[OPE-L:3410] Re: Value of Money

Steve Keen (s.keen@uws.edu.au)
Mon, 14 Oct 1996 19:52:11 -0700 (PDT)

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Alan had a short question for me and Mike in the midst of this post:
> I ask Steve Keen and Mike Williams the simple question: how
> do they distinguish between production and inflation? The
> need for a proper theory of value does not arise from
> paying Marx his due but from paying bills with money.

I use the conventional statistical approach: an indexed basket of
commodities, where the basket reflects som aggregative goal. So, for
example, to measure inflation vs production in consumption goods, I'm
quite happy to use the consumer price index; to measure inflation vs
production in capital goods, the capital price index; to measure asset
price inflation, composite asset indices based on the relative weighting
of assets.

All of these are problematic theoretically, but I don't think the
problems outweigh the usefulness.

I don't see the connection between your question and the subsequent
sentence, however. But to try an answer, I think one can both give Marx
his due *and* contend with the reality that one pays bills with
money--but that this can't be done within the commodity-money framework.