[OPE-L] Re [OPE-L] [Jurriaan] Notes on gold

From: glevy@PRATT.EDU
Date: Tue Nov 08 2005 - 13:49:00 EST

---------------------------- Original Message -------------------------
Subject: [OPE-L] [Jurriaan] Notes on gold
From:    "Jurriaan Bendien" <adsl675281@tiscali.nl>
Date:    Tue, November 8, 2005 10:52 am

Hi Paul,

I can see your point. In my experience, few statisticians believe their
estimates to be totally accurate. Rather, they concentrate on quantitative
margins of error, and the plausibility of estimates, by collating many
different data sets. In addition, the argument is, that if the survey
methodology is constant over time, then even if some items are overlooked by
the survey, it is nevertheless possible to show the real trend in a
variable. But BOP data are notoriously prone to error and revision, because
of the number and complexity of transactions (as I know from professional

In the case of the United States, I think I could create a good peaceful
job for myself just improving the questionnaire documents used to collect
financial data from business people. I have looked at quite a few of them,
and from a professional point of view they're often just not user-friendly
documents, and that increases the likelihood of response error, the
magnitude of which remains unknown, unless specifically tested for with
split-ballot, chi-square type experiments (unlike e.g. sampling error where
you can often estimate a magnitude of error). The additional problem in the
USA is, that a number of different statistical agencies collect their own
macro data, without there being any central agency providing an integrated
approach to data collection and processing. And thus BEA will compile its
estimates from a lot of different sources, with different data collection
policies. The number of national standard classifications are few. Here in
Holland, a lot of CBS economic surveys are now integrated, digitalised and
simplified, but in many countries it's still the old paper thing.

Years ago, I did an exercise on cumulative revisions of New Zealand's
annual GDP data, comparing the first official release with the last
revised estimate, and I discovered that the discrepancy between the two
was in some cases close to the annual increase in GDP. Yet, "the markets"
attach great significance to current reports of growth rates in real GDP,
even although that is not really warranted. All this suggests that the
use of statistics is an "art" of sorts, in that you have to know what
exactly is being measured, and how a statistic can be validly used.
Mostly in my own writing I just stick to percentages and totals providing
an indication of magnitude or proportion, knowing that often the degree
of data accuracy does not warrant more.

My point of view on value relations between products in Marx's sense is,
that they reflect social relations between people (not infrequently,
relations of bargaining power), but value relations cannot usually be
measured directly, only indirectly (as quantities of labour time, as real
or ideal prices, or as trading ratios). Because value relations can only
be inferred in this sense, not observed directly as sense-data, the naive
empiricist will say that they do not exist. But that is bad science; in
science, there are many phenomena which we cannot observe or experience
directly, although we know, as realists, that they exist, and can measure
them through the observable effects they have. Even so, it could be argued
that value relations can be observed directly, simply by observing how
economic actors empirically interact, but the point is, that this remains
an interpretation of that interaction, a theory or theory-laden
observation. If that wasn't the case, we'd all be Marxists now.

I aim to write all this up one day more exactly in an article about the
transformation problem, but I have not yet had time to do it beyond
writing a few notes on it, and looking at some of the voluminous
literature. My initial argument is that the Marxian transformation of
value-added into profit is no less problematic than the official
transformation of profit into value-added, and that you cannot group,
relate, compare and calculate prices without at least implicit reference
to a value theory that provides rules for price aggregation. That's just
an insight that is basic to accounting of any sort. I think that Piero
Sraffa came close to this insight, in his contribution to the "capital
controversy" (the so-called "aggregation problem") but he did not
elaborate the wider theoretical implications. Using certain assumptions,
you can build complex mathematical models, but if we do not provide good
arguments about what entitles our assumptions in the first place, then no
amount of mathematical wizardry proves anything much. In other words, in
official economics, prices are regarded as an entirely unproblematic
notion, but on closer inspection the notion of prices is much more
complex and problematic. This did not bother Marx at all, because he
viewed prices simply as symbols expressing value relations more or less
accurately - but I think a more precise discussion of the nature of
prices can resolve some of the theoretical controversy. And if I get the
time, I aim to trace out the link between value relations and moralities
as well. This however is not so much a value-form theory, but a
price-form theory.


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