>===== Original Message From "Fred B. Moseley" <fmoseley@mtholyoke.edu> ===== Me: >> >> We seem to agree that Marx regarded the real wage as given in some sense that >> is consistent with elimination of one of the degrees of freedom >> contained in a >> simultaneous system formulation of the value analysis. > Fred: >Gary, please note that I am talking in the paragraphs quoted above about >the "simultaneous equation" interpretation of Marx's theory, not about my >own "macro-monetary" interpretation. I have argued in several papers that >I do not think that Marx took the real wage as given. Instead, I argue, >along with the "new interpretation", that Marx took the money wage as >given. (I also go further - and more consistently I think - and argue >that Marx also took the money constant capital as given, not the technical >conditions of production). > Yes, sorry for the lapse. I've read your stuff, so I know where you're coming from on this issue. I should have been paying better attention when I wrote the above. > >> But there appears to >> be a point of contention over whether Marx's theoretical outlook is >> consistent >> with closing the system by designating one of the commodities as >> numeraire and >> fixing its price to unity. >> >> I have the impression that Marx would not object to this procedure: in >> certain >> contexts he treated gold as commodity money, and hence as a standard of >> value, that is, a numeraire. > >Gary, what exactly is a "price" (i.e. an absolute price), according to the >"simultaneous equation" interpretation of Marx's theory (or, according to >Sraffa's theory, since the two are essentially the same)? What is the >unit of measure? (Any references would be appreciated.) Me: I think the Sraffian position would be that absolute price really doesn't matter much from the standpoint of the issues Marx is addressing in his discussion of value, the transformation problem and the determination of the profit rate. Any commodity or set of commodities will serve adequately as numeraire. It may of course matter when one is discussing other issues, like inflation or how class struggle plays itself out in concrete situations. In some contexts Marx adopted gold as numeraire. This discussion is interesting to me because I hadn't realized till now that this question of absolute price is thought to be important by some interpreters of Marx. I've always supposed that it hasn't got anything to do with value theory and thedetermination of the profit rate. Fred: >In Marx's theory, the "price" of a commodity is defined as the >*exchange-ratio between that commodity and the money commodity*, >e.g. gold. At the high level of abstraction of Volume 1, the price of a >commodity is determined by the relative quantities of labor-time required >to produce that commodity and a unit of gold. Me: So how is this different from what one finds in the Sraffian literature? "Pick a numeraire, any numeraire: relative prices are what matter." Fred: >Marx's concept of price is analogous to the Sraffian concept of "absolute >price". It is not a "relative price", in the sense of a ratio of prices >(Px / Py). Gold has no price in Marx's theory. Gold has a value in >Marx's theory (determined by the labor-time required to produce it), but >not a price. Gold cannot have a price, because a price is an exchange >ratio with gold. Gold has no exchange ratio with itself. > >A "relative price" in Marx's theory would be a ratio between two "absolute >prices", i.e. a ratio between two exchange-ratios with money. Therefore, >a "relative price" in Marx's theory is a ratio of exchange between two >commodities *other than the money commodity* (e.g. the exchange ratio >between wheat and cloth). I don't Marx was not much interested in such >"relative prices". Me: I'm having trouble getting my brain around the prededing. Surely the price of gold in terms of itself is 1 -- unless Mark is using price in an altogether different way from the way Ricardo used it, which, on the basis of the textual record, I don't believe is the case. Again we are back to the relation between Marx & Ricardo. > Fred: >In Sraffa's theory, on the other hand, I am not sure what an "absolute >price" is. Me: Well, it doesn't really come up, because it's not an interesting issue within that theory. Any commodity can be selected as numeraire, and the commodity selected fixes "absolute prices." But you just don't get any insight about the world from fixing absolute prices. The important issues relate to the mechanisms that regulate relative prices. Fred: >It does not appear to be an exchange-ratio with >money. Instead, since the money-commodity is chosen as the numeraire, >exchange-ratios with money are "relative prices", rather than "absolute >prices" (as in Marx's theory). > Me: Hmmm. I see now that I have no idea what Fred means by absolute prices. Can you explain? Still me: > >> Strictly speaking, the mathematics don't so much >> require that a particular commodity's value or price be given; rather they >> require that we recognize that the equations can only determine relative >> prices. > Fred: >Gary, I don't think it is strictly true that the system of equations can >only determine relative prices. It seems to me that the equations >determine only relative prices ONLY IF one price is taken as >given. However, as I argued in my last post, if instead the real wage and >the profit rate are taken as given, then absolute prices can be determined >from these same equations. You may only be interested only in relative >prices, but that is not strictly required by the equations themselves. > Me: The point is that the fundamental data (technical conditions of production, one distribution variable) can only determine relative prices. Specification of a numeraire to close the system does of course give "absolute prices" in the sense of assigning a precise numerical value to each pi, as opposed to just allowing solutions for the ratios pi/pj. But the selection of the numeraire and the resulting "absolute prices" are entirely arbitrary, whereas the relative prices are not. Gary
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