Re: [OPE-L] Ajit's Paper on Sraffa and Late Wittgenstein

From: Ian Wright (wrighti@ACM.ORG)
Date: Mon May 29 2006 - 13:21:31 EDT

Hi Ajit

> Ian, I don't understand what you mean by "price of
> money capital r", no such concept is there in Sraffa.

Certainly Sraffa never discusses such a thing. Nonetheless it is
implicit in Sraffa's starting point.

Take Sraffa's surplus representation of an economy. Add two additional
pieces of information that Sraffa does not explicitly consider: the
composition of the real wage and the composition of capitalist
consumption. It then follows that money-capital is a commodity and r
is its price.

It's important to take this step in order to properly formulate
real-cost accounting, something that Sraffa never manges to do. I
agree that Sraffa does not talk about real costs, except for oblique
asides to labour values. That's because he omits the value-theoretic
principle of objective real cost.

> The dated labor aproach only shows that the price of a
> commodity can be resolved into only wages and profits
> in the case that there is some positive wages. This is
> referring to Adam Smith's idea that price is resolved
> into wages, profits, and rent. The method of Smith was
> silightly different but the work I'm doing on Smith
> now will show that his method was robust. The idea
> that Sraffa is alluding to Smith here is also clear
> when he at the outset declares it as "cost of
> production aspect", a term Marx used for Smith's
> "additive theory". In any case, the purpose of this
> chapter was to show that the Austrian notion of
> quantity of capital determination on the basis of
> 'period of production' was logically flawed.

The dated labour representation also makes Sraffa's earlier point that
only when r=0 are "the relative values of commodities are in
proportion to their labour cost, that is to say the quantity of labour
which directly and indirectly has gone to produce them". Stick r=0
into Sraffa's dated labour representation and you get the (incorrect)
formula for labour-values used by all neo-Ricardian critics of Marx's
value theory, from Samuelson onwards.

My point is Sraffa is wrong at this point, because it is a real-cost
accounting error to leave the price of money-capital, r, unreduced to
its labour cost.

> There is no such thing as a commodity called "money
> capital" in Sraffa.

Yes I know. And from a value-theoretic perspective this is the crucial
flaw in Sraffa's representation of an economy. Sraffa omits the very
commodity that distinguishes simple commodity production from
capitalist reproduction. However, money-capital is implicit within his
theoretical framework: all one needs to do is to distribute Sraffa's
surplus in physical terms, not just nominal terms.

> I have not read your paper and my computer advises me
> not to open your web because its address is of a type
> that may contain problems. So if you send me your
> paper by attachment, I'll read it and get back to you
> after sometime, as I can't promise to read it
> rightaway. But I think you are on a wrong road.
> Bringing any idea of capitalist consumption in the
> problem of value and price determination is a red
> herring.

I'll send you a copy.

> What do you mean by "self-replacing equilibrium"? Do
> you mean something like Marx's simple reproduction
> schema?


> In any case, I don't think Sraffa's equations
> care for equilibrium at all. But other Sraffians
> disagree with me.

Not all. Ravagnani at least would agree with you. I think also Roncaglia.

> I have just completed a paper which
> critiques Garegnani's interpretation of Sraffa's
> prices as centre of gravitation. I'll send you the
> paper privately and not burden the list with it.

Thanks. I'll read it.

> I don't understand why you keep introducing your terms
> into Sraffa? There is no such thing as "real cost" or
> determination of "real cost" in Sraffa's book.

That is true. Sraffa misses the simple and important value-theoretic
principle of real-cost. However -- it is there in Sraffa, if you know
how to look for it.

> And the
> idea that if the system is not in equilibrium then
> neither cost (real or whatever) or labor values are
> determinable is simply wrong. You must mean something
> more than what you are saying here.

Tell me why it is wrong.

> Ian, you are taking a wrong road. Stop and rethink.
> First of all, I'll advise that a good way of
> understanding the whole business of value theory is
> not to first join a team and try to play for that
> team. What I mean is that there is no need to start of
> my saying, "I'm going to defend or prove that Marx was
> right". I started of that way, and that led me to
> waste a lot of time.

Woah there! That is not my starting point.

The metaphor of wrong roads and wrong turnings is apposite.

The point you have reached in value theory is to a large extent
predicated on the existence of the transformation problem. This place
is quite odd: it denies the possibility of any real cost, non-price
invariant over economic configurations, such as Marx's labour values.
As Mirowski explains, without such invariants or conservation
principles, the possibility of formulating causal laws of economic
change is lost. You have made this point yourself, and valiantly tried
to turn it into a virtue, such as your invocation of Hume's scepticism
regarding the objectivity of causal laws, or borrowed Wittgenstein to
suggest that the concept of value belongs to a heremeneutically closed
language game, which is the source of philosophical errors, or pointed
out that the direction of price changes are crucially dependent on the
choice of numeraire.

But what if Sraffa threw you off-track and you have taken a wrong turning?

Yes, let's think about this, but don't pre-judge and assume that I'm
the one wandering through the woods.

Best wishes!

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