Re: [OPE-L] standard commodity

From: ajit sinha (sinha_a99@YAHOO.COM)
Date: Wed Mar 23 2005 - 09:55:04 EST

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

> 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.

Andrew, you may be interested in ghost stories and
ghosts may be having real influence in many people's
life. But that does not mean that my paper or Sraffa
or anyone else must deal with ghost stories. The
problem appears to me is that you have a private
meaning of numeraire. Our paper deals with numeraire,
which has a well defined meaning in economic theory,
particularly in the theory that our paper is designed
to critique. How about if I say that poverty is the
most serious economic problem and your theory says
nothing about how to measure poverty or reduce
poverty. So, there! That's my criticism of your
theory. You will be legitimately allowed to say,

> 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 why do we have to do this? What theoretical
purpose does it serve?
 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.

How does value help you here?
> 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.

Yes, but the statement that it has "a positive
relationship" does not make sense. First of all if
value theory has to explain why 'one quarter of corn =
x cwt. of ironí, as Marx put it, then in that case the
statement that labor and prices have positive
relationship is meaningless. So you will have to say
that well, 'value theory is not designed to solve the
problem Marx posed for it. It is supposed to explain
why one quarter of corn which used to exchange for x
cwt. of iron, now exchanges for y cwt. of iron? And
your statement means that in this case, the change in
the prices can only be explained by changes in the
labor values, i.e., if y is smaller than x, then the
relative labor content of iron must have increased.
This is the only meaning I can make of your positive
relationship statement. So let's see how far your
statement goes in this case. Now since Ricardo it is
well known that the exchange ratio between corn and
iron could change simply because the distribution of
income between wages and profits changed without any
change in the direct and indirect labor content of the
two commodities. So what would your statement in this
case mean? Where is the beef? Now let me hummer you
further. Let us suppose I assume that income
distribution remains the same, then you would say that
in this case the price change must have come about
because of technical change and this price change is
explained by the changes in labor values. But to
establish any claim like that you will have to
establish a relationship between labor-values and
exchange rate to begin with, which your first
statement logically cannot do. That's why I keep
saying that to establish that labor-values explain the
changes in prices you will first have to establish a
relationship between labor-values and prices, which is
the real question of the labor theory of value. There
is no escape from it. As far as what I think about
labor and all this--may be some other time. Cheers,
ajit sinha

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