Re: [OPE-L] standard commodity

From: Rakesh Bhandari (bhandari@BERKELEY.EDU)
Date: Fri Mar 25 2005 - 12:48:19 EST

At 10:11 PM -0800 3/24/05, ajit sinha wrote:
>Just a quick response.
>--- Andrew Brown <A.Brown@LUBS.LEEDS.AC.UK> wrote:
>>  Hi Ajit,
>>  The numeraire certainly ain't money!
>>  Re, your discussion of 93 percent correlation: if
>>  there is a 93 percent
>>  correlation over a number of 'observations', then of
>>  course there may be
>>  subsets of observations with zero correlation, and
>>  some with negative
>>  correlation too.
>Have you seen Ricardo's "Principles"? If you have,
>then why are you attributing such things to Ricardo?
>If you are talking about LTV, then as I understand it,
>"T" here stands for Theory. Therefore, my point was a
>theoretical one. That is, when you say that LTV states
>that "there is a positive relation between labor-time
>and changes in prices", then my theoretical point that
>a change in price can come about because of change in
>distribution without any change in labor element
>leaves your theory in deep trouble.

Please Ajit can we do something more than talk about Malthus' objection
to Ricardo's theory of value?

Marx did not attempt to explain exchange ratios in unmediated fashion
by the theory of value. So this objection is meaningless as we know
from Marx's own chapter on the effect of distribution on exchange
ratios. If you come back and say that Marx did not figure the effect
of distributional shifts on the standard of value and thus the effect
on nominal size of the piece from those distributional shifts, then
you are just obsessed with what even in your terms would have to be a
nominal problem.

And it's not even clear to me that there would have to be a nominal
change. To be sure, if we assume that the rate of profit in the gold
industry will have to be same as in the bulk of other industries
after the distributional shift then the total size of pie will
doubtless change as a result of distributional shift. But it is not
clear that this is what would happen in the gold industry. It could
be that the value of gold in the sense of the labor time that it
represents would not change after a distributional shift; the burden
of adjustment being put solely on the rate of profit in the gold
industry which then would not tend towards equality with the new
uniform rate of profit that will be earned in the bulk of other
sectors. If this is so, then a distributional shift will not have an
effect on the size of the pie as measured in gold.

Moreover, Marx's theory of value had a qualitative side. Namely, he
attempted to explain why only a single commodity had come to
represent an aspect of all commodities--their embodiment of
homogeneous or abstract social labor time--and why in virtue of that
sole representative power that single commodity had fetishistic
power. Any attempt to say that value is redundant on the grounds that
exchange ratios can be determined without it will leave us unable to
dissipate the mystery of the fetishistic powers of money.


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