From: glevy@PRATT.EDU
Date: Thu Oct 04 2007 - 08:29:48 EDT
I had a hard time reading Paul C's reply to Jurriaan so I reformmated it below so that it's clearer to follow who wrote what. In solidarity, Jerry Jurrian wrote: > I did not "aggregate" the value of the stock of US physical assets with > the stock of US tradeable financial assets, rather I struck a ratio > between the estimates I had, to give a rough indication of magnitude. I > would say from the data I have looked at that the value of the stock of > financial assets in the US would be larger than the value of the stock > of physical assets. About half of Americans however own negligible > financial assets. =========== Paul C replied: > It is fair enough to make a ratio between them, but the two numbers are > of different types, and the type of the ratio is yet something else. =========== Jurriaan wrote: > First you argued financial assets are "not values but information > structures, sequences of records held on the hard disks of the banking > system". Then you argue "social relations are codified in and depend > upon data structures." But these claims are not the same. I am not sure > what to make of this. =========== Paul C replied: > No they are not the same, the second is intended to be a clarification > of the first. It was of course rather brief. The chapter 9 of the online > book http://www.dcs.gla.ac.uk/~wpc/reports/info_book.pdf by Ian, Allin, > Greg and I, attempts to investigate the relationship between > conservation laws, information structures and credit money at somewhat > greater length. =========== Jurriaan wrote: > I do not agree that "In commodity exchange a conservation law holds, the > sum of embodied labour/value does not rise in exchanges" as stated. > Because this law, if true, would hold only for the exchanges involved in > the production of the gross output (Marx's definition of gross output or > "value of production" differs significantly from the conventional > measure, as I mentioned). It would presumably mean that no net additions > to the new value created can result from the exchange of newly produced > commodities only, or, that exchanges or products can only redistribute > values, not add to them. This idea is strongly contested by bankers, > e.g. because without operating certain transactions the product-value > would not exist at all etc. > > Yet assets are being devalued and revalued all the time, whether they > are being traded or not. The conservation law would then presumably > state that for every devaluation of some of the new commodity output > there must be an equal revaluation of some other component of the new > commodity output (?). > > However, at least one aspect is that the exchanges of total inputs and > total outputs in the sphere of production are not all the exchanges > there are. External to that sphere, a large trading process occurs as > well. When Marx referred to values, he referred only to components of > the gross output on his definition, not to total trade volume. > > One could depict unequal exchange in the trade in products as being only > a redistribution of values between different owners. =========== Paul replied: > Depends what you mean by value. By value I always mean socially > necessary labour time embodied. > This clearly can not be created in exchanges, but a conservation law > says more than this. It says that the each agent engaged in exchange > tends to retain the same stock of socially necessary labour time in the > commodities they hold. This is not absolutely the case because there is > some dispersion of exchange ratios around value ratios, but the > dispersion is small, and taken as a whole it is a zero sum game. > > If you start confusing value with price, then of course it can appear > that the whole system is non-conservative, since an inflationary > increase in the money stock can bid up asset prices =========== Jurriaan wrote: > When new debt is incurred, then in a conventional balance sheet it will > obviously appear on both sides of the ledger, i.e. for every asset there > is a liability, that's clear. I am not sure though what you mean by the > L1 norm in this case - this seems to refer to a mathematical technique > to discover a function/vector that will most closely describe/fit a data > set (?). ========== Paul replied: > L1 norm or, Manhattan metric, is the sum of absolute values of > elements of a vector > > Assume an agent has a vector of assets and liabilities, the L1 norm of > these grows both with increasing assets and increasing liabilities =========== Jurriaan wrote: > I do not know what you mean by "real capital", I assume you mean > tangible physical assets or productive capital (?). =========== Paul replied: > I mean aggregations of structured matter whose entropy has been changed > as a result of labour, and which can be used for productive purposes. =========== Jurriaan wrote: > In Cap. 2, Marx distinguished broadly between commodity capital, money > capital, and production capital. Financial assets would presumably be a > component of money capital. He also refers to "fictitious capital" or > "fictitious commodities" though he fails to specify exactly what he > means by that, it could be thought of as a capitalisation on property > ownership. In Marx's analysis, capital can, assuming a developed credit > and capital market, flexibly transit from one form of capital to > another. Thus, if for some reason production becomes a more risky or > less profitable avenue for accumulation, capital exits from the sphere > of production to the sphere of circulation. It does not cease to > accumulate, but the mode of accumulation changes, i.e. instead of > M-C...P...C'-M' the circuit becomes M-M', M-C-M', C-M-C', C-C' > (=countertrade) and so on. =========== Paul replied: > > This will not add up Jurrian. > > In Marx's volume 1 analysis the money stock is conserved, it is > impossible, in aggregate for capital to move from productive form into > money. An individual capitalist can do this but only to the extent that > another capitalist buys commodities from him, and thus undergoes the > reverse move. > > There is no adequate formal analysis of debt or bank money in Marx. =========== Jurriaan wrote: > The corollary is that capital which is not production capital exists > either as commodity capital (lodged in tradeable goods, physical assets > or tangibles of some sort) or as money capital (lodged in financial > claims of some sort) or fictitious capital (fiduciary claims of some > sort). Instead of producing anything extra, you can use capital to buy > up real estate, or companies, or trade in money, equities, securities, > other financial products etc. (a current favourite is "buy-outs"). It > would not be too difficult to show, with various statistical indicators, > that in aggregate the total stock of money capital and commodity capital > grows much faster, and is larger than, the total stock of production > capital (well, in this regard actually the Fed axed the computation of > M3, which was increasing around 12% yearly, as against about 10% in the > EU and 3 or 4% in Japan and possibly 20% in China). =========== Paul wrote: > > The measure M3 is roughly 0.5 times the l1 Norm of bank accounts, this > does grow, but the commodity norm does not. > > I explain these different norms in the chapter I mentioned. ============= Jurriaan wrote: > Marx's knowledge of the role of capital finance in the historical > origins and development of capitalism was rather sketchy, and he did not > live to work out the ideas he presents in Cap. Vol. 3 in more detail. So > there is a lot more work to be done in that area, to make sense of > historical and current realities in terms of the approach he favoured. ============ Paul replied: > I agree with the last point
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