# Re: (OPE-L) Re: value, money, and the exchange of equivalents

From: Phil Dunn (pscumnud@DIRCON.CO.UK)
Date: Mon Dec 01 2003 - 17:48:32 EST

```Hi Jerry

I don't see much possibility of agreement here but at least we can
clarify the differences.

>Phil wrote:
>
>>  To give up the idea that money is a universal equivalent merely
>>  because prices can fluctuate while production conditions remain
>>  unchanged seems to me to be folly.  Marx does it, of course.
>
>I'm not sure I follow.  What is "it" that Marx does?  Is it
>"folly"?

At the point in CI where Marx talks about the quantitative
incongruity of price and magnitude of value as inherent in the price
form itself, he has made a decision to abandon the universal
equivalent in favour of a deterministic theory of value.  It is a
self-inflicted injury.

>
>>   If
>>  money is not a universal equivalent then what is it?
>
>A medium of exchange along with many other social functions.
>
>One doesn't have to give up on the idea that money is
>a universal equivalent to recognize that prices of
>individual commodities are not necessarily equal to their value.

If prices of individual commodities are not necessarily equal to
their value then where is the equivalence?

>
>>  Consider the circuit of money capital.  The capitalist starts off
>>  with some money but the value of the constant capital acquired with it
>>  is not equal to the value of the money.  The capitalist ends up with
>>  more money but the value  of this money is not equal to the
>>  value of the commodity capital sold.
>
>Can't the MELT change?

Consider a simple circulating constant capital model.  Our capitalist
starts of with \$100 of money.  At this time the MELT is, say, \$1/hr.
One period later the capitalist ends up with \$300.  Value added,
according to the historical cost convention, is \$200.  But by the end
of the period the MELT is \$1.5/hr.  We have to correct for inflation.
To calculate nominal value added we must first convert the initial
\$100 to value, 100 hours.   Then we move it forward time to the end
of the period and convert it back to dollars using the MELT at that
time.  \$150.  So nominal value added is \$300-\$150 = \$150.  Absolute

The capitalist starts off with 100 hours of absolute money value and
with it buys 100 hours of constant capital.   100 hours of value are
added.  At the end 200 hours of commodity capital are sold for money
whose absolute value is 200 hours.

The MELT can change but does not affect the issue, which concerns the
conversion of money to or from constant or commodity capital at a
definite point in time.

>
>>  The question is not whether I should read Volume 3 but rather why, if
>>  the universal equivalent is rejected, anyone should bother to read
>>  Volume I?
>
>Because the concept that money functions as a universal
>equivalent is only one (relatively small) part of Marx's
>analysis in Volume 1.

I rather think that the volume I analysis, as a whole, depends on
equal exchange.

Yours, Phil
```

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