From: Andrew Brown (A.Brown@LUBS.LEEDS.AC.UK)
Date: Wed Mar 23 2005 - 14:15:54 EST
Hi Ajit, Well, your first comment was no doubt in total jest but it really got me thinking... You write, 'you may be interested in ghost stories and ghosts may be having real influence in many people's life'. Do you mean that 'generalised exchange value' or purchasing power is not real? Or that it is? Or that it is not real but does have effects? How can something that is not real have effects? Is it a ghost?!:) Your comment may be in jest but in fact parallels Marx's reference to the 'ghostly' nature of value. As a materialist I don't believe ghosts exist (!) but I take the evident causal efficaciousness of purchasing power to be a challenge to materialism because it is hard to find a material ground for it. Sraffa's 'given techniques' provide no such ground, contra Steedman's view, because in reality techniques are not given forever but themselves part and parcel of a general social process that is seemingly dominated by general purchasing power (the profit motive). How do you see all this? Do we just look at the language game and eschew reference to purchasing 'power' beyond any such game? The trouble with this is that it seems to leave us bereft of the ability grasp capitalist reproduction and development. If it dispels the illusion that we are dominated by a ghost, it leaves us with the impression that we are dominated by an illusion. How, then, does the society reproduce? Uh oh, is this mumbo jumbo again? Sorry... :) But that does not mean that my paper or Sraffa or anyone else must deal with ghost stories. The problem appears to me is that you have a private meaning of numeraire. Our paper deals with numeraire, which has a well defined meaning in economic theory, particularly in the theory that our paper is designed to critique. How about if I say that poverty is the most serious economic problem and your theory says nothing about how to measure poverty or reduce poverty. So, there! That's my criticism of your theory. You will be legitimately allowed to say, "bull"!' I reply: Your paper, in the conclusion, says that economic science as such is fundamentally limited (this is also what you say in your previous papers on Sraffa, and what intrigues me). This is more than an immanent critique of general equilibrium (unless you equate 'economic science' with 'general equilibrium theory'). It is on the terrain of this large claim of yours that I have been arguing. The object of both your claim and my response is the same: economic science. Thus we, of course, have the same *definition* of the numeraire but it is the *significance* of the numeraire to economic science, and indeed the significance of economic science, that is at issue. You write: 'Yes, but the statement that it has "a positive relationship" does not make sense. First of all if value theory has to explain why 'one quarter of corn = x cwt. of iron', as Marx put it, then in that case the statement that labor and prices have positive relationship is meaningless. So you will have to say that well, 'value theory is not designed to solve the problem Marx posed for it. It is supposed to explain why one quarter of corn which used to exchange for x cwt. of iron, now exchanges for y cwt. of iron? And your statement means that in this case, the change in the prices can only be explained by changes in the labor values, i.e., if y is smaller than x, then the relative labor content of iron must have increased. This is the only meaning I can make of your positive relationship statement. So let's see how far your statement goes in this case. Now since Ricardo it is well known that the exchange ratio between corn and iron could change simply because the distribution of income between wages and profits changed without any change in the direct and indirect labor content of the two commodities. So what would your statement in this case mean? Where is the beef?' I reply: The answer to your question is that, as previously mentioned, there is not an exactly proportional relationship. Why not take Ricardo himself and say, following Stigler's mischievous interpretation, a correlation of 93 percent? You continue, 'Now let me hummer you further. Let us suppose I assume that income distribution remains the same, then you would say that in this case the price change must have come about because of technical change and this price change is explained by the changes in labor values. But to establish any claim like that you will have to establish a relationship between labor-values and exchange rate to begin with, which your first statement logically cannot do. That's why I keep saying that to establish that labor-values explain the changes in prices you will first have to establish a relationship between labor-values and prices, which is the real question of the labor theory of value. There is no escape from it'. I reply: See above. You write, 'as far as what I think about labor and all this--may be some other time'. Ajit this isn't fair!:) Come on, I've 'owned up'... what are your thoughts? Many thanks, Andy
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