Re: [OPE] Reply to critics (Cockshott mainly)

 Jurriaan
----------
In the case of accumulation of capital by one person at the expense of
another, the net gain of one person is the net loss of the other. Net
accumulation occurs by one person, but not the other, and, because the net
gain is offset exactly by the net loss, there exists no net accumulation for
the both of them. To a computer scientist this idea is maybe
incomprehensible, because it seems illogical; how can positive net
accumulation and zero accumulation co-exist at the same time? However, if we
think dialectically about the whole and the parts, and different
aggregations, we can understand it. In the first case, we are netting the
result for each person. In the second case, we are netting the result for
both of them together.

Let's say at time t, A has $100 and B has $50. At time t1, f B obtains $50
from A, then B has accumulated $100. A's accumulation is negative,
namely -$50. if we now total the capitals of A and B, we can conclude that
at titme t, it totalled $150, and at time t1 it also total $150, and all
that has happened is that B has accumulated at the expense of A. I can
extend this ultrasimple example into extraordinarily complex equations, but
lack the time to do so now.

Paul C
------------
What you are saying at one level is obvious, the crucial question is which
concept it appropriate when analysing the economy as a whole. For this
you have to use the social net concept.

 Jurriaan

You are correct in the sense that if I have a stock of houses and I just
trade in entitlements to their ownership, then that of itself makes no
difference to the number of houses or to their Marxian value. But anybody
knows this is not how the housing market works. The total net worth is not
the same as it was before because the nature of the financial claims changes
the net worth. In crude Marxist theories and neoclassical theories, all
prices are the same kind and all markets are the same kind, but real
economists know this is not true. Capital gain on housing is not a stock
appreciation but the appreciation of a physical asset, given a steady or
growing demand for housing vis-a-vis supply. If I own title to an asset I
can borrow more funds which I can reinvest for profit. And therefore owning
title to the asset already enables an extra profit because I can obtain
extra funds to play with. If the asset increases in value, I have made a
capital gain, which I realise upon sale.

Paul C
--------
You are now claiming what you criticised Gerry for - that value is created
in exchange. You are saying that houses increase in value because
of growing demand, not because of a decline in labour productivity
in the building industry. I assert that there is no decline in productivity
in the building industry, hence house values have not increased.
What you call the increase in house values is the increase in the
capitalised price of the ground they stand on.

 Jurriaan
----------

Well I am not likely to hire you as an economist.

Paul C
---------
Well, yes, perhaps I do charge too much,

But you dont get out of dealing with the distinction between land price
and capital by quips like that.

Jurriaan
----------

If you know anything about labour economics you know that "to produce twice
as much of a commodity requires twice the expended labour" is false.

Paul C
------------

Well that is certainly the basic assumption of the labour theory of value, certainly for the
quantities of commodity I have been giving 1 or 2 million kilos of grain, and given
that world grain production is of the order of 10^12 kilos, the fractional increase
that I was talking about was of the order of one part in a million, at this scale
the deviation from linearity would be unmeasurably small. So to any reasonable
accuracy of measurement my statement was true.

The University of Glasgow, charity number SC004401
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Received on Sun Oct 3 17:35:46 2010