Re: [OPE-L] standard commodity

From: ajit sinha (sinha_a99@YAHOO.COM)
Date: Wed Mar 16 2005 - 08:09:52 EST

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

> Full reply as promised.
> The conclusion to your paper, with Paul C., stresses
> that the comparision between values before and after
> technical change is impossible, or better still,
> meaningless (analogous to comparison between
> language games for Wittgenstein). But this result is
> obvious, given the general case of technical change,
> where a new (basic) good is introduced and hence the
> respective price vectors, before and after technical
> change, are incommensurable. I simply do not see
> what is so significant about showing
> incommensurability under the relatively superfical
> special case where 'technical change' maintains
> qualitative identity of all goods in the economy,
> merely involving new input or output magnitudes. Why
> would Sraffa himself have bothered with such a
> relatively trivial matter -- as part of his lifes
> work -- when the general case is obvious and renders
> the intricacies of the trivial case, indeed trivial
> (assuming, for sake of argument, your interpretation
> of Sraffa)?

I think you are missing the fundamental point. It is
one thing to say that all languages are dynamic and
evolve and change so talk about meaning of words is
meaningless and quite another thing to establish under
what conditions words do have meaning and how it is
impossible to assign the same meanings to the words
when those conditions change. I don't agree with the
way you are presenting the problem. There is no such
thing as "new" basic good. Similarly, your statement
that "I simply do not see what is so significant about
showing incommensurability under the relatively
superfical special case where 'technical change'
maintains qualitative identity of all goods in the
economy, merely involving new input or output
magnitudes." As a matter of fact the question of
technical change or for that matter any kind of change
does not arise in Sraffa's given input-output tables.

Sorry if the above is repeteting my earlier points
> -- and this is a sign that out conversation may be
> about to stall -- but some annotated comments below.
> -----Original Message-----
> From: OPE-L on behalf of ajit sinha
> Sent: Fri 11/03/2005 13:07
> Cc:
> Subject: Re: [OPE-L] standard commodity
>       --- 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
>       economics?
>       __________________________
>       Well, the history of economic thought would seem to
> suggest that value theory is central to economics.
> (We go from LTV through confused eclectics like JS
> Mill to marginal revolution, after all). Keynes
> clearly owes debt to marginalism. You ask 'what is
> wrong' with the hypothetical case of all economics
> being useless? Answer:  it is helpful to push the
> logic of an argument to show it leads to such a
> conclusion, especially when one has on offer an
> alternative point of view that suggests economics
> need not be useless. Turning to your point that 'on
> the other hand' some economics seems to say sensible
> things then I certainly deny that *useful* things
> can be said about the essence of capitalism absent a
> value theory -- where an economic theory is useful
> for long-run and system-wide issues concerning
> capitalism, and appears to lack a value theory, then
> it unwittingly presupposes one, in my view.
I'm not so sure about the history of economic thought
point you make. Adam Smith was able to say a lot of
things economic without having a theory of value.
Ricardo thought he could get away too, but had to deal
with it because of the necessity of generalization of
his one-good model distributional proposition. Now we
know that Sraffa has solved the problem associated
with it. Even most of Marx can be made sense of
without a theory of value. It seems to me that only
neoclassical economics needs a theory of value most
desperately--as all economic variables are some kind
of price for it. But well, I'm only thinking aloud. I
have not come to a conclusion about the significance
of a theory of value in economics. By the way,
"nonscientific" does not mean "useless", at least in
my book.
>       >
>       > 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.
>       ______________________
>       This leaves only a few ratios (e.g. proft rates;
> income shares) available for comparison through time
> (I won't call them dimensionless given Philip Dunn's
> recent post). These are the things to be explained
> by economics and social theory and they defy
> explanation absent some substance, homogenous
> through time and space, that can can plausibly be
> considered to be manifested by them (or by the terms
> that constitute them)-- this is the substance of
> value. Explanation of a quantity generally requires
> reference to somehing that is quantiatively and
> qualitatively related to the quantity in question.
> E.g. we explain weight of a sack of potatoes as a
> function of the the number of potatoes in the sack.

Actually I can show you less potatoes weighing more
than more potatoes! Anyway, the question is what does
substance of value mean. What does this substance do
in determining prices? And from your point of view,
why the substance is not something like petrol or
electricity? As we all know, when it comes to
measuring labor even at any given point in time, let
alone over periods of time, we have to not only deal
with the heterogeneity but also some sort of
"fictitious" labor and not the "real" labor given the
"socially necessary" clause. Cheers, ajit sinha

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