From: Ian Wright (iwright@GMAIL.COM)
Date: Tue Jul 27 2004 - 12:19:46 EDT
Just a few casual remarks on Allin's post prompted by Rakesh. >Money (e.g. the dollar) is a unit of account, a "standard of value" if >you like. In that respect it bears some analogy to a "standard of >weight", such as the standard kilogram. In an economy with non-commodity money the MEL is under-determined, that is there is a conventional or subjective element to the absolute price level. This is very much analogous to the social agreement of the scale of measurement of standard units, such as the standard kilogram. It is also set by convention, and in this sense is under-determined. In an economy with commodity money then perhaps the situation is different and the value scale is set by labour-time in the gold sector. But I have not thought about this much. >And with the social "valuation apparatus", it turns out that it >doesn't matter very much whether or not the standard (e.g. the dollar) >remains constant over time. The system is in trouble if the standard >fluctuates wildly over a short time horizon, but it is remarkably >robust in face of substantial ongoing change, at a non-constant but >boundedly-varying rate. In my simulation of a simple commodity economy the MEL fluctuates both toward equilibrium and in equilibrium. This doesn't seem to matter. Strictly speaking I agree that "money doesn't measure", but it does represent something, just like a kilo represents something. Another disanalogy is, I think, that the kilo is consciously used by us to measure mass, and therefore the semantics of a kilogram is derivative on our practice, whereas money is not normally consciously used by us to measure labour-time. Its semantics, as you imply, derive from the economic system considered as a whole ... -Ian.
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