On 4/23/97, I wrote:
>In the 2-commodity world Ajit and Andrew are discussing, it
>would seem possible to assign "$" prices in one period such
>that the unit prices of each commodity do not change as
>inputs become outputs. Given production in a subsequent
>period, Andrew's point would seem valid. If not, again,
>we have to ask how are we to deal with "real" prices
>as opposed to mere relative prices in a Sraffa system.
Chai-on commented (OPE-L 4896):
Chai-on:
What is "real price"? The relative exchange-value between the 2 commodities
is the real price whereas the $price is a nominal price. At the moment,
however, the nominal price is irrelevant.
I now remark:
Your point is well-taken. For real prices to appear in these
n-commodity models, we should be able to designate one of the
commodities as the money commodity and express all prices in
terms of it. Here, I think n must be greater than 2. Using
those prices, we could make inter-temporal comparisons of prices.
In this way, the models can become models of an economy in time
rather than "at the moment."
This is precisely what I have never found in Sraffa. To be sure,
given the point of his effort, I do not think it is a shortcoming.
However, since his work has given rise to criticisms of Marx's
effort to examine an economy as it changes in time, we are
confronted with more than a few fatally flawed critiques of Marx.
On the other hand, perhaps I am wrong. Hence, my question in the
above was "How are we to deal with 'real' prices as opposed to
mere relative prices in a Sraffa system?"
John