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
implications
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
theory.
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
money.
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
that
the actual price vector seems to lie between that predicted by a
Sraffian
model and that predicted by a simple labour theory of value. The
Sraffian
model of prices can thus not be treated as an adequate predictive
model
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
and
Steadman who had argued that Sraffa rendered the labour theory of
value
scientifically redundant.
Conversely however, our work does indicate that the Sraffian model
does
have some independent explanatory value independently of what the
labour
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
Commodities
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
sort
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
problem.
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
labour.
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
models.
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