[OPE-L:5071] Re: Sraffa's Non-Proof

Ajit Sinha (ecas@cc.newcastle.edu.au)
Mon, 19 May 1997 02:33:56 -0700 (PDT)

[ show plain text ]

Andrew insists that I should respond to this. The reason I did not respond
to this was that I thought it would be quite clear to anyone that Andrew
does not have any response to my point, so he is simply resorting to
rhetorical games. But it seems Andrew himself thinks that he has made some
theoretical arguments here, so then i'll respond.

At 11:41 AM 5/5/97 -0700, Andrew wrote:
>A reply to Ajit's ope-l 4912.
>I have shown that Sraffa does not prove that the magnitude of an equalized
>profit rate is unique, even if relative prices are stationary between the time
>of input and the time of output. Ajit's objection to my demonstration was
>that my prices were measured in dollars, but there are no dollars in Sraffa's
>I responded :
>"We can debate whether Sraffa was referring to a mythical economy without
>'dollars,' or whether he intended his constructions to have some bearing on
>actual economies. That would make for an interesting discussion, perhaps, but
>note well that I and Ajit have been talking all along about 'an economy,'
>i.e., any economy."
>.. "Hence, I was fully aware all along that one can postulate imaginary
>conditions in which 'prices do not change unless technology, real wages, or
>relative profit rates change.' My reference to Sraffa's non-proof has been
>posed from the beginning as an example ('For instance') of a result WHICH

Now what is there to respond here Andrew? You made a theoretical criticism
of Sraffa in his theoretical context. I proved to you that your criticism
was false. Then you brought in $, without even defining what this dollar is.
If it is a commodity-money, then its production condition must be specified,
which you did not do. Apparently it is a fiat money. This is introduced with
a lot of fanfare about "actual" economy, which Andrew is so concerned about,
as if there is an actual economy that produces only pig and iron. Then I
took the rhetorical wind out of his system by showing to him that his own
prices are not "actual" and cannot be "actual", so his theory is also
dealing with an abstract economy, to which he now seems to agree in a
non-commital fashion. Now, let's go on:
>Ajit has now defended his objection by dismissing economic arguments that
>refer to the real:
>"In economics the word 'real' is used only as a rhetorical devise, and has
>implied impact only on feeble minded."
>Given this position, Ajit should have no difficulty agreeing with my proposal,
>in the post to which he responds, on how we can settle this debate:
>"I'm happy to let Ajit pursue his theory, in which the profit rate is
>determined solely by technology, real wages, and relative profitability, given
>only that he makes clear that the results of that theory do not necessarily
>apply to any actual economies, and that such results cannot be used as
>'proofs' that propositions concerning actual economies are false. Agreed?"
>but his reply doesn't take up this point. So I reiterate my proposal now.
>Curiously, despite Ajit's dismissal of economic arguments that refer to the
>real, in the same post he objects to my demonstration that the profit rate
>doesn't necessarily equal Sraffa's rate on the ground that my profit rate is
>not the REAL profit rate!!
>"... the *real* value of 'capital' would not change, and the profit must be
>calculated on the *real* value of investment and not on the nominal value of
>investment." [emphases added]
>In ope-l 4638, he similarly invoked the real:
>"I think given *real* wages in Marx is very important. His rate of
>exploitation is an objective measure and not a monetary measure. ... So a
>change in workers consumption should change the necessary labor-time. It
>basically means a change in *real* wages." [emphases added]
>as he did in ope-l 4678:
>"As I said, time and time again, for a time period of a business cycle or so,
>say long term, the *real* wage basket, on the average, is held constant.
>However, in the secular time period it has a downward tendency." [emphasis
>and in ope-l 4710:
>"In a response to Jerry, I gave the evidence from India, where money wages
>have risen considerably over the last few years but not the *real* wages.
>Money wages have a tendency to adjust to *real* wages rather than *real* wages
>adjusting to some *given* money wages--at least not in any long term sense."
>[all emphases except last added]
>and in ope-l 4786:
>"My point is that in the long term perspective money wages adjust to *real*
>wages. Even when the class-struggle has influence (ie. upward influence), it
>must be on *real* wages and not just money wages. When you take *real* wages
>as determined in a socio-historical process, ie. independent of the
>determination of the prices of other commodities, then you can work out an
>objective measure of exploitation." [emphases added]
>There's a lot more like this, but I think the point is clear.
>It thus seems to me that Ajit's objection to discussion of the real in
>economics is contrary to his own practice. It also seems to me that his
>objections to my demonstration of Sraffa's non-proof are self-contradictory,
>so that my demonstration stands.

So the argument is that since I distinguished, as every economist who was
born on this plant before me has done, NOMINAL wages from REAL wages, my
arguments against his rhetoric of 'actual' is contradictory; and so, and
this is the greatest leap of logical faith, his flawed criticism of Sraffa
stands! First of all, Andrew should know that in any language, which
includes English as well, one word could mean various different things,
depending upon its context. The distinction between REAL and NOMINAL is
quite well established in economic theory. Nominal wages means wages in
terms of money and real wages means the amount of goods and services one
could buy with that money. Invoking of 'real' wages does not necessarily
mean that your theory is non-abstract, which is what Andrew wants to imply.
Real wages can be a legitimate abstract category in an abstract theory, and
by the way, all theories are abstract--otherwise, they are not theories.
Let's go on.
>BTW, since I myself have no objection to discussion of the real, I agree that
>nominal money figures should (in certain contexts) be adjusted to obtain real
>figures in measuring the profit rate. At this point, the problem arises:
>what are the real figures? Those who hold to a use-value theory of value
>assert that the real is a quantity of use-value, e.g., a quantity of the
>"numeraire" or of the standard commodity, etc. This is based on the
>metaphysical proposition that because a bushel of corn is identical physically
>to a bushel of corn, a bushel of corn is always worth as much as a bushel of
>corn. At least that seems to be the basis of it -- I've scoured the
>literature in search of an explicit justification for this reduction of value
>to use-value, but haven't found anything but assertion; the "argument" I've
>just given is what I've been told when I've pressed the point. Its
>proponents evidently consider it self-evident.

Now, how can REAL mean "a quantity of 'numeraire' or of the standard
commodity" is beyond my capability of understanding. A quantity of numeraire
is by definition NOMINAL and not REAL. Again, it is beyond my capability of
understanding how a bushel of corn equal to a bushel of corn is a
"metaphysical proposition". What is the objection here, that one bushel may
not be equal to the other bushel? Well, then give it a precise quantity such
as one ton of corn equal to one ton of corn. Does this become physical? One
bushel of corn will always WORTH one bushel of corn as long as you cannot
distinguish one bushel from another. Let us suppose I grew some gorn five
years ago and kept it in my grainary and you produced a bushel of corn this
year. Now, as long as my corn is as good as your corn, why should your corn
be more or less worth than my corn? What is metaphysical about this?
>That does not make it any less of a metaphysical proposition. It is therefore
>not possible to show that my demonstration is invalid by invoking this
>proposition, as Ajit does. All well and good if the critics of TSS happen to
>*believe* in it, but it must be recognized that no matter how much they
>rhetorically invoke "objectivity," their "proofs" rest on metaphysical belief.
> So do the objections to the TSS refutations of the Okishio theorem and
>vindication of the internal coherence of Marx's law of the tendential fall in
>the profit rate.
>Curiously, those who object most strenuously to Marx's view that a unit of
>(insert nitpicky qualifiers here) living labor always creates the same amount
>of value are almost always the ones who accept *unquestioningly* that a unit
>of the numeraire always has the same value!

This is nothing but funny. What's your point Andrew?
>I do not think this was Marx's concept of real magnitudes. He does not
>contrast real magnitudes to value magnitudes. For him, the real magnitudes
>are themselves value magnitudes. Once one adjusts the value magnitudes
>(measured in money) for changes in the monetary expression of value (MEV) or,
>equivalently, measure them directly in labor-time, one has the real
>magnitudes. Thus, in his discussion of the falling rate of profit, he reasons
>in terms of labor-time, not money, not corn.

Now, let me try to understand this. There is supposed to be two kinds of
magnitudes; "real magnitudes" and "value magnitudes". Then we are told, for
Marx the distinction collapses. At this juncture, we need to ask: what were
the units of the "real magnitudes" and "value magnitudes"? If they are
magnitudes, then they must have some units. If they had two different units,
then how can one collapse them. For example, one ton of corn, most of people
would agree, is a "real magnitude"; and five hours of labor, let's say, is
its "value magnitude", then by what magic one could say one ton of corn IS
ITSELF five hours of labor? But as we go on, it becomes even more
interesting. The next sentence tells us that we have to "adjust" self-same
real-value magnitude, which is measured in MONEY. However, we do not know
what this money is. Apparently, the value-magnitude I suggested above as
hours of labor is incorrect. The value-magnitude is in terms of money. So
now one ton of corn becomes self-same as certain amount of money, whose unit
we don't know and how we arrive at that amount of money we will never know.
This whole thing requires the knowledge of some serious voodoo. The
adjustment, of course, had to be made for "changes in monetary expression of
value". Now, we get into another trouble. First the "value magnitude", which
we are told is the self-same "real magnitude" is measured in money. Then we
are told the "value" must be "adjusted" for changes in its monetary
"expression". Then we are told, "equivalently measure them directly in
labor-time". How does "equivalently" arise there is only god knows! Then we
are given the final conclusion, "Thus" Marx's discussion of FROP is in terms
of labor-time!! If Andrew does not think that what he wrote is simply
gibrish, then I, for one, can't help him. My only request to Andrew is that
please remove Marx's name from what you write. Marx did not write such
gibrish. Do him a favor. Don't put all this stuff in his name.
>This alternate concept of what is real is based on the proposition that a unit
>of (insert nitpicky qualifiers here) living labor always creates the same
>amount of value. This seems to be metaphysical as well, but Marx attempted to
>derive it, not take it for granted.

"Derive" it from what? The "nitpicky qualifiers? Cheers, ajit sinha