From: Andrew Brown (andrew@LUBS.LEEDS.AC.UK)
Date: Mon May 31 2004 - 09:34:59 EDT
Hi Costats and all, Let me clarify my comment on Costas’ notion of money as ‘absolute purchasing power’, in light of Costas’ reply. > Andy wrote: > > "Costas, money as form of 'purchasing power' means, quantitatively, > that money serves as an index of the size of the feasible set, i.e. as > no more than a numeraire. Money does not serve to homogenise > the diversity of goods. Thus 'purchasing power' cannot be compared > quantitatively through time due to qualitative change to the feasible > set (changed in goods, new goods, old goods). In these > circumstances a science of money must look for something other > than 'purchasing power', as which the diverse goods are equivalent, > shouldn't it?" > > This argument is not entirely clear to me but I read it as saying that > money 'as purchasing power' cannot be a numeraire because the set of > commodities changes over time. Rather, there can be no numeraire (whether ‘money’ or anything else) that is quantitatively comparable through time because of changes in the set of commodities. >I do not see why change in the set over > time is an especial problem for money 'as purchasing power'. It is not an especial problem for money but a general problem for the concept of ‘purchasing power’. >Nor is it > clear that this particular problem becomes less difficult when, say, > abstract labour is chosen as factor of equivalence. The theoretical > difficulties of making dead labour (especially of many vintages) > equivalent with living labour are well-known. It is clear. ‘Abstract labour’ provides a unit of measure that is constant through time (i.e. through change in the set of commodities). ‘Purchasing power’ has no such measure. It is one thing to have a problem in determining the precise magnitude of a quantity (SNabLT) through time. It is a more abstract, simple and fundamental problem to be bereft of a constant *unit of measure* throught time. The problem with ‘purchasing power’ is the latter problem. The problem with valuing vintages of capital is the former problem. > > In any case, in my view, money becomes the numeraire as commodities are > regularly and universally offered for it in view of its unique purchasing > power. In short, the unit of account function (as social process and not > as abstract division by an economist) is inseparable from the means of > exchange function. Both functions arise out of money's monopoly over > buying ability. The coherence and consistency of the nomenclature of price > is a different matter, and depends on the existence of abstract labour as > social substance. In the absence of the latter, for instance, money would > still operate as numeraire but prices could fail to exhibit transitivity. I originally interpreted your para here to imply that you felt that the question of ‘quantity’ is a ‘different matter’ to the question of quality. As if quantity were a matter of ‘nomenclature’, a purely nominal, secondary issue. Now, I am not so sure how to interpret your para. In any case, the point I am getting at is that it the terms ‘unit of account’, ‘purchasing power’, and other such, lead, on reflection, to a search for the ‘third thing’ that is value because of the problem of finding a unit of measure that is constant through time. This is so in the CMP and prior to the CMP. I’m not clear that your attempt to use these terms absent an enquiry into value is fully consonant with this point. Many thanks, Andy
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