From: Rakesh Bhandari (rakeshb@STANFORD.EDU)
Date: Mon Jun 21 2004 - 19:42:29 EDT
Fred to Ajit back to Fred > > > > In Marx's theory in Capital, the MELT is determined >> > by the value of gold, >> > i.e. is equal to the inverse of the labor-time >> > required to produce a unit >> > of gold (i.e. MELT = 1 / Lg = 1 / (2 hrs. per >> > shilling) = 0.5 shilling per >> > hour). >> __________________________ >> >> But how do you get "the inverse of the labor-time >> required to produce a unit of gold"? In the production >> of gold constant capital is a factor, which is not >> gold. So you need to measure the constant capital >> factor in arriving at your measure of "labor time >> required to produce a unit of gold". My question to >> you all for a long time have been: how do you do that? >> Cheers, ajit sinha > > >The labor-time required to produce a unit of gold includes the labor-time >required to produce the means of production used in gold production, >which is taken as given. > This is a four to five year old debate on OPE-L. Ajit's challenge appears a valid one but implies mis-understanding of Marx's methodology. This was all explained four years ago. Marx arbitrarily stipulates a certain value to gold and then stipulates further that it remains fixed. This is of course "nonsense" to Ajit, but he thinks there's reason in how he (or the surplus school) handles money? There are real effects on the Sraffian system depending on which numeraire is arbitrarily chosen. The understanding of money in that theory seems to me nonsense (of course it all goes back to Sraffa accepting the basic premises of Malthus' criticism of Ricardo; here again the best answer would have been to negate the question, not construct the standard commodity as invariable measure of value...that money may be a commodity does not mean its purchasing power and thus the size of the net product as measured in money will be affected a redistribution of income). But back to Marx... How does he know the value of gold? How does he know the value of the used up means of production? Does he assume it's handpicked from a flowing river? Why does he assume it's fixed? Well yes there's no beating around the bush. Simply stipulating (or pulling from thin air) a fixed value for the money commodity seems arbitrary. Why does Marx make such aribtrary or seemingly nonsensical assumptions? Why given the thought experiment that Marx was trying to carry out does he make arbitrary assumptions about gold? Why after critiquing Ricardo for his search for an invariable standard of value does he construct one in his own theoretical investigation? Why as Fred argues is m simply taken as given (with very few, if any, exceptions) throughout the three volumes of Capital? Is there any way to justify the way he proceeded, that is Marx fixing m as .5 shilling/hr and thus the value of shilling as 2 hours. Why yes. But the only justification ever given for Marx's seemingly arbitrary or nonsensical assumptions about money in the three volumes of Capital has been provided by Grossmann. And no one has ever to my knowledge ever made direct contact with what Grossmann actually argued. If one wanted to isolate in a thought experiment the effects of the developing productive forces on the relations of production, one would have to isolate the effects of rising productivity which means one would want all changes in exchange ratios to happen on the commodity side of the equation. But this cannot be done in a controlled thought experiment without stipulating and fixing the value of money. Is this an arbitrary or nonsensical way to proceed? One would think so only if scientifically untutored (see Grossman quote below). And arbitrary compared to what? Again a four year old debate on OPE-L. The debate we haven't yet had explicitly at least concerns the validity of Marx's critique of the labour certificate programme. Hilferding refers to it in course of distinguishing between theoretical and practical measures of value. See critique of Bohm Bawerk. Grossmann: "Through prices the fluctuations of a given capital in the course of its circuit become expressed in money, which serves as measure of value required for accounting. And with respect to this measure of value marx proceeds from the assumption, which is purely fictitious and which forms the basis of his analysis, that hte value of money is contant. At first sight this appears to be all teh more suprising in the sense that, in his polemic with Ricardo's 'invariable measure of value,' Marx emphasizes that gold can only serve as a measure of value becuse its own value is variable. But science needs invariable measures: 'the interest in comparing the value of commodities in different historical periods is, indeed, not an *economic* interest as such, but an academic interest.' (Marx) "From the historical surveys of the development of thermometry we know that a reliable measure of heat variations was established through the fundamental work of Amonton, with the discovery of two fundamental points (boiling point and the absolute null point of water) for liquid used as the measure of heat variations. This alone could establish the constant reference points with which it became possible to compare the variable states of heat (Mach) "There are no such constant reference points for gold as the measure of value. So an exact measure of the value fluctuations of commodities would be impossible. On the one hand changes in the value of the money commodity may differ from the changes in the value of individual commodity types. In this case we have no exact measure to ascertain how far, say, the rising prices of a given commodity have been caused through changes in its own value and how far through changes in the value of the money commodity. In this case, suppose we were studying variations in the magnitude of surplus value; then, with a variable value of money, it would be difficult to tell whether a given increment in value (or price) was not something merely apparent and caused purely by changes in the value of money. "'In all these examples there would however have been no actual change in the magnitude of capital value, and only in th emoney expression of the same value and the same surplus value...there is, therefore, but the appearance of change in the magnitude of employed capital.' (Marx) "Alternatively the value of money varies in the same proportion as the values of other commodities, for instance due to general changes in the productivity--a limiting case that is scarcely possible in reality. In that case there would have been enormous absolute changes in the real relations of production and wealth, but these actual changes would be invisible on the surface, because the relative proportions of individual commodity values would remain the same. The price index would not register the actual changes in productivity. "Thus it was entirely valid for Marx to substitute the 'power of abstraction' for the missing constant reference points, so falling into line with Galileo's principle: "measure whatever is measurable, and make the nonemeasurable measurable.' For instance to ascertain the impact of changes in productivity on the formation of value and surplus value, Marx is forced to introduce the assumption that the value of money is contant. This assumption is therefore a methodological postulate that equips Marx with an exact measure for ascertaining values of industrial capital during its circuit. It is an assumption underlying all three volumes of Capital." >Comradely, >Fred
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