Re: [OPE-L] standard commodity

From: Andrew Brown (A.Brown@LUBS.LEEDS.AC.UK)
Date: Mon Mar 21 2005 - 06:09:36 EST

Hi Ajit,
I not have managed to express the key point properly to one who does not already agree with the point. So let me try again and then lets's see what you think. My first two annotated replies, however, cover old ground, so you may want to skip them to save tedium. 
You write ' In no economy all the outputs of the
production process are qualitatively "new goods" and
different from what they were as inputs.' 
I reply: I agree with you. In fact my point requires only that one new good is produced which, obviously does occur, as you go on to agree yourself.  Real world technical change, it should be said, entails basic new goods, since it generally means new 'technology', that is generally a new structure, able to do new things (why not call it a new 'machine'?). Can you see what I mean here? I'm simply pointing out what 'technical change' seems to mean: it does *not* mean there are a set of perfectly known designs to be chosen from as in neo-classical economics. 
You write: ' A few new
goods may come up but they are not large in numbers,
and there is no problem in dealing with their pricing
by treating them as non-basics. '
If you 'deal with' them as non-basics you simply evade the problem we face in realty of comparing an economy before and after technical change. You omit time from reality by pretending that new inputs do not arise through technical change. I hope we can agree that it is important to deal with technical change through time. Now, I am not saying the Sraffian system is useless. Rather, I am saying that to be useful one needs to show that it yields results that illuminate a world where technical change occurs.
The next point is they key one. You write ' It is, of
course, obvious that one cannot compare prices of a
qualitatively new good with any previous prices, but
this does not mean that if there are some
qualitatively new goods in the system it ipso facto
invalidates comparison of prices of all other goods
that have remained qualitatively the same.'
This is actually where we disagree, and where my previous posts have been poorly expressed. Let me try again. Recall that a numeraire is an arbitrary index of exchange value. The exchange value of a good is not really the 'price' of the good (expressed in the numeraire). The exchange value of the good is not really a scalar at all. It is a vector containing the quantity of each respective good in the economy that will exchange for one unit of the good in question. Or, as Marx puts it, a given commodity does not really have 'an' exchange value rather it has as many exchange values as there are other goods in the economy: one car = (1000 mars bars; 0.5 houses; 0.01 aeroplanes; 200 televisons, etc.). It is this true concept of exchange value that becomes incommensurable just as soon as one new good turns up in the economy. Surely, I hear you - and many an economist - cry, one good good isn't really that important? Well, the only way to vindicate the strong intuition that that a change in one good between systems does *not* make 'exchnage value' incommensurable between systems is to accept that 'exchange value' is itself just an index of something else. What is that other thing?.... it is value!! In other words, your strong intuition that the addition of one or two new goods isn't that 'significant' is in fact a display of your implicit belief that there is a real thing called 'value' that is distinct from exchange value! This is why a theory of value is central to economics. One view is to say that the 'utility' of the exchange value vector is little changed by the change of just one good. Herein lies the roots of subjective value theory. Another is to say the labour time represented is little changed. Herein lies the roots of a materialist LTV. This is all quite simple really. Marx does it just a pargarph or two at the strat of 'Capital'. But note: you have to understand all this *before* you can understand what comes later in 'Capital'. This is precisey because what comes later is going to appear like 'mumbo jumbo' to common sense intuition.

Having quoted a bit of my 'mumbo-jumbo' on the LTV you write, quite reasonably, ' But let me
try to get back to some meaning step by step. You say,
“The point re. magnitude is that this mechanism does
not mean that labour time and price lack any
relationship (as do, for example, labour time and
weight). That's all that is required.” My question is:
what is this relationship between labor-time and
price? And particularly when, according to you, this
labor-time cannot be measured? '
Well, in terms of magnitude, it is a broadly positive relationship, don't you think? Albeit there are different OCCs, there's crises, there's ecomnomic rent. So it's pretty chaotic. But there is likely a pretty strong positive relationship when dealing with (ceaselessly changing) avereage and in aggregate (obviously not an exact proportionality though, contra the usual interpretation of Marx's famous aggregate equalities). Economists from Ricardo (93%) to Joan Robinson (let alone your co-author, as Rakesh appropriately pointed out) seem agreed on this. On 'measure' I mentioned that you haven't quite parahprased me correctly. We can't 'see' the weight of an object but it still has weight doesn't it? We could measure it on a pair of scales, using 'weights'. These 'weights' are analogous to prices and are the 'external measure' of weight. The immanent, invisible measure of weight is the quantitative aspect of the force of weight (gravity) itself (in units appropriate to this force). This immanent measure is analogous to labour-time. It's a useful analogy but like all analogies it ain't perfect....
Still mumbo-jumbo?
Many thanks,

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