From: Paul Cockshott (wpc@DCS.GLA.AC.UK)
Date: Thu Jun 08 2006 - 17:40:36 EDT
Assume an arbitrary numeraire equation that fixes the scale of the price system. In Sraffa's model prices are money units per units of commodity-type. In a circular flow representation of Sraffa's equations the price of money-capital is no different: it is money units per unit of money-capital, with dimensions $/$, equivalently a dimensionless ratio. Note that this does not imply that a capitalist can supply money-capital for a nanosecond and receive its price. -------------- Paul At this point you are surely conceding that what you call the price of money capital has dimension t^-1 ------------------ -------------------------- Continuing with the dimensional analysis: in Sraffa's model quantities are measured in units of commodity-type. So quantities of the money-capital commodity are measured in money units. If we wish to be explicit about the length of time represented by the production period then the dimensions are money units per unit of time. --------------- Paul No this is not right. The production rates are in units of tons of corn per year. The prices are in oz of gold per ton of corn. The revenue flow from sales is tons of corn /year x oz gold / ton corn and hence oz gold per year. If we consider a two year production period, the prices do not change, but it we consider a two year period the profit will double - this is because the profit is a rate per year, thus what you call the 'price of money' is not a price at all. --------------- > "It is not until capital is money-capital that it becomes a commodity, > whose capacity for self-expansion has a definite price quoted every > time in every prevailing rate of interest." > Marx, Capital Vol. 3. > > --------------- > Paul > Marx is being vulgar here. I'm not sure what to make of your comment. My feeling is that Marx is concerned to explain all the value forms of the capitalist economy, from the simple to the most esoteric and fetishistic. ------------------ Paul Marx has no theory of the rate of interest. ------------------ Ian Money-capital is a form of value that requires explanation in terms of underlying labour-time transfers. Sraffa's labour-value accounting cannot do this job because it does not count the labour-time worked to produce the goods that are bought with the profit-income from the sale of money-capital. Sraffian labour-value accounting gets struck at prices of production and cannot advance to the analysis of higher forms of value. I think that rather than cherry-picking from Marx those aspects which we find agreeable or disagreeable, we should try to understand the unity and consistency of this theoretical framework. For example, once Sraffa's labour-cost accounting error is fixed, r is also equal to Marx's S/(C+V), which has dimensions labour-hours/labour-hours, also equivalently a dimensionless ratio. ------------------ Paul It is important to distinguish the flow rate of profit from the stock rate of profit. The flow rate refers to the proportion of current labour that it devoted to the production surplus goods relative to the remainder of social labour. The stock rate refers to the number of people producing surplus goods divided by the number of person years required to construct the capital stock. The flow rate is a dimensionless quantity, the stock rate has dimension 1/t . Marx does not always distinguish clearly between the two because he still uses single production period analysis for most of his work. Each index tells you something useful about the economy, but they tell you different things. ---------------------------- > In the circular flow model there is both working-capital and > commodity-capital. However, there is not an identifiable "point in > time" when a firm both owns the working-capital and the > commodity-capital that was bought with it. That would not make any > sense. > ----------------------- > Paul > It makes sense because of the stochastic nature of transactions > which requires cash balances to ensure reproduction ( see my draft > on money which you have ). You must not have carefully read what I wrote. The stochastic nature of transactions is not relevant. I am modelling an exchange economy: money is exchanged for goods. At the completion of the transaction an economic agent cannot have both the money spent and the good received. ---------------------- Paul The point is that each capitalist is both a buyer and a seller. If one capitalist buys inputs another sells them, on average they are all buying and selling at the same time. The rate will be stochastic, the deviations in cash balances from the mean will be subject to noise with a Poisson spectrum. ----------------- Ian What has introducing money-capital go to do with a requirement to model partial stocks and unfinished goods within a production period? ------- Paul The point is that Sraffa does not have money capital, he only has commodity capital. If you introduce money capital you have to augment the Sraffian accounts which deal only with labour inputs and inputs of means of production, with an additional column on each side of the equation. On one side it represents the stock of coin held by firms in order to start out production, on the other side it represents the stock of coins that the firms have after production has continued. In your simple case this will be the same in each case, but if we allow an industry producing the numeraire and assume that this is gold or silver, the stock of gold will go up each cycle. ----------------------- My feeling is that you are introducing extraneous matters, which may be relevant for deepening the model. But for the purposes of critique I am content to work within Sraffa's single production framework. Best wishes, -Ian. ------------------------ I am not introducing it. You introduced the concept of money capital. I am just pointing out that if you introduce this concept then your accounting system has to be made more complicated.
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