Re: [OPE-L] questions on the interpretation of labour values

From: Paul Cockshott (wpc@DCS.GLA.AC.UK)
Date: Mon Mar 19 2007 - 06:40:54 EDT

The problem is not so much with assuming that things have prices
at one instant in time, and in principle deriving differential
equations to predict the changes in the next period.
That can all be done using flow rates. The problem comes
when you tie the idea of 'empirically given' to the term
'stock of money capital'. Then it is no longer a question
of empirical prices at one point in time, but an attempt to
construct a stock quantity, my argument is that it is unclear
what is meant by that stock quantity.

This may have less relevance to Fred but it is certainly
relevant to Ian who wants to say that this stock of money capital
has a labour value given by the flow of profits claimed by it.

-----Original Message-----
From: OPE-L [mailto:OPE-L@SUS.CSUCHICO.EDU] On Behalf Of Rakesh Bhandari
Sent: 19 March 2007 07:37
Subject: Re: [OPE-L] questions on the interpretation of labour values

>On Sat, 17 Mar 2007, Pen-L Fred Moseley wrote:
>>M is whatever it is in the real capitalist economy.  With
>>unlimited resources, one could estimate M.  But this is not
>>necessary for the theory.  M is an actual magnitude, which
>>exists prior to the production of the output, and which can be
>>taken as given as such, whatever it is.
>I think Paul has a good point in his critique of the "given-ness"
>of M.  Duncan Foley has made a related point, which pertains to
>Fred's claim that M (whatever it is) "exists prior to the
>production of the output".
>That is, a stash of "money to be advanced" can be said to exist
>_prior_ to production only (a) at the micro level of individual
>firms (perhaps!) or (b) in a fictional economy on a synchronized
>annual agricultural cycle.  In real capitalist economies
>production cycles are of various time spans and are intertwined.
>There's no macroeconomic time "prior to production" at which one
>could count up M.  (What we can count: stocks at a point in time,
>anf flows over a definite period of time).

Of course this has all been previously discussed, and I'll assume
that there exists a traditional transformation procedure--that is put
aside my inverse transformation interpretation.

  For Marx the cost prices are expressed, well, in prices, so that
implies there already exists before the transformation a MEL
determined by productivity in the gold sector. Now let's say the cost
prices are determined on the assumption that prices are proportional
to values and we have the famous transformation of simple prices into
prices of production. I see no reason to believe that the exchange
value of gold will be affected by the equalization of the profit
rates, though that will probably affect the distribution between rent
and profit in the gold sector (nor should the exchange value of gold
be affected by changes in the ratio of profits to wages).  In other
words, the exchange value of of gold in invariant to the
redistribution of profit among the sectors in which reproducible
commodities are produced and thus total simple price should remain
equal to total price of production. The size of the pie as measured
in gold should not change as capitalists share the total surplus
value among themselves. Of course you may object that total profit
will no longer equal surplus value even if this iterative process
does not reach equilibrium but as Shaikh and Gouverneur argue this is
only an optical illusion.

Of course there was with money gold commodity a real problem of
fetishism, that is it appeared that there was too much gold or too
little gold chasing commodities. Which is the only an expression of
disproportionalities in the social relations of labor, that is
productivity growth in the gold sector was racing ahead or falling
behind  average productivity growth.

Because Marx wants to study the effects on the relations of
production of the development of the  forces of production of truly
reproducible commodities, the kind of commodity with which he begins
his investigation, he assumes throughout capital that the value of
gold is fixed and that its exchange value is determined by that
value, as Fred has argued.  This is a perfectly reasonable scientific

It also leads to more fertile results than the construction of an
unnecessary and purely analytical standard commodity. Which seems to
have solved a problem that Ricardo wrongly thought important, that
is, distributional changes would affect the exchange value of gold.
Ricardo simply forgot that gold does not come under the laws of
reproducible commodities. I have argued this at length on this list
with quotes from Ricardo; his own confusion is evident in these
contradictory passages.


>Ian made the point that sums of money have a real existence,
>whether as stashes of coin or as bit patterns on bank computer
>hard drives (I paraphrase).  That's true, but Paul's point is that
>it's not at all clear which of these real money-tokens should be
>added up to give Fred's "M".
>Allin Cottrell

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