Re: (OPE-L) recent references on 'problem' of money commodity?

From: Fred Moseley (fmoseley@MTHOLYOKE.EDU)
Date: Sun Nov 21 2004 - 23:30:07 EST

Hi Claus,

Thanks very much for joining the discussion.  I would like to begin with
your last point, and then reture to other points hopefully soon.

On Sun, 21 Nov 2004 cmgermer@UFPR.BR wrote:

> > Fred:
> >
> > However, an interesting conclusion that I have reached recently (which I
> > discuss in the working paper that I have attached to previous messages) is
> > that, with respect to the determination of the MELT, it DOES NOT MAKE ANY
> > DIFFERENCE whether or not credit money still is tied to gold in some
> > way.  In both cases, the MELT is determined by the ratio MV / L.  I won't
> > go through the algebra here, but it is in my paper, and I would be happy
> > to discuss.
> Claus:
> Isnít the ratio MpV/L of the same nature as Duncanís original MELT? Duncan
> relates the total money value added (which is a part of the total money
> value of the product - TMV, or MpV when expressed in terms of
> inconvertible paper money) to the total *living* labor employed (LL),
> while you relate the total money value of the product MpV to the total
> labor (dead labor + living labor) contained in it. Your equation is
> MELTp=MpV/L=TMV/L, while Duncanís is MELT=MVA/LL. Thus, doesnít your
> equation incurr in circular reasoning too, as you say about Duncanís?

No, these two ratios are very decidedly not the same.  Duncan's ratio is
MELT = MVA / LL (to use your notation).  Therefore, Duncan's MELT cannot
be used to determine MVA, because the MELT is determined by MVA; that
would be circular reasoning.

My ratio is instead: MELT = MV / L.  In this case, the MELT is determined
independently of MVA (or P), and hence can determine MVA (or P), without
circular reasoning.  

Even though MV = PY as an identy, taking M as given is not the same as
taking P as given. The whole debate is over the direction of causation
between M and P:  which is taken as given (or determined prior) and which
determines the other?

> I wonder whether it is really necessary to go through the algebra as you
> did, since the relation MV/L seems to be intuitive: if one knows that the
> money values of commodities represent amounts of social labor, then it is
> intuitive that the ratio TMV/L (or MV/L) gives the average money value of
> a unit of labor time. 

I am glad that you think that this ratio is "intuitive".  So do I.  And my
algebra shows that this ratio is equal to Marx's method of determination
of the MELT with inconvertible paper money.

> But this is empirical ex post calculation, if L
> could be estimated.

But L cannot be estimated, as I have discussed at length (because of
unequal skills and unequal intensities).  

This is a theoretical explanation of the MELT, in which M, V, and L are
assumed to exist independently of P (even though L is not observable) and
to jointly determine the MELT, and hence indirectly determine P.  

Claus, do you agree or disagree with this "intuitive" theoretical
explanation of the determination of the MELT today?  If not, then how do
you think the MELT is determined today?

I hope you will at least agree that Marx's method of determination of the
MELT with inconvertible paper money reduces to MV / L.  In this case, the
algebra is unambiguous.

Thanks again.


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