Re: [OPE-L] standard commodity

From: Andrew Brown (A.Brown@LUBS.LEEDS.AC.UK)
Date: Fri Mar 11 2005 - 05:22:46 EST

Thanks Ajit,
I don't think economics can get very far without a theory of value, and in point of fact well known existing economic theories do have a theory of value, hence the burden of argument would seem to be on you to show us how economics can proceed absent a theory of value. And I hope we agree that economics is useless if it tells us nothing about reality where change through time is axiomatic.
You write:
The problem of
new machines etc. being produced is not a problem
within the context of a given system of basic goods.
All new goods including new kinds of machines are
non-basics for the given system of production. Cheers,
ajit sinha

I reply: at best this remark seems to confirm the point I was making. In the real world, 'technical change' includes the introduction of a new machine to the production process. Therefore (1) the correct analysis (one which does not assume away the very point at issue) of such technical change must be a comparison between 2 different *basic* systems; (2) the Okishio theorem tells us nothing about the movement of the real world profit rate, in the face of real word technical change; (3) I remain puzzled as to why you place so much stress on results that you achive by entirely unrealistically holding the set of (basic) goods qualitiatively identical -- the fundamental limitation to economic science (and value) that you wish to stress is surely given by the point about real world technical change that I am making? (4) For my own part I believe the LTV is essential precisely because it provides a common substance and hence unit of value through real world technical change (the *magnitide* of this substance in any commodity changes, but the substance and unit itself does not, through technical change).

Your further thoughts on the above would be very much apperciated. Specifically if I have got something wrong I'd be very grateful if you could explain why and how. I will otherwise remain confused!

Many thanks,


--- Andrew Brown <A.Brown@LUBS.LEEDS.AC.UK> wrote:
> Thanks to Paul and Ajit,
> Have always been intrigued by Ajit's interpretation
> of Sraffa (I speak
> as an interested layman on Sraffa). Paul, I did not
> think you subscribed
> to Ajit's interpretation. I thought you held a
> labour theory of value. I
> thought that Ajit, by contrast, takes Sraffa to show
> us that no theory
> of value, in any accepted sense, is possible (time
> -- technical change
> -- takes us from one 'system' to another, analogous
> to moving from one
> 'language game' to another, hence rather disabling
> economic science).
> But the conclusion to this paper talks about a
> fundamental limitation on
> economic science as such, in line with Ajit's view,
> thus I am puzzled
> that you (Paul) should subscribe to it. No doubt I
> have misinterpreted
> both of you - so apologies in advance for that...
> To my inexperienced mind, a more fundamental point
> than the one you make
> in this paper is that 'technical change', in the
> real world, involves
> change in the goods produced (e.g. a new machine).
> Given such a change,
> then you can't compare prices before and after
> change (as you do in the
> paper, by keeping the economy's goods qualitatively
> identical) can you?
> Albeit this doesn't provide the immanent angle on
> general equilibrium
> theory, but perhaps it makes Ajit's point more
> forcefully, when it comes
> to practical (real world) considerations? Or, more
> likely, I have got
> something wrong somewhere.
> On a related aside, perhaps you can help me with the
> following. The
> Okishio theorem tells us that viable technical
> changes cannot lower the
> rate of profit. But how can this tell us about 'real
> world' technical
> change, where, say, a new good is introduced? As far
> as I can see it can
> tell us nothing about such a case, but no doubt I
> have got all this
> horribly wrong (people as far apart as Steedman and
> Fine seem to me to
> have stated that 'empirically' the rate of profit
> can only fall if real
> wages rise).
> Many thanks,
> Andy
> -----Original Message-----
> From: OPE-L [mailto:OPE-L@SUS.CSUCHICO.EDU] On
> Behalf Of Paul Cockshott
> Sent: 08 March 2005 12:08
> Subject: [OPE-L] standard commodity
>  Ajit and I have written a paper on the significance
> of the Standard
> commodity which, with Gerry's permission I am
> posting to the list.
> It is at:
> >

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