From: Rakesh Bhandari (rakeshb@STANFORD.EDU)
Date: Tue Jun 01 2004 - 05:15:35 EDT
Ajit, the measuring rod does not remain invariant to the distribution of income only if the measuring rod, money, belongs in the system in which the rate of profit is equalized, that is, if money is like most other commodities in that (as I have argued) its supply can be regulated such its production yields neither more nor less than the average rate of profit over time. All the apparent changes in the size of the pie from mere changes in distribution only result if one assumes that the measuring rod should belong to the system in and over which the rate of profit is equalized. But money does not belong there. Malthus was able to create problems for Ricardo because he got Ricardo to accept that gold is like all other commodities in that its production will tend to yield the average rate of profit over time. But Ricardo realized that gold was not like other commodities. I have already quoted Ricardo's recognition of this, but he did not dwell on it (see p. 193-4 of Sraffa's ed. of Ricardo's Principles). There was no reason to search for an invariable measure of value. Malthus burdened Ricardo with a false problem. Rather than negating the question, Sraffa tried to solve it with the invention of a standard commodity which has no real world relevance (it changes with each technical change; it is not money; it's only an example of technical virtuosity and thus can only have the appeal of esoterica). Sraffa's time was wasted by Ricardo's inability to shrug off Malthus' baseless assumptions about what you call the measuring rod. Michele Naples first made this argument; David Yaffe had intimated it. I have added to it in my own way, so has Fred Moseley. You're not grappling with it. Yours, Rakesh
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