In reply to Andrew's [OPE-L:3307]:
Andrew:
>Duncan: "I think Andrew and I both start from an interpretation of the labor
>theory of value that ...stipulates that in a given period an hour of expended
>social labor creates a certain amount of money value."
>
>I would usually have no reluctance in affirming this, but in the present
>context, I'm wary of saying that expended living labor creates money value.
>Even in the *aggregate*, money prices of commodities can rise or fall *after*
>production for a myriad of reasons that have nothing to do with the living
>labor expended *earlier*, *during* production. If, for instance, bank lending
>increases markedly, money prices might rise such that equal portions of the
>output, *produced* in a "given period" but sold in succession, may have
>different money prices.
Duncan (now):
Though this is somewhat off the main point of the discussion, I'd like to
note that this possibility is inconsistent with the mature Marx's theory of
money, in which, following Tooke, he argued that the price level is
determined by the cost of production of the money-commodity to other
commodities, and not by credit or the quantity of monetary assets.
Andrew:
> Also, production takes time, so the relation between
>labor-time and money value may vary during a given period of production.
Duncan (now):
I spent quite a bit of time on the principles of measuring the "value of
money" (or equivalently the "monetary expression of value") in continuous
time with technical change in my monograph, Money, Accumulation and
Crisis.(Harwood Academic, 1986). Following the principle that the monetary
expression of value is equal to the ratio of money value added to living
labor time, it is possible to measure it over any time interval
unambiguously using the standard definitions of money value added.
Fortunately, however, your examples all stipulate a constant monetary
expression of value (or so I take your language "assuming one hour of labor
time is the equivalent of 1$", or words to that effect in the examples), so
that the issue of how to handle a changing monetary expression of value can
be separated from the issues we're discussing.
Andrew:
>Duncan: "Suppose we start with some data from a real economy that includes a
>series of prices of output p(t), and a measurement of the quantity of output
>X(t), and of the inputs to production, including a measure of the social labor
>expended per unit of output l(t) (assuming that we've agreed on how to create
>these measures.) Then I think Andrew and I would agree that the monetary
>expression of value is equal to the ratio of the Money Value Added (defined in
>the appropriate way) to the social labor time expended.
>
>(1) MVA(t) = m(t)l(t)X(t)."
>
>I don't agree with this, because production takes time. Only if production is
>instantaneous do the l(t) and X(t) refer to one, and the same, t. In many
>contexts, this issue, raised by Simon, need not present a problem, but in the
>current context it does. Assume, for instance, that production is flow
>input/point output. During one production "period," then, the living labor is
>expended at a succession of times, all or almost all of them earlier than the
>time of output. Consequently, here, and whenever production isn't
>instantaneous, we can't assume a single uniform m(t) throughout the production
>period.
Duncan (now):
You might not want to assume a uniform m(t) in confronting real data from a
real capitalist economy, but as far as I can tell the examples we're
discussing do explicitly assume a constant monetary expression of value.
Andrew:
>
>Duncan: "if we make the assumption that the monetary expression of value is
>given (for example by production costs of a money commodity like gold), then
>this equation turns into a theory of money prices, given the path of social
>labor time expended. I think both Andrew and I agree that this is a meaningful
>way to proceed."
>
>Yes, *if* the givenness of the MEV means that it is assumed to be *constant*.
>However, I'm unwilling to call this a "theory" of money prices, since it
>follows from an arbitrary *assumption*, not from any claims concerning
>determination.
Duncan (now):
I don't see that we have any disagreement here. I'm interested in
understanding why you get the money rate of profit path you do in your
examples, and I'm perfectly happy with the assumption for the sake of
argument that the monetary expression of value is given and constant.
Andrew:
>
>Duncan: "The point I want to focus discussion around is that the price path
>derived from this equation for any given path of social labor time is
>sensitive to the exact definition of money value added we put on the left hand
>side. Since both
>Fred and Andrew seem to have misunderstood me on this point, let me emphasize
>that I am not proposing any different treatment of the right hand side of this
>equation (the measure of the social labor time)."
>
>The measure of living labor-time is not my problem. Rather, if the MEV is
>changing during the period, then *however* one measures MVA, I don't accept
>the equation, because it assumes the MEV doesn't change.
Duncan (now):
Well, now I'm kind of disoriented, since I thought the assumption of a
constant MEV was the assumption on the basis of which you were calculating
your example.
Andrew:
>
>Duncan: "Andrew's examples are based on the definition of the money value
>added as the difference between the sales price of the output and the cost of
>the
>inputs which is (remembering that we are treating the cost of labor-power as
>negligible)
>
>(3) MVA(Andrew) = p(t)X(t) - p(t-1)aX(t)
>
>= p(t)X(t) - p(t)aX(t) + ((p(t)aX(t)-p(t-1)aX(t))
>
>= MVA(National Income) + Inventory Valuation Adjustment
>
>"In the interests of making the assumptions involved in an argument as
>explicit as possible (as Alan advocated so eloquently in his discussion of the
>Okishio literature), I want to call people's attention to the fact that this
>definition of value added is different from the standard national income
>accounting definition, in that it includes the revaluation of the stocks of
>inputs over the production period due to the change in prices, which in NIA
>terms is called the Inventory Valuation Adjustment, and is excluded from the
>NIA definition of value added."
>
>I'll accept all this, though I remain confused about the NIA definition, and I
>still don't like the term "money value added."
>
>Duncan: "I think it is also significant that by adopting this definition of
>money value added to define the monetary expression of value one is
>effectively imputing to the
>expenditure of social labor the change in the value of stocks of inputs
>through the production period due to price changes, a change in value which
>has nothing to do with the production process itself. I confess that at this
>point I think the NIA definition of value added is a better representation of
>my current understanding of Marx's labor theory of value, though I'm certainly
>willing to hear arguments to the contrary."
>
>I don't accept this. First, again, I would NOT use the above to define "the"
>monetary expression of value. If we take "p" to be the unit money price, as
>Duncan is now doing, then I would "define" the MEV as follows:
>
>(1/m[t])p(t)X(t) - (1/m[t-1])p(t-1)aX(t) = l(t)X(t)
>
>or
>
>m[t] = p(t)X(t)/{(1/m[t-1])p(t-1)aX(t) + l(t)X(t)}
>
>where the numerator on the RHS is the money value of output and the
>denominator {.} is what I understand to be the labor-time value of output.
>(This holds even if the above are considered as vectors, i.e. multiple
>sectors.) Thus, I understand the MEV at any moment to be the ratio of the
>money value to the labor-time value of the product. (Actually, however, since
>money is spent on and used to value non-produced assets, I think that, in a
>*real* economy, the numerator should be the money value of *all* alienable
>assets and the denominator their labor-time value.)
Duncan (now)
Two points: 1) under the assumption of a given and constant monetary
expression of value, these equations are exactly the ones I attributed to
you.
2) The phrase "labor-time value of the product" seems inherently ambiguous
to me, because there are many different ways to measure the gross product,
depending on the time period, the structure of production, and so on. I
think that is why Smith, and Marx following him, stuck to value added
accounting concepts. The ratio of the value added (or the value of net
product) to living labor time is unambiguous, while the ratio of the value
of gross product to living labor time is inherently ambiguous.
More follows.
Duncan
Duncan K. Foley
Department of Economics
Barnard College
New York, NY 10027
(212)-854-3790
fax: (212)-854-8947
e-mail: dkf2@columbia.edu