Fred's latest post on this thread suggests that he advanced a separate claim about m that is stronger than (but equally as valid as) the claim that surplus value is determined "up to a[n unknown] factor of proportionality." So I return to his post 3895, to assess this stronger claim. Fred writes: [...] >I have argued that it is not necessary to "know m" in either of these two >senses in order to have a determinant theory of surplus-value and many >other important phenomena in capitalist economies. > >I have argued that Marx's labor theory of value assumes that THERE IS AN >ACTUAL M in the economy, i.e. that each hour of abstract labor does indeed >produce a quantity m of money new-value. It is this actual m, that is >assumed to exist, that is TAKEN AS GIVEN in Marx's theory of >surplus-value. > >Even though we don't know empirically what this m is (and in principle we >cannot know it empirically because abstract labor is unobservable), and >even though we cannot provide a full theory of the determination of m, >Marx's theory still assumes that an actual m exists, and it this actual m, >whatever it is, that is taken as given in the theory of surplus-value. > >This is a perfectly legitimate and valid logical method - to take some >variables as given and then to determine other variables on the basis of >these given variables. In this case, to take the actual m (and other >variables) as given, and then to determine money new-value and money >surplus-value on the basis of these givens. Ajit (and Gil), what is wrong >with this logical method? There is no problem flowing simply from the fact that a given theoretical entity, in this case m, is unobservable. For example, the notion that capitalist firms act to maximize profit is central to neoclassical theory, even though profits are not perfectly measurable because of imputed costs and other difficulties. However--and this is the key point--the testable hypotheses of the theory do not depend on measuring profit. Based on the assumption of profit maximization, you can derive unambiguous predictions about relationships between strictly observable variables, such as firm output and market price, without attempting to measure profit. Whether or not one believes in neoclassical theory, it, like other real economic theories, generates hypothetical relationships among potentially observable variables, even if it includes theoretical elements which are not themselves observable. So in the present case, Fred's assertion of the existence of m would be theoretically innocuous if doing so leads to testable hypotheses about economic relationships among strictly observable variables. Does it, Fred? Or do all the hypotheses include the unobservable m, such as S = mL-V? In that case you don't have an economic theory, you have a metaeconomic theory--which is fine of itself, but debating details about that theory would be pointless. There is a second issue, concerning the necessary connection of a price-based measure such as m to a *labor* theory of value, but I'll address that by following up on my separate post under this thread. In any case, I assume it's settled that in the expression S = mL- V, S *cannot* be said to be determined "up to a factor of proportionality," contrary to Fred's previous claim. Gil
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