[OPE] Reply to critics

(1) How is the exchange value of products influenced by the income earnt
from owning money?

What I meant is that the value of money is influenced by the income which
owning the money can generate. If I own $100 and the rate of interest is 5%
I end up with $105 and if the interest rate is 8% I end up with $108. With
the $105 or $108 I can buy more than I could with $100. If I can invest
worldwide, I can place my money at the best exchange rate conditions and at
the highest interest. In that case I will have the maximum increase in my
funds. I could add that if my accumulation activity creates additional
demand, this is likely to affect the market and the production process that
supplies the market. With small amounts the differential is slight, but with
very large funds the exchange ratio between money and commodities is
affected greatly by yields and rates.

(2) Surely this is an ambiguity on your part about what you mean by
accumulation.
Either you follow what you say is Marx's view, that it is a net addition to
the value of capital, in which case debts do not count since they are not
net
addition to value. Or you specify some other procedure whereby the
redistribution
of capital between agents counts as accumulation. What appears arbitrary to
me is
that you appear to be adding the positive side of debts but not deducting
the negative
side. If a person takes out a $50,000 mortgage on a $100,000 house that they
own, then there is no
change in the net worth either of the bank nor of the borrower, so that the
creation of this loan can not count as capital accumulation.

Paul, with you I always have to debate the most simple things from
accounting 101. It is patently obvious that people can accumulate wealth at
the expense of others so that the total stock of wealth does not increase. I
find it absolutely shocking that a computer scientist cannot grasp this
elementary point. Most times, accumulation involves both net addition and
redistribution, that is exactly what makes it complicated, and why grossing
and netting in social accounting involves value theory. If I take out a
mortgage and house prices increase, I can make a capital gain on my house
and thus I am accumulating capital despite the fact that the house stays
exactly the same as it was before. If the capital gain is sufficiently high,
as it was for some years in California (a teacher could make more money from
taking out a mortgage than from teaching, as reported by the LA Times), then
it becomes a very good commercial proposition to borrow funds and invest
them in real estate. You may argue that the capital gain is fictitious
capital, but when I sell the house at the end of the year there's real extra
money in my account. What does that extra money represent? You could say it
is a redistribution of funds which does not add value to the total capital
stock, but if the value of housing increases durably across the board, then
I could also argue that the value of the total capital stock has increased
due to the demand for housing. In Marxian value terms this may not be true,
but if the cost structure of building a new house increases durably, so that
the labour producing new houses is valued more highly, then it would seem
that the relative value of housing does increase, and that the gain in value
is not simply fictitious.

(3) Marx never uses the term physicalist theory of value and so never
rejects it, this 'physicalist theory of value' is a straw man you have
invented.

It is true that Marx did not use the term "physicalist", but he does say
economic value is a purely social category. He emphasized that numerous
times. Your "materialist" theory is based on the idea that only "material
production" creates value, but I don't think that was Marx's view at all.
And that is not a straw man proposition.

(4) No Value is not purely social, it is social, but social within the
context of the interaction of humans with nature via labour. And the value
of a produced commodity is not an 'attribution' it is a necessity imposed on
people by the need to work to survive. The price to a share certificate, or
an acre of land on the other hand is just a social attribution.

This is just playing with words, and in addition you confuse value and
price. If I am buying a share certificate or an acre of land I am also
interacting with nature via labour, since I have to do work to clinch the
deal.

(5) This is a misrepresentation of Sraffa, for Sraffa too, it is synchronic
property of the current conditions of production.

This is just false. Sraffa explicitly assumes that the value of inputs
comprises direct and indirect labour and he invents some equations for
"dated labour", the dated labour being the "dead" labour contained in the
physical inputs used to make it. This entails, that the value of the
commodity comprises the sum of current and past labour used to make that
commodity. It is an embodied labour theory of value and it is this theory
also which Maurice Dobb proposed. Sraffa talks specifically of a "physical
surplus".

(6) What is the non-material production that is so essential to material
production Jurriann? The activity of banking perhaps?

If you have any idea of modern production, you would know that material
production requires all kinds of services, including information services,
in order to operate at all. In fact the majority of labour engaged in
so-called material production involves information processing.

(7) This too is a caricature, nowhere in our article on productive labour
did we even suggest that 'material production of tangible things is regarded
as the productive activity'. On the contrary, our analysis concluded that
the production of, say, F-22 Raptor fighter jets --- presumably hard
'material, tangible things' --- is an *unproductive activity*.

But I see that as a problem for your theory, since an F-22 Raptor is a
commodity just like any other, built out of all kinds of other commodities.
Why should the same products sold and used to make a civilian plane count as
unproductive if they are used to make a military plane? Even if we exclude
some material production as unproductive, as you do, it still remains that
the Cockshott/Zacheriah theory has persistently stated that value is a
property of the material production process, of the output of productive
labour, that other kinds of production depend on this, and that non-material
production does not create value. It recalls the old Stalinist Material
Product System (MPS).

I am very grateful to Ian Wright for formalizing Marx's argument more the
way it should be, but actually I had already stated that interpretation of
current replacement cost myself many years ago.

You guys can have Stalin and Sraffa, I'll just stick with Marx and Engels.
Just bear in mind that the fetish of material production cost millions of
workers' lives.

Jurriaan

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Received on Wed Sep 29 10:22:38 2010