Re: (OPE-L) Ajit's paper

From: Rakesh Bhandari (rakeshb@STANFORD.EDU)
Date: Fri Jun 04 2004 - 10:34:35 EDT

>Rakesh, I do not have time to teach you the basics of
>political economy. So this is going to be my last
>response to you for sometime--I'm looking forward to
>some more interesting discussions emerging with
>others. But you should know this basic fact, which
>should solve many of your questions relatin to this,
>and that is: any commodity, which is not a standard
>commodity will be affected by the changes in income

Well, yes, Ajit, have I not been referring to Ricardo's own
expression--"curious effect". I know exactly what you are saying. But
you have not yet replied to my challenge. So I shall repeat it:

If you cannot state exactly what has to be assumed about money for
the curious effect on the net product to obtain from a change in
distribution, then you are not being clear. You are stating that a
monetary effect obtains without explaining why, and you are not
clearly defending the reasonableness of assuming money has the
properties it has to have for said effect to obtain. The clarity and
understandability you claim to have achieved dissipate upon closer

Do note that you stepped away from laying out the premises about
money that are implicit in your own argument.

>Fred can argue whatever he wants. But the fact of the
>matter remains that price is a relative concept. It is
>not very profound to say that the price of something
>in its own terms is always equal to one.

You can argue what follows from money not having a price.

>  And
>>  the relative
>>  rate of profit in the money sector obviously cannot
>>  be affected if
>>  one sets up simultaneous equations by which the rate
>>  of profit in au
>>  production is stipulated to be the same as same rate
>>  of profit in
>>  other commodity producing sectors.
>Isn't this a proof that you don't know much about
>things you think you know so much about?

No it is not. I have argued that the money sector will not yield the
same rate of profit as most other sectors, that it makes no sense to
set its rate of profit equal to a uniform rate in other sectors. But
this is what Bortkiewicz did, and what was implicit in Malthus'
criticisms of Ricardo.

>Who is
>telling you all this rubbish? What is relative rate of
>profit, any way?

It's very simple. Even Ricardo recognized that not all commodities
were such that their production would yield the same rate of profit
made in most sectors of commodity production. I am saying that money
as commodity is one of the exceptional sectors. And for non
accidental reasons.

>  And why when wages rise in all the
>sectors this relative profit in the money sector can
>obviously not change.

Again of course the rate of profit in the money sector would change
but not its value or its purchasing power and hence the size of the
net product.

Remember this debate starts with your assertion that a change in
distribution can change size of net product as measured in money.

And you have yet to give a clear answer to what precisely has to be
assumed about money for this assertion to be true.

>And what it has to do with
>Sraffa's point that in general the money commodity
>will be affected by the changes in income

That's not the assertion. The assertion is that the size of the net
product will change. That is what Malthus said to Ricardo. I can give
you page numbers. But again what has to be assumed about the money
commodity for this to be true.

>Rakesh, your heros are mostly zeros for me, so why you
>keep throwing these names unnecessarily?

Because you do not understand what Michele Naples and Fred Moseley
have already argued as is clear from what you have written above.

>  As I told you
>above, all this business about average rate of profits
>go nowhere.

>  Both Ricardo and Marx understood this
>after trying it out. If a commodity is not a standard
>commodity, it will be affected by the changes in

The question is not the effect on the money commodity in terms of its
profitability but in terms of the net product in terms of size as
measured in the money commodity.

>Rakesh, I don't need to read Freeman. I never comment
>on most of this kind of literature in my publications
>because I'm simply not interested--they are not
>serious enough for me. I do it only for ope-l
>chit-chat. But let me tell you something to follow. Go
>and read Freeman's paper in 'Ricardo, Marx, Sraffa'
>volume. I read it long time ago. There Freeman
>criticises Sraffa's 'dated labor concept' by
>interpreting it as Sraffa is saying that labor content
>of a commodity should be measured by going back in
>dates to collect labor time used up in producing
>successive rounds of commodities (right now I don't
>have the book to quote to you verbatim).
>  Now, anybody
>who knows Sraffa even a bit would know that Alan
>apparently did not even bother to open the book before
>publishing his criticism (and that too of Sraffa!).
>The chapter on dated labor is not more that 4 pages in
>big type prints. And they are your teachers on Sraffa.
>And I'm supposed to respond to their criticisms of

It is obvious that Freeman understands the Sraffa' solution is a
simultaneous, not a dated one. In fact this is what he is
criticizing, so I am sure you have mis read Freeman.  But this is a
peripheral issue to the questions that I have put to you, the
questions that you never answered.
>Labor values can be derived without any reference to
>prices. So I don't know what you mean by "their
>identity on both input and output side".

Again you can derive them from technical conditions only if you
assume unit labor values are the same on the input and output side,
at t and t +1. As Freeman points out, unless you make this
assumption, there are too many equations vis a vis the unknowns.

>The value part of the used up constant capital is
>measured by the labor time it takes to replace the
>used up capital. There is no two time period involved

That may be true, but that does not mean that the replacement value
of c should be in the denominator of the rate of profit.

>  Value is well defined for any given point in

and it is different at given points of time, at t and t+1.


>  Cheers, ajit sinha
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>Friends.  Fun.  Try the all-new Yahoo! Messenger.

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