[OPE-L:3203] Re: IVA and all that

andrew kliman (Andrew_Kliman@msn.com)
Tue, 1 Oct 1996 09:33:59 -0700 (PDT)

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A response to Steve Keen's ope-l 3190.

Steve: "what the hell do prices mean in a one-sector model? You need at least
2 sectors to have even relative prices."

As Marx puts it, when taken by itself, price is simply the monetary expression
of value. So, yes, there must be money in addition to "another" commodity,
but accounting money is sufficient to *express* value. Marx understood this
extremely well.

If one denies that commodities have something in common, i.e., denies that
they are all values, then of course there is nothing for price to express and
so only relative prices (or values) matter. For Marx, however, there were 2
senses of "relative value"; the typical one, and the intrinsic relativity of
value per se. As productivity rises, a commodity's *own* value falls, even if
there is no 2d commodity or even if the 2 exchange in the same ratio as before
(i.e., the exchange-value of the 1st is constant). Marx rejected in advance
the Walrasian notion that the value of the "numeraire" is constant. He
considered this fetishistic.

As my example in ope-l's 3168 and 3176 (same example) indicates, measurement
in money not only gives different answers from measurement in use-value
("real" figures), but both give different answers from measurement in
labor-time. It becomes an important theoretical problem, not yet
satisfactorily answered, to explain whether and why the labor-time magnitudes
matter if the money magnitudes are moving in the other direction.

Steve: "I would argue that TSSers should start with at least a 2-sector model
(Marx, after all, used 2 or 3 sectors), which makes it possible to bring in
relative prices based on the labor value of each sector. Technical change
which alters the production method for "constant capital" would then have a
price to alter."

I've already answered the part about constant capital having a price to alter.
I reject the blanket statement that Marx "used 2 or 3 sectors." He examined
one particular problem by dividing social production into 2 --- NOT 3 ---
departments (this is an important point, if one wants to understand what the
reproduction schema were really about). In his analysis of the immediate
process of production, however, chapter after chapter examines a SINGLE
capital. Moreover, the Ch. 9, Vol. III transformation shows that none of the
results of that analysis need to be modified when one takes multiple branches
and competition into account.

Clearly, both Jerry and Steve are right that the answers to models are
affected by the number of sectors. For instance, quantitative price/value
differences will affect lots of things. But in the present phase of
discussion we are not examining behavior or structural models. We are
examining relations of determination, accounting principles, invariances, etc.
by means of particular examples. As Duncan indicated, it is now clear that
the TSS results differ from results obtained by simultaneous determination for
reasons that have nothing to do with behavioral or structural assumptions.
They differ when v = 0, when v > 0, when there's 1 sector, when there's 2
sectors, when there's circulating constant capital, when there's not, when
there's fixed capital, when there's not, when prices = values, when they
don't, when profit rates are equal, when their not, when there's no growth,
when there is growth .... So what needs to be studied, and is being studied,
is why they differ per se.

Andrew Kliman