# [OPE-L:3878] Re: Re: Re: Re: Re: m in Marx's theory

From: Paul Cockshott (clyder@gn.apc.org)
Date: Mon Sep 25 2000 - 03:41:40 EDT

>> You should know that price is a relative
>> concept. Marx's prices in terms of gold is also relative. It is a ratio of
>> exchange between two commodities.
>
>Marx's prices are indeed in terms of gold, but they are in terms of an
>absolute quantity of gold (or of money representing gold); e.g. 30
>shillings, 600 pounds, etc. in Marx's many examples). In this sense,
>Marx's money prices are absolute prices; they are not ratios of absolute
>prices.
>
>Sraffa's relative prices, on the other hand, are ratios of absolute
>prices. The absolute prices are never determined, only the ratios between
>them.
>
>Ajit, what exactly are these absolute prices that appear in Sraffa's
>system of equations, prior to the selection of a numeraire and the
>determination of relative prices. How exactly are these absolute prices
>defined? In terms of gold or what? Could you please give me some
>references where Sraffa or others have discussed the definition of these
>absolute prices? Thanks.
>
>Fred:
>
>>> The Sraffian
>>> system of equations has an extra unknown. The system can be solved if
>>> the price of one of the commodities is set equal to 1 (i.e. is TAKEN AS
>>> GIVEN!). This one commodity, called the numeraire, is arbitrarily
>>> chosen and is not necessarily real money. (Indeed in a system of paper
>>> money, the numeraire commodity cannot be real money). Sraffa's
>>> innovation was to take as the numeraire the "standard commodity", which
>>> is a composite commodity with peculiar characteristics and which has no
>>> relation to real money at all. Sraffa's relative prices in terms of
>>> the ideal "standard
>>> commodity" have nothing to do with real world prices; they are only a
>>> solution to a logical problem with Sraffian theory ("the invariable
>>> measure problem" in order make prices invariant to changes in the
>>> distribution of income between wages and profits).
>
>>
>> So now we know that you opened the PCMC for the first time only yesterday. I
>> hope i can take credit for making you do so. The book is a hard one to
>> understand. It will take some time, but will put you on the right track.
>
>Readers, please note that my serious criticism of Sraffa's theory - that
>its numeraire prices, especially with the standard commodity as the
>numeraire, have nothing to do with real world prices - is met, not with a
>response to this criticism, but with another personal insult. The insult
>is not appreciated and the criticism remains unanswered.
>
>
>>
>> > Fred:
>> > Therefore, we can see that Sraffa's theory is also determinant "only up to
>> > a scalar multiple", just like Marx's theory. In this respect, so roundly
>> > condemned by Ajit, Marx's theory is no worse than Sraffa's theory. And
>> > the fact that Marx's theory is trying to explain real world prices and
>> > real world profit makes it preferable to Sraffa's theory, which is only
>> > trying to determine hypothetical numeraire-prices, which have no relation
>> > to real world prices and profit.
>>
>> ____________________
>>
>> Now you must know that for your theory "only up to a scalar multiple"
does not
>> hold. As far as Sraffa is concerned, it does not matter which commodity you
>> choose, take gold if you like, the price ratios will remain the same.
>
>This is similar to what I am saying about the role of m in Marx's
>theory. If m changes, all the absolute monetary magnitudes change
>proportionality, so the ratios among these monetary magnitudes remain the
>same.
>
>
>>
>> > Fred:
>> >
>> > How can anyone who accepts such a highly unrealistic theory like Sraffa's
>> > criticize Marx's theory for failing to provide a complete explanation of
>> > the determination of the value of money in his theory of real world prices
>> > and profit? I think it is far better to have a partial explanation of
>> > reality than a partial explanation of hypothetical
>> > numeraire-prices. Especially when Marx's theory has such substantial
>> > explanatory power of important phenomena of real capitalist economies.
>>
>> _______________________
>>
>> Please leave Marx out of it, because, in my opinion, you don't understand
>> Marx. So leave the poor guy alone. Your above rhetoric only shows that you
>> have not understood Sraffa at all. But as i said, it will take time. Nobody
>> can understand Sraffa in one day. Cheers, ajit sinha
>
>
>Again, a serious criticism - that it is better to have a partial
>explanation of real world prices than a partial explanation of
>hypothetical numeraire prices - is met with an insult. Again, the
>
>Please see my next post for a response to Ajit's "please leave Marx out of
>it".
>
>I look forward to further discussion (without the insults, please).
>
>Fred
>
>

What do you mean by an absolute price?

Surely just the exchange ratio between a commodity and the
numeraire or universal equivalent as marx calls it?

>From the state theory of money one might have a different
theory, but within commodity money theory I dont see the
difference between Marx and Sraffa here

Paul Cockshott (clyder@gn.apc.org)

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