Re: [OPE-L] standard commodity

From: Rakesh Bhandari (bhandari@BERKELEY.EDU)
Date: Wed Mar 23 2005 - 13:49:36 EST

At 6:55 AM -0800 3/23/05, ajit sinha wrote:
>--- 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.

Economists' understanding of the numeraire is a private affair; it
is the meaning that money has in the private 
world of economists and nowhere else.

>  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,
>  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 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.

No Marx is not interested at first in explaining 
the exchange ratio. In the first part of Capital, 
he wants to show what it is that money has to 
alone represent if commodities only exchange 
against it. He tries to unlock the mystery by 
beginning with the accidental form of value which 
is not analyzed in order to explain the exchange 
ratio of linen and cloth but to uncover the 
substance of value which a single commodity alone 
comes to represent in the highest form of value.

Let's take your approach; say I make steel the 
numeraire; then (assuming that steel is a 
universal input) I reduce the inputs in all other 
commodities to steel so that I may assign them 
each a respective steel value. A numeraire 
however represents nothing other than itself. It 
is only a convenience for the calculation of 
exchange ratios.But how can a mere device for 
calculation convenience and have fetishistic 
power? Giving everything a steel value does not 
explain  in virtue of its representation of what 
would steel be able to monopolize direct 
exchangeability. There is no reason why 
commodities could not exchange against each other 
in terms of their steel values.

Money is a fetish because it alone embodies the 
social relation among laborers, not because all 
other commodities can be reduced to embodiments 
of its concrete substance.

  For Marx gold does not only represent itself. 
Because Marx shows that it alone represents 
abstract social labor (this is what Marx 
discusses in the three peculiarities of the 
equivalent form), the mystery of fetishistic 
power is thereby disclosed. Gold is (of course 
was) not a fetish in virtue of any of its own 
properties or its status as a physical input 
common to commodities; it is a fetish in virtue 
of its monopoly of representation of a social 
substance of which all commodities are a mode of 

So my sense here is that Marx thought he had 
established that the substance of value had to be 
abstract social labor because  in alone having 
come to represent abstract social labor money had 
thereby gained fetishistic powers that a 
numeraire as a mere calculation device alone 
could not possess. That is, Marx's theory of the 
substance of value allows him to explain the 
power of money.


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