Re: [OPE-L] workers' consumption and capitalists' consumption

From: ajit sinha (sinha_a99@YAHOO.COM)
Date: Wed Jun 28 2006 - 05:51:46 EDT


Ian, let's bring it to a close. But for yourself, just
think of the equation that you keep cutting off from
my reply:

In your given corn economy:

2t. of RM corn + 4000 hrs. of Labor --> 10 t. of corn

how do you get labor-value of 1 t. of corn equal to
1000 hrs. of labor? Unless you transform the
production system as:

2t.of RM corn+4t.of CC+4000 hrs.of L --> 10t. of corn

How this 4t. of CC can be defined as 'surplus' of the
system? No need to answer this to me, but just think
about it and try to convince yourself. Also think
about what will happen to your accounting system, if
it is growing on a balanced path? Do you think that
there should be different accounting system for growth
context and a different one for zero growth context?
If not, then what kind of problem your accounting
system has. I think some of these questions you need
to think through before you stake out your position in
print. I must say, after a very long time I have
enjoyed a debate on ope-l. My best, ajit sinha


--- Ian Wright <wrighti@ACM.ORG> wrote:

> Hi Ajit
>
> I guess this thread is nearing its natural
> conclusion, particularly as
> we are both beginning to repeat ourselves and
> perhaps exhausted the
> patience of listmembers. You asked some specific
> questions in your
> last message, which I will answer.
>
> > Didn't everybody know that in a no-surplus economy
> the labor
> > theory of value gives the right exchange rations?
>
> A closed model of simple reproduction is not a
> "no-surplus" economy.
>
> The neo-Ricardian critique of Marx's LTV is that the
> LTV holds in
> simple commodity production (zero profits) but not
> in simple
> reproduction (non-zero uniform profits), i.e. the
> crux of the matter
> is competitive prices and equal returns to capital
> invested. I have
> not encountered the claim that Marx's LTV holds in a
> no-surplus but
> fails in a surplus economy.
>
> > Actually, you don't need to introduce labor at all
> in
> > your system. You can do the whole exercise in
> terms of
> > materials as Sraffa in chapter one does. So what
> kind
> > of defense of labor theory of value this formal
> system
> > can produce?
>
> In an important sense the solution of the TP is
> simple and obvious
> once the reason for its existence is understood. In
> the modern
> context, there is a TP because the adopted
> labour-cost accounting is
> non-conservative. Once this accounting error is
> fixed, and the
> replacement costs of commodities properly
> calculated, then real-costs
> in general, including labour-costs, are conservative
> in price. The
> real-cost symmetries in Sraffa's "subsistence"
> equations of Ch.1 are
> then restored in Sraffa's "surplus" equations of
> Ch.2. Hence, Ch.2
> does begin to look like Ch.1 again, on condition
> Sraffa's surplus is
> both nominally and physically distributed.
>
> Sraffa's open representation of an economy, with an
> undistributed
> surplus, severs the connection between money-capital
> and its
> real-cost, what I call an interruption of the
> circular flow. Hence, a
> whole recursive path of vertical integration is
> missed. If we don't
> vertically integrate over the real-cost of
> money-capital, and actually
> count the indirect labour required to manufacture
> capitalist
> consumption, you lose conservation of real-cost in
> price. Hence,
> something called a "transformation problem".
>
> The analogy to conservation laws in other areas of
> science is very
> close. In physics, it took some time for the idea of
> conservation of
> energy to really take hold (for example, see
> Meyerson's "Identity and
> Reality", itself a major influence on Mirowski's
> brilliant
> contribution to value theory, "More Heat than
> Light"). The principle
> of the conservation of energy was not deduced from
> definitive
> empirical evidence. The elaboration of the principle
> was more a
> conceptual matter, which included accounting for the
> `missing' or
> `lost' energy, in the form of heat, sound, etc.,
> during energy
> transformations.
>
> > Though Sraffa is not designed to study
> > technical change, you must know that he is able to
> > handle it quite well as he does in his chapter on
> > land. The point is that treating of technical
> change
> > as magic is childish.
>
> The idea that labour can alter its productivity
> without the
> introduction of new machinery is not "childish",
> particularly in the
> context of a 1-d corn economy. I agree that
> single-production Sraffa
> is not designed to handle technical change. But
> single-production
> Sraffa is also not designed to handle changes in the
> *real*
> distribution of income, which you introduced as a
> critique. In
> general, a change in the real distribution of income
> is a change in
> the composition of the net product. For this to make
> sense we must
> assume constant returns to scale, which violates
> Sraffa's theoretical
> assumptions, unless we introduce technical change.
>
> I am working within Sraffa's assumptions. This is
> why I characterize
> your introduction of changes in real income, as a
> critique of my
> construction of the circular flow from Sraffa's
> surplus equations, an
> "external" critique of Sraffa's framework. You are
> highlighting some
> limitations of Sraffa's approach, and so my response
> is a shrug of the
> shoulders. I agree there are important limitations
> to trying to
> understand an economy in terms of linear algebra,
> particularly if the
> interpretation of that algebra has metaphorical
> tensions (e.g.
> circular flow vs. undistributed surplus). The
> economy is irreducibly a
> dynamic system. My justification for working within
> this static
> framework is that it needed some "debugging",
> particularly when
> applied to Marx's LTV and his conservation laws.
>
> Best wishes,
> -Ian.
>


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