# Re: [OPE-L] standard commodity

From: ajit sinha (sinha_a99@YAHOO.COM)
Date: Tue Mar 22 2005 - 09:11:55 EST

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

> Ajit,
>
> You wrote: 'So from your example, 1 mars bar =
> 1/1000 car, 1
> airplane = 100 cars, 1 television = 1/200 cars. Now
> let us suppose that after technical change we have 1
> mars bar = 1/1005 cars, 1 airplane = 90 cars, 1
> television = 1/190 cars, and 1 "new good" = 20 cars.
> Now can we at least say that the price of mars bar
> in
> terms of car has fallen, the price of airplane in
> terms of car has fallen and the price of television
> in
> terms of car has risen? If not, why not?'
>
>
> I reply: Yes you can.
_______________________
If I can then all your objections to our paper fall
with it and at the same time it shows why the question
of "new good" is irrelevant to the problem at hand.
_________________
Andy:
What you can't do is say what
> has happened to the
> 'exchange value' or 'purchasing power' of any
> particular good, in the
> face of new goods. A numeraire is, I take it, an
> index of exchange
> value, for what other general significance can it
> have absent value
> theory?
_________________________
Ajit:
I don't know what you take numeraire for. But in
economic theory, given a system of price equations
with prices being homogenous of degree zero, any
commodity or a combination of commodities from the
system can be taken as the standard against which
other commodities are valued. That commodity or the
that combination of the commodites is called the
numeraire. Now to what you are saying I can't do: If
you go back to your and my example you can read it
backward and still say what is the purchasing power of
one unit of car in terms of mars bar, in terms of
airplane, in terms of television and in terms of the
'new good". If you want to compare period one with
period two, you can still say whether the purchasing
power of the car has increased or decreased in terms
of the mars bar, the airplane, and the television. So
your point remains that I cannot say whether its
purchasing power has increased or decreased in terms
of the "new good". But of course, it is obvious.
Something has to be there for at least two time period
to show a change. But how does it invalidate all price
theory?
_______________________
>Andy:
> The exchange value of a good is a vector containing
> the quantities of
> all other goods for which the good in question will
> exchange. The
> incommensurability of exchange value before and
> after technical change
> is therefore obvious. What do you think exchange
> value is? The problems
> of measuring inflation and 'GDP' (so called index
> number problems) are
> where all these issues become nice and clear.
_______________________
I don't know what is "obvious" here. As I have shown,
and should be obvious to anybody that you can always
compare the prices of goods which exist in both the
time period. You have to tell me why and how I cannot
do that. I don't know how the problem of "measuring
inflation" and "GDP" come into picture when we are
dealing with relative prices of goods? It only shows
that you are simply confused about the subject matter
we are discussing.
____________________________

>
>
> You wrote 'I simply don't understand why? What do
> you mean by
> incommenrable?'
>
> I reply: I can't compare apples to oranges without
> reducing them to some
> common third factor that they both possess, say
> their weight.
__________________

Yes, but you can compare the prices of your mars bars
in terms of the car. Where is "incommensurability"
here? Why do you have to bring apples and oranges when
you had yourself brought four commodities such as mars
bar, airplane, television, and car. Why couln't you
you find yourself jumping to a fresh apples to oranges
is that you are unable to stick to systematic
arguments. Being unsystematic and all over the place
does not make a profound theory.
_______________________
>
>
>
> You quote me, "What is that other thing?.... it is
> value!! In other
> one
> or two new goods isn't that 'significant' is in fact
> a
> display of your implicit belief that there is a real
> thing called 'value' that is distinct from exchange
> value! This is why a theory of value is central to
> economics." And you write 'Your above statement
> makes absolutely no
> sense to me'.
>
_________________

I had a lot of think about it Andrew. You forget that
I have not only read Capital but have studied it
deeply. I know my Marx.
________________________
>
> You wrote, 'How do you move to aggregates and
> averages when you
> are dealing with relative prices of commodities?
> Wasn't that the subject matter we were dealing
> with?'
>
> labour times and
> prices. Labour time entails an intrinsic value
> notion so it is natural
> to consider both relative and absolute values.
_____________________
That still does not explain why you move to
"aggregates" and "averages" when the subject matter is
relative prices.
_____________________
>
>
>
> You quote me: "Economists from Ricardo (93%) to Joan
> Robinson (let
> alone your co-author, as Rakesh appropriately
> pointed
> out) seem agreed on this." And you write: 'Forget
> First of all, I have read a
> few economists too and I'm in a business of
> interpreting real good and tough ones and so there
> is
> no need to get side tracked on interpretation
> issues.
> Secondly, as you know, I'm a pretty arrogant sort of
> a
> chap. I don't care what sort of a name you throw at
> me, if I disagree I would be happy to argue with the
> person rather than argue second hand. So the best
> way
> to get anywhere with me is to develop your own
> arguments without throwing names.
>
> I reply: I was trying to indicate the nature of my
> position by reference
> to a wide strand of economic thought. This is not an
> appeal to
> authority. What do you think the relation between
> labour times and
> prices is? Have a chat with your co-author!
________________________

I don't need to have a chat with my co-author. As a
matter of fact there is no need to drag him into this.
He has only co-authored a paper with me he does not
have to agree with me on every issue now. You ask me:
"what do you think the relationship between labour
time and prices is?" Now you think I'm going to fall
for such trap? First you assert that there is a
relationship between labour-time and prices. When I
ask you, so tell us what kind of relationship it is.
You tell us that actually labor-time cannot be
measured and the relationship is quite chaotic
etc.etc. Since then you are going on and on without
being able to make one single coherent statement about
this relationship. Now you put a question to me which
assumes that I must accept that there is a
relationship between labor-time and prices and the
only thing left for me is to tell you what I think is
this relationship. Smart but not smart enough!
Actually i'm not going to tell you what I think. I
first want to find out what you think is this
relationship. Once you tell me that, then I will show
you the weakness of your reasoning, which will in the
end reveal the weakness of your criticism of our
paper, of Sraffa, as well as your understanding of
Marx.
_______________________
>
>
> You quote me. "On 'measure' I mentioned that you
> haven't quite
> parahprased me correctly. We can't 'see' the weight
> of
> an object but it still has weight doesn't it? We
> could
> measure it on a pair of scales, using 'weights'.
> These
> 'weights' are analogous to prices and are the
> 'external measure' of weight. The immanent,
> invisible
> measure of weight is the quantitative aspect of the
> force of weight (gravity) itself (in units
> appropriate
> to this force). This immanent measure is analogous
> to
> labour-time. It's a useful analogy but like all
> analogies it ain't perfect....   Still mumbo-jumbo?"
>
> And you reply, 'Yes! Because I can change
> "labor-time" with anything I
> want and the analogy will remain intact. In any
> case,
> an analogy is not a substitute for a theory. All it
> can do is to help someone understand a theory. You
> are
> smart enough to know that all this is mumbo-jumbo,
> so
> I don't understand why you are writing them. You are
> simply either not reading them after writing or not
> thinking about the nature of the problem you are
> dealing with. If you are someone who can read Marx,
> Sraffa, Wittgenstein, Hume, and others and claim to
> have some understanding of them, then you must be
> able
> to think through your own thoughts. How can you
> present this kind of unorganized thoughts as an
> alternative to serious work like Sraffa's? You have
> to
> be more serious than that. I am trying to force
> people, particularly modern day "value theorists",
> to
> think clearly on important theoretical issues for
> their own good. It is no good to oppose ajit sinha
> without any understanding of the issues involved, as
> Rakesh does.'
>
> 'invisibility' of value.
> So I gave an analogy involving something else
> (weight) which is
> invisible. This shows, amongst other things, that
> there is no inherent
> problem with positing invisible forces or substances
> (assuming that we
> agree on the existence of 'weight'). If you have
> some other problem with
> value than invisibility, then fire away but I can
> only reply to what you
____________________
"invisibility". It was you who said that labor is the
"stuff" embodied in the commodities. So I showed you
that your "stuff" analogy does not work. Now, in your
new analogy the gravitational pull cannot be taken as
the "stuff" or what ever embodied in the things that
have weight. In any case, there is a well developed
theory that explains the relationship between the
gravitational pull and the weight of things. When we
read physics text books they don't give us an analogy
of labor-time and prices. So why can't you just give
me the theory rather than the analogy from physics?
The reason is that you don't have a theory but you
will not admit to not having one. And that is why you
are going from apples to oranges to stuff to weight,
etc. etc. Cheers, ajit sinha

__________________________________
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