[OPE-L:7209] [OPE-L:733] Re: Re: Re: Thought experiment on exchange

Rakesh Bhandari (bhandari@phoenix.Princeton.EDU)
Tue, 23 Mar 1999 20:33:05 -0500 (EST)


Humean skepticism aside, I do not expect to find tomorrow that one silk
hanky is exchanging for 1,000 pianos where it is the reverse today. Or
(looking around my room) that one pencil will exchange for 100 irons. There
is considerable stability in exchange ratios (though not in unit values); I
am not claiming that the exact ratio can be determined by labor
contents--other market related factors intervene in the short and long
term. You say something about Walrasian derived demand functions could
explain such stability. I suppose this means that the piano purchaser
usually gets 1,000 more utiles out of playing chopsticks than the other guy
gets from blowing his nose in silk and that this vast difference in utile
accumulation explains the difference in exchange value? I don't understand
what you are getting at.

>For what it's worth, I doubt that as an empirical matter "exchange ratios
>become stable" over time. This suggests that the variability of a given
>exchange ratio tends toward zero, at least for commodities.

It suggests no such zero variability; I suggested that the considerable
stability in exchange ratios suggested they weren't being determined by
chance alone. You now argue two contradictory things: 1. there is no
stability in exchange ratios worth explaining (exchange ratios are
determined by chance?) and 2. that stability can be explained by Walrasian
demand curves. I am having trouble following you.

Take the case of persistent average profit
>differentials between nominally competitive industries. Mainstream
>economists explain these differences via reference to risk premia, and
>"risk" is not a product of labor.

The differences in risk can't explain the stability in exchange ratios such
as above. Are you suggesting that the production of pianos is 1,000 more
risky than hankies or irons 100 x more risky than pencils?

>I've suggested above that while such stability might be suggestive, it
>doesn't "compel" us to presuppose the commonality of abstract labor.
>But conversely, if, in fact, exchange ratios are not typically stable (as I
>believe to be the case), can we conclude that there is *no* common element?

It obviously doesn't compel us. You still disagree.
My answer is "no" to the query.

By the way, I didn't call you an Austrian (that quote was submitted to
express agreement with David L's methodological comment, though it was
perceptive of you to find an implicit critique of some of your theorizing
here); at any rate, you seem to be calling yourself a Walrasian now. I
suggested that by simply writing off Marx as an idiot who only analyzed
those objects from which he could derive the common substance of labor
(this is the first derivation he does indeed make, only to then analyze
the queerness of this homogeousness labor stuff--see Patrick Murray in
Moseley.ed), you were missing that the task he set himself was the
specification of the kind of labor that produced the mysteries of exchange
value and that this task was part of his critique of classical economics.
He was not trying to prove the labor theory of value. The famous letter to
Kugelmann is relevant in this context.

Yours, Rakesh