[OPE-L:5219] Re: Questions to Ajit

john ernst (ernst@pipeline.com)
Sun, 8 Jun 1997 19:06:40 -0700 (PDT)

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This goes back a bit but as I recall the
issues were:

1. fiat money
2. joint production
3. moral depreciation

Here, let me bring us up to date on the first issue
and then add to it a bit.

Fiat money:

I stated that I could imagine a constant value to fiat
money since I could imagine a constant value to gold

You pointed out (correctly) that in my imagination I was
stretching things a bit in that changes in other sectors
would have an effect on the value of gold. You also
noted the obvious -- gold is not fiat money.

Correct me if my summary is wrong.

John comments:

Here I think it is a matter of locating where we are.
That is, I am not willing to argue that what you call
a theory prices can be based upon a money commodity
whose value is unchanged as productivity changes in
other sectors. I use that imagination of mine (let
gold be produced by labor alone) only to get an idea
of what Marx is talking about when he makes the
assumption that the value of gold is constant. No
theory of anything can be based upon such an
assumption. On this I think we agree. For Marxists,
the task would be to show why and how a given amount
of labor creates the same value regardless of
technical change. If we have to simply assert that
this is the case to show something else, we miss the

2. Joint Production.

As Sraffa, Schefold and others view the production process
with fixed capital as one of joint production, I note that
they also abstract from technical change. To be sure,
they are generally after a set of equilibrium prices and
hence given that objective, there's nothing wrong with

However, given that capitalist anticipate some price decreases
as they introduce a new technique, the RRI that they expect
would differ from that calculated with the assumption that
equilibrium prevails. The RRI they actually realize may
differ from that anticipated but neither will necessarily be
that computed assuming equilibrium.

For example, in determining the economic lifetime of a machine
Schefold only takes account the machine can be used before
it physically wears out or before its efficiency decreases.
Again, this is fine for his purposes but it has little basis
in the reality of capitalists. That is, the capitalist also
anticipates the obsolescence of the machine.

I'll get back to you on your ideas concerning "moral depreciation."
Sorry for the delay but I've lost a bit of my old e-mail.