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Ajit has argued, and Gil seems to agree, that "m must be known" in order
for my interpretation of Marx's theory to be a theory at all. In other
words, if m is not known, then my interpretation is not a theory of
It is not clear to me exactly what is meant by "m must be known". Known
as an empirical magnitude or determined theoretically, or both?
I have argued that it is not necessary to "know m" in either of these two
senses in order to have a determinant theory of surplus-value and many
other important phenomena in capitalist economies.
I have argued that Marx's labor theory of value assumes that THERE IS AN
ACTUAL M in the economy, i.e. that each hour of abstract labor does indeed
produce a quantity m of money new-value. It is this actual m, that is
assumed to exist, that is TAKEN AS GIVEN in Marx's theory of
Even though we don't know empirically what this m is (and in principle we
cannot know it empirically because abstract labor is unobservable), and
even though we cannot provide a full theory of the determination of m,
Marx's theory still assumes that an actual m exists, and it this actual m,
whatever it is, that is taken as given in the theory of surplus-value.
This is a perfectly legitimate and valid logical method - to take some
variables as given and then to determine other variables on the basis of
these given variables. In this case, to take the actual m (and other
variables) as given, and then to determine money new-value and money
surplus-value on the basis of these givens. Ajit (and Gil), what is wrong
with this logical method?
This given m does leave an element of incompleteness to the theory. But
all theories are incomplete to some extent. All theories take some
variables as given in order to determine other variables. And, as I have
argued, this particular incompleteness does not affect the major
conclusions of Marx's theory. If m changes, then all the monetary
variables change proportionally, so that the ratios among these monetary
magnitudes remain the same. In addition, other conclusions that do not
have to do with quantitative magnitudes, but rather with important
qualitative phenomena of capitalist economies (e.g. conflicts over the
working day and the intensity of labor, inherent technological change,
etc.) also do not require a theory of the determination of m.
So the lack of determination of m is no big deal. It certainly does not
mean that Marx's theory becomes a "theory of nothing". Rather, it is a
theory of a whole lot of important phenomena, even though m is taken as
There are certain other questions for which a theory of m would be
necessary. The main example is inflation. So I think a high
priority for Marxian theory should be to develop a more complete theory of
the determination of m. However, a complete theory of the
determination of m is not necessary to explain surplus-value and the other
important phenomena that the three volumes of Capital are concerned with.
Ajit will probably just reassert "because you don't know m, you don't have
a theory of anything." But I think I have shown that this is not
true. One can take m as given and still explain lots of important
phenomena on the basis of this given m (and other givens). Ajit, please
explain: why is it not logically valid to take the actual m as
given? Isn't one allowed to take some variables as given in order to
determine other variables? What is wrong with this logic?
I look forward to further discussion. I would also of course appreciate
comments from other listmembers as well.
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