[OPE-L:5144] Re: Can Ajit's price theory fly?

Ajit Sinha (ecas@cc.newcastle.edu.au)
Thu, 29 May 1997 00:44:55 -0700 (PDT)

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At 06:04 AM 5/28/97 -0700, Andrew Kliman wrote:
>A response to Ajit's ope-l 5133.
>Ajit notes that I "cut out the last part of the numbers" he gave me. That's
>because they were not relevant. Rather than answering the question I posed
>him, they were part of a critique of my alleged argument. I responded to this
>critique *as a whole* by noting that I am issuing a challenge to Ajit, not
>making an argument of my own. What is under examination is the internal
>coherence of Ajit's own price theory.
>What Ajit needs to produce, and all he needs to produce, is a set of prices
>that meet the conditions of the challenge. He still has not yet done so.
>He seems to suggest that the price ratio of 1:1 meets the conditions for
>periods 0 and 1: " I gave you the numbers." Yes, he gave me the ratio 1:1,
>but it doesn't work. It contradicts what Ajit himself considers to be a
>"tautology." I have offered to demonstrate this.
>Ajit is right that "Time and time again I have said that price is a measure at
>one point of time." But he has also said that the equality of the output
>prices of one period with the input prices of the next is a "tautology." What
>is at issue is whether Ajit's "necessarily ... static" price theory is
>self-contradictory, because it violates this "tautology."
>I suggest that he get busy trying to produce some numbers that might rescue
>his price theory from self-contradiction.
>Yes, *his* theory -- to my knowledge, Sraffa's published works don't say
>anything about the relation between the output prices of one period and the
>inputs prices of the next. Nor does he claim to have a price theory.
>Andrew Kliman

I think if anybody has to get busy, it is you with some elementary economics
text books. I would suggest that you take a look at any principles level
macroeconomics text--even though they are bourgeois text etc., they do
clarify some basic concepts which most of the economists take it as
understood. The concept you need to check up is the distinction between
NOMINAL GDP and REAL GDP. When you are comparing GDP's over the years you
are supposed to do it for the real GDP, even though the real GDP is not a
very precise or satisfactory measure. It is because comparing nominal GDP's
over the years, when prices are changing, would be absurd. Why? because when
prices change, the value of money would change. Thus you would be measuring
something with a fluctuating yard stick, and your measure would be
meaningless. The numbers which you cut out made this point quite clearly.
The way you interpret your condition is an absurdity. You want me to keep
the value of money-commodity constant when your other condition is that the
technical change has led to changes in prices. I don't indulge in such
absurdities. When I said that when an output is bought as in input, it is
one transction, and by definition there is only one price here, and there is
nothing wrong with it. This is what I read in the quotation from Dumenil you
put up. I have not read Dumenil's paper you have quoted from. If he meant
anything like you are suggesting, then this is not the first time he has
said something meaningless. Now, I have to get to a reply to John Ernst,
which I consider to be a more constructive endeavor.

Cheers, ajit sinha