Re: [OPE-L] standard commodity

From: Paul Cockshott (wpc@DCS.GLA.AC.UK)
Date: Tue Mar 22 2005 - 17:40:19 EST

 As Co Author, let me put my 'penny's worth' into this.

1. Our paper was deliberately restricted to the issue of price changes
   in commodity money systems. We decided not to go into the
   for fiat money since the neo-classicals who are the target of the 
   critique do not systematically theorize this.

   What we show, albeit by implications, is that the equilibrium point
   of an economy after technical change depends on what appears to be
   something arbitrary - the numeraire. Assume you have two possible
   numeraires - call them gold and silver. After an a technical change
   the price of some commodity, let us say sewing machines,  will rise
   in terms of silver but fall in terms of gold. So if the currency
   were based on a gold standard, then sales of sewing machines would
   be expected to rise. If we had a silver standard sales would be
   expected to fall. - This is the immanent critique of neoclassical

2. Personally, and I can not speak for Ajit on this, I think that the
   commodity theory of money is at the very least inadequate. As long
   term list members will know, I then to follow Wray's State theory of

   In this context the result of the indeterminacy of the direction of
   price movements with respect to the numeraire can also be read as an
   immanent critique of commodity money theory.

3. On the relation between Sraffa's work and my own researches into the
   labour theory of value.

   Empirical work by Allin and I, and also by David Zachariah indicates
   the actual price vector seems to lie between that predicted by a
   model and that predicted by a simple labour theory of value. The
   model of prices can thus not be treated as an adequate predictive
   nor is it significantly superior to the simple labour theory of value
   as a predictor of prices. 

   This empirical result is an extrinsic critique of the work of Hodgson
   Steadman who had argued that Sraffa rendered the labour theory of
   scientifically redundant.

   Conversely however, our work does indicate that the Sraffian model
   have some independent explanatory value independently of what the
   theory of value predicts. There is some partial 
   transformation of values into prices of production. A model which 
   treated prices as being the result of some linear combination of
   labour values and Sraffian prices would predict market prices better
   than either of the theories by themselves.

4. I consider that Sraffa should not be treated as being identical with
   his interpreters. I am unsympathetic to the polemical use made of him
   by Steadman and Hodgson, but I think that The Production of
   by Means of Commodities, was one of the greatest works of 20th
   century critical political economy.

   With the Standard Commodity and Basic System it introduced the notion

   of a set defined by transitive closure into economic thought. The
   of recursive definition here is conceptually on a par with other 20th
   century logical innovations - Russell's barber paradox, or Turing's
   proof of the impossibility of a solution to Hilbert's decision

   The Basic System he identified is critical to analysis of:

   a) the maximal growth rate of an economy

   b) the effective planning of a socialist economy

   c) and here I speculate, it provides an underlying model for
      the growth constraints on tumours and bacterial colonies.

   I also argue in a joint paper with David Zachariah to appear shortly
   in Science and Society, that it provides the key to giving a 
   scientifically rigorous definition to the concept of productive

5. On the lack of dynamism in Sraffa's system. 

   In science Occam's razor is a good guide. Do not complicate
   things beyond what is necessary. If you can get a reasonable
   simulacrum of reality with a simple model, accept this it for 
   what it is good for.

   I think that Sraffa's model  already went just over the
   edge in terms of added complexity relative to gain in
   predictive power - for which I would cite the fact that
   it has little predictive edge over the somewhat simpler
   labour theory of value. I think that to go beyond this
   and demand a fully dynamic theory of value is to ask
   too much.

   Constructing a genuine dynamic model of value is
   very hard, especially if it hopes to be a specific in its
   predictions as Sraffa's. I do not regard the work of the
   Kliman school as being a serious competitor in this regard.
   I suspect that it is better to abandon full deterministic
   models and restrict ourselves to more parsimonious stochastic

This archive was generated by hypermail 2.1.5 : Thu Mar 24 2005 - 00:00:02 EST