Re: (OPE-L) Ajit's paper

From: Rakesh Bhandari (rakeshb@STANFORD.EDU)
Date: Tue Jun 01 2004 - 05:15:35 EDT

the measuring rod does not remain invariant to the distribution of
income only if the measuring rod, money, belongs in the system in
which the rate of profit is equalized, that is, if money is like most
other commodities in that  (as I have argued) its supply can be
regulated such its production yields neither more nor less than the
average rate of profit over time. All the apparent changes in the
size of the pie from mere changes in distribution only result if one
assumes that the measuring rod should belong to the system in and
over which the rate of profit is equalized. But money does not belong
there. Malthus was able to create problems for Ricardo because he got
Ricardo to accept that gold is like all other commodities in that its
production will tend to yield the average rate of profit over time.
But  Ricardo realized that gold was not like other commodities. I
have already quoted Ricardo's recognition of this, but he did not
dwell on it (see p. 193-4 of Sraffa's ed. of Ricardo's Principles).
There was no reason to search for an invariable measure of value.
Malthus burdened Ricardo with a false problem. Rather than negating
the question, Sraffa tried to solve it with the invention of a
standard commodity which has no real world relevance (it changes with
each technical change; it is not money; it's only an example of
technical virtuosity and thus can only have the appeal of esoterica).
Sraffa's time was wasted by Ricardo's inability to shrug off Malthus'
baseless assumptions about what you call the measuring rod. Michele
Naples first made this argument; David Yaffe had intimated it. I have
added to it in my own way, so has Fred Moseley. You're not grappling
with it.
Yours, Rakesh

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