Re: [OPE-L] standard commodity

From: ajit sinha (sinha_a99@YAHOO.COM)
Date: Fri Mar 11 2005 - 08:07:03 EST

--- Andrew Brown <A.Brown@LUBS.LEEDS.AC.UK> wrote:

> 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.
I don't think the burden of argument can be on me.
Let's suppose that I have convinced you that a theory
of value cannot deal with changes in technology. Now
if you think that without a theory of value one cannot
do much in economics and economics must necessarily
deal with changes in technology. Then you come to the
conclusion that the project of economics as a
scientific discipline must be abandoned. But then
what's wrong with that? Why should there be a
necessity that economics must be a scientific
discipline? On the other hand I find that most of the
schools of economic thinking except neoclassical
economics and to some extent Marxian economics go
about their business without caring about having a
theory of value, which includes Keynes. Now to what
extent their stories are coherent and how far they can
go without a theory of value is something that needs
to be looked into closely but there is no denying that
they are able to say a lot of things economic in a
reasonable way. I think what we need to put on the
agenda is: why a theory of value is important to
> 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;

Yes, but why comparison between two systems must imply
comparison of prices in the two systems. One may be
able to compare various other things without taking
price comparisons into account.
> the Okishio theorem tells us nothing about the
> movement of the real world profit rate, in the face
> of real word technical change;

Let's leave Okishio theorem out because it is not
relevant here. But in general, I do not think that
there is such a thing like "real world". All real
worlds are constructs of one kind or the other.
(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?

The theory basically needs only one basic good to work
itself out. I don't think it is unrealistic from any
kind of real world perspective. Most of the raw
materials and food grains etc. are not changing
qualitatively from one production period to another.
(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).
The problem with LTV is that one does not know what
one means by it. Most of the people who are writing on
LTV these days don't even know what theory stands for
in LTV. For many of them LTV is like a circus animal,
which does all kinds of tricks before your eyes.
> 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,
> Andy

I have a feeling that I have made you even more
confused. But talking to you is always a pleasure!
Cheers, ajit sinha
> --- 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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