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

From: ajit sinha (sinha_a99@YAHOO.COM)
Date: Tue Mar 20 2007 - 07:38:51 EDT

--- Ian Wright <wrighti@ACM.ORG> wrote:

> Sure $1 represents value but is not itself value.
> But consider $1 of
> money-capital that costs $r to borrow over the
> production period. The
> $r, the price of money-capital, also represents
> value. But what value
> does it represent?
Okay, Ian! I'll make a brief intervention here but
then don't expect me to continue. I'm working on a
couple of papers that I'll send you after a little
while, then you will know why. But any way, let's go
step by step. Imagine a subsistence economy. Will
there be a positive r for borrowing money in this
economy? If not, why not. And if yes, how is it
incorporated in the economy? Now think of a one good
corn economy with surplus. Suppose 1 ton of corn in
one year produces 1.2 tons of corn. Now, in
intertemporal context, one would say that the price of
1 ton of corn in period 0 is equal to 1.2 tons of corn
in period 1. That is P0 = (1 + 1/5)P1. 1/5 is your r.
But the system can generate positive r for not
consuming the corn but lending it to somebody only if
the system of corn production actually produces 1.2
tons of corn out of 1 ton of corn. Now let me tell you
one more shocking thing: in an intertemporal framework
Sraffa does not ASSUME input prices to be equal to
output prices! Cheers, ajit sinha

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