Re: [OPE-L] standard commodity

From: Andrew Brown (A.Brown@LUBS.LEEDS.AC.UK)
Date: Tue Mar 22 2005 - 11:20:00 EST

Hi Ajit,
In a system of generalised commodity production we aren't much interested in the exchange value of a commodity in relation to just one other commodity! That isn't what we mean by 'purchasing power' or exchange value, nor is it the true significance of  'price'. We do not acquire money only for its own sake but because it allows us command over all the goods produced in the economy, in some or other definitie quantitities. Isn't this the key significance of money? It (money) is the general equivalent and it has a crucial quantitative dimension for us that is not captured by reference to the exchange relation with just one good! (If you disagree then here certainly lies a deep disagrement between us).  We are interested in generalised purchasing power and so need to quantify it. But, absent a theory of value by which we can reduce to one dimension the manifestly diverse goods that money enables us to purchase, all we can do to quantify purchasing power of, say, a unit of money is consider the whole set or vector of goods, each of which costs one unit of money. Then one unit is 'worth' one of these vecotrs, two units is worth two and so on. But this obviously breaks down once new goods come along so to get a measure of generalised exchange value -- or purchasing power -- through time then becomes impossible without the 'third thing', value, that allows us to commensurate otherwise incommensurable diverse commodities. 
Alas, your other replies seem to me to offer a 'revisionist' history of our actual conversation!  But I really would like to know your view of the relationship between labour times as prices. Please, this question does not presuppose you think there is one, you can just reply: 'I don't think there is any relationship'. Any sort of substantive reply would be very helpful for me. I tried to answer this question for myself previously but failed to make any sense to you. Let's truncate my own previous reply: in terms of simply magnitude (your favourite terms?), I think it is a positive relationship, and a pretty strong one. But it is not exact, not ergodic.
Many thanks,
-----Original Message----- 
From: OPE-L on behalf of ajit sinha 
Sent: Tue 22/03/2005 14:11 
Subject: Re: [OPE-L] standard commodity

	--- 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.
	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?
	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
	> 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
	make your point by using your own example? The reason
	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
	> words, your strong intuition that the addition of
	> 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 reply: well, have a think about it!
	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?'
	> I reply: you asked me about the relation between
	> 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
	> about "economists".
	> 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
	> 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.'
	> I reply: you asked me about the problem of the
	> '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
	> ask me.
	But I did not ask you about the problem of
	"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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