:55 EST

```
Phil:
Suppose nominal value added totals 2 million dollars.  Then the
_absolute_ value of money  is 0.5 hours per dollar.
To get from a nominal price to a price measured in hours just
multiply by the absolute value of money.

For simplicity I will assume that the real and the absolute values of
money are constant in time.

Marx's 'value of labour-power' is gone.  Instead there is
labour-power value.  The actual, recognised labour-power value of a
clock hour of labour-power is equal to the real wage paid for it.
The value creating power of labour-power is identically this real
labour-power value.   Also there is a potential-for-recognition for
this actual labour-power value. This is the natural real wage.
------------------------------------
Paul:

I don't quite follow this.
You seem to have gone from a distinction between labour and labour
power to a distinction between absolute and real values of money.

How is this an advantage?
----------------------------------

To measure it we need to do a least squares fit to price data:

minimize with respect to x the square of  (y - Mx)

where x is a vector of hourly natural real wage rates, y is a vector
of recognized labor activity, measured by money, expressed in hours.

In other words y is equal to a vector of firms' absolute value added
(nominal value added in dollars times the absolute value of money).
M is a matrix.  The element M(f,t) gives the hours worked in firm f
by workers of skill type t.  We need to have the number of firms much
greater than the number of skill types to get a good fit.

The dimensions of y and M are hours.  x is dimensionless -- wages
measured in money hours divided by clock hours.

-------------------------------------------------
Whatdo you expect these xs to be, >1 or <1?
```

This archive was generated by hypermail 2.1.5 : Tue Nov 11 2003 - 00:00:00 EST