RE: [OPE] Problems in International Political Economy (IPE) shaikhs defence of Marx

From: Paul Cockshott (
Date: Thu Apr 17 2008 - 18:44:32 EDT

The problem with the argument he presents is that it just seems to
reiterate Marx's criticism of Ricardos theory of the general price level.

Marx's criticism is based on the idea that the MELT is fixed by
the labout time necessary to produce gold. But there is an inconsistency
in this since he is assuming what has to be demonstrated.

When applied to other commodities it is assumed that if the exchange
value of a commodity falls below its value, labour will be withdrawn
from the production of that commodity and vice versa if the exchange
value rises above labour value.

Thus the proportionality between value and exchange value is something
that is established by competition, with value being the point to
which exchange values gravitate. The proportionality of exchange value
and value is a result not an axiom.

When Marx turns to money he now makes the proportionality of value and
exchange value into an axiom : the direct price of a commodity is the
ratio between the number of hours labour in the commodity and the
number of hours labour in a gold coin.

If the supply of money in a country increases, according to Marx,
the result is not a rise in prices, but a withdrawal of part of the
coin into hoards or into jewelrey. 

But why should this happen?

What is it about gold that enables people to know its true value?
Since for all other commodities competition acting through supply
and demand that enforce the law of value, why does this not occur
with gold?

What is supposed to be the mechanism by which holders of gold know
that goods are trading at their values, and that they should relegate
more of their coins into hoards?

Why is there no real balance effect on aggregate demand?

If capitalists find themselves having bigger cash balances, why do
they not attempt to invest this in additional labour and means of
production, thus bidding up the price of labour power and constant
capital goods?

Paul Cockshott
Dept of Computing Science
University of Glasgow
+44 141 330 1629

-----Original Message-----
From: on behalf of
Sent: Thu 4/17/2008 4:32 PM
To: Outline on Political Economy mailing list
Subject: Re: [OPE] Problems in International Political Economy (IPE)

> "Following Anwar Shaikh, I think a Marxian perspective on trade

> incorporates a theory of absolute advantage." 
Jerry, thanks for your reply. Can you please expound on this? 
> I
am not sure whether I understand this. 

Hi Dogan:

His perspective is explained in (1980) "Foreign Trade and the
Law of Value, Parts I and II",
_Science & Society_ and
(1980) "On the Laws of International Exchange" in Ed Nell ed.
_Growth, Profits, and Property_.  These can both be downloaded at:

In solidarity,

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