[OPE-L] monetary macro interpretation

From: Jurriaan Bendien (adsl675281@TISCALI.NL)
Date: Fri Jun 02 2006 - 17:15:57 EDT


I don't really know where you want to take the argument, I don't understand
it properly. Is it poetry, is it a theoretical formula you want, or is it an
empirical measurement you want. All the MELTS I've tried so far run into
objections, so I need to tried harder for a MELT that really does the job,
how's that for openers.

You say, "To translate from prices to labour values we need a MELT." I don't
follow this for a start, because as far as I understand:

(1) Marxian values can be "expressed" only as (i) exchange ratios of
labour-products, (ii) real or ideal money-prices, or (iii) quantities of
labour time or (iv) some kind of ratio involving some or all of these three,
(2) the MELT refers to the MONETARY valuation of labour-TIME worked (paid
labour and surplus labour).

In its simplest expression:

1 average unit of abstract labour-time = N units of money, according to some
standard valuation.

You then move on to a slightly more sophisticated expression, such as:

MELT = new value created / paid labour-time to produce it

And then you can refine or qualify that a bit more.

In the realm of THEORY, we can introduce all sorts of sophisticated
subtleties to do with the circulation of money, commodites and capital and
how this might affect the valuation of labour-time and its product.

EMPIRICALLY (realm of observables), our ability to measure things is very
limited, because all we have available qua relevant data is aggregate net
output variables (and their main components) and paid hours worked
variables, which we could adjust in various ways, e.g. to take account of a
skilled/simple labour distinction, currency inflation and so on.

The actual concepts which Marx uses in his text to express the social
valuation of labour-time are vastly more subtle than you can measure in
statistical aggregates, at most you can can some anecdotal evidence for
those more subtle concepts, for illustrative purposes. For example the SNLT
(I think) does not refer to a composite of past and living labor embodied,
but to the average LT currently socially necessary to produce a product.
Then there's stuff which Marx doesn't really discuss, e.g. that the
employment of salaried labour in labour markets depends on a large amount of
non-market (voluntary, unpaid) labour to operate at all.

Even so, economists usually take official input/output measures for granted,
use them for their ratios, and do not inquire further into them. They forget
that these input/output measures have been compiled according to a standard
official definition of gross and net value added, excluding some flows,
including others, and adding imputations and valuation adjustments.

As soon as you inquire more into the definitions and procedures used, you
realise that the official output measures diverge in important ways,
conceptually and quantitatively, from:

(1) real sales revenue receipts, real costs, real profit income and real tax
(2) the Marxian concept of the value product (broadly, the netted sum of
wages, profits + interest + rent + tax & royalties on production + fees of
various kinds, associated with the production of current output).

In other words, the official output measures themselves are theoretical
constructs which depend on a multitude of assumptions and accounting
conventions. Having grasped that, you can go two ways: either you take the
official output measure and introduce various adjustments to that measure,
or you construct completely new output measures according to your own
estimation procedure, working from various data sources (tax data, national
accounts, administrative records, labor force statistics, census records

Mostly, empirical researchers do not get further than the first option and
some notion of direct/indirect prices or direct/indirect labour inputs. The
main reasons are that

(1) the second option is a hell of a lot more work, and
(2) the first option is thought to be sufficient to provide a crude
indicator of the trends.

A third reason might be that

(3) the data quality itself is not sufficient to warrant making very refined
distinctions or manipulations in the data.

If you were nasty, you could also say that

(4) many scholars are a bit lazy, they invent theoretical reasons for not
having to get their hands dirty in the effort of grappling with data, and
having their theories disciplined by data.

These sorts of considerations really lead to the question of what the
specific purpose of this type research is, what is its goal. We might want
to develop some empirical indicators, but what is it supposed to prove, in
particular, and who does it persuade. Mathematically, we can trace out the
logical implications of various theoretical postulates, and we try to get
the equations to equate. Empirically, we can corroborate the theory. Now
what? Are we emancipated more by that? Are we closer to the truth? In what

I'm sorry, I am tired from the workweek and need to take a rest


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