From: Allin Cottrell (cottrell@wfu.edu)
Date: Mon Nov 15 2004 - 22:19:48 EST
On Sun, 14 Nov 2004, Rakesh Bhandari wrote: > If $1000 is set equal to x barrels of oil, y oz of gold, and z > bushels of grain... "is set equal to": do you mean, if we suppose $1000 to be the actual price of the basket in some base period? (Otherwise I can't attach any meaning to the proposition: you can't just stipulate that $1000 is the value of any basket of commodities, since the dollar is a real thing in its own right and what it exchanges for is not a matter of stipulation -- unless unless we're talking about an imaginary accounting price for gold, that is not actually exchangeable at the notional price.) > and the socially necessary abstract labor time required to produce > that basket then decreases--say it took 1000 hours and now only > takes 500 hours--then the MELT changes correspondingly, no? The price/value ratio for that particular basket changes (unless the price changes in the same direction and proportion as the labor content -- that has not been specified). But do we have grounds for supposing that the overall MELT has changed in the same direction and proportion? > Before $1000 represented 1000 hours; now it represents only 500 > hours. For these particular commodities (if their dollar price remains unchanged); and not necessarily in general. > If Greenspan had to stick to a gold standard, how would things > work out? Say $1000 is set to w oz of gold. Where it once took > 1000 hours to mine that amount of gold, it now takes 1500 hours in > the mines that have not been tapped out. The MELT (the money > new-value produced per hour of socially necessary labor-time) > would now be 67 cents. $1000 would now purchase 1.5 x the labor > time that it purchased before. The MELT has decreased; the Foley > value of money increased. I may be wrong, but as I understand it, the Foley value of money partakes of no such nonsense: isn't his MELT defined in terms of the entire net product (its labor content and its monetary value)? Allin. -- Allin Cottrell Department of Economics Wake Forest University, NC
This archive was generated by hypermail 2.1.5 : Sat Nov 20 2004 - 00:00:01 EST