tag:blogger.com,1999:blog-5154389358831836369.post1189482393725720745..comments2024-03-28T02:00:36.854-04:00Comments on The Slack Wire: Piketty and the Money View: A Reply to MisterMRJW Masonhttp://www.blogger.com/profile/10664452827447313845noreply@blogger.comBlogger7125tag:blogger.com,1999:blog-5154389358831836369.post-10208457854310842992014-09-29T23:52:45.365-04:002014-09-29T23:52:45.365-04:00I'm going to be slightly off topic here. But a...I'm going to be slightly off topic here. But as to whether Marx means his LTV ironically, I think it's a split decision. It, after all, takes him a full 3 volumes to work out his account. The difference between Marx and the Ricardan and Smithian accounts which provided the materials for his critique, is that his account is an extracted rather than an embodied account of "labor value" and the formation of "labor-value" occurs not through laboring processes, which produce and are use-values, but through market exchange-value relations, which do the extracting/abstracting of SNALT as a unit of account. SO I think the issues of costs and relative prices that you refer to, citing Sraffa, should be referred to the infamous "transformation problem", which the neo-classicals misread, causing a century of controversy. Contrary to Mister MR, I don't think that Marx was depending on an equilibrium account, but rather taking over the assumptions of balanced equilibrium reproduction precisely in order to undermine them in terms of the accumulation of long-run dynamic dis-equlibria, as the basis of his family of crisis tendencies. But still all "wealth", as paper claims on underlying production and production incomes, must "ultimately" be squared with the latter, so it does little good the slide and elide such signifieds under an endless accumulation of signifiers. Both land rents and credits depend upon the underlying productive base and its possible expansion, else they prove in the end entirely fictive. Picturing the "economic subsystem" entirely in terms of a "system of payments" in the manner of Luhmann, (which led Habermas astray, in the name of "communication"), simply won't do, since it ignores not just the distributional issues, which effect the level and composition of demand determining the "optimization" of the economy and the viability of its payments, but also the resource base upon which possible real production depends.<br /><br />One of Marx' basic, chronic complaints is that capitalism inverts the relation between means and ends, ( of Aristotelian origin, going back to the latter's criticism of the baunasoi), leading to the endless accumulation of means without regard for any "ultimate" or socially determined ends. IOW the generation and distribution of productive surpluses solely in terms of the social construction of private profits distorts the entire process of social development and the human and natural ends it is supposed to subserve. And the further issue arises, given that to economize means to produce more from less, or to produce the same unit output from fewer unit "resources", just what resources should be "economized" upon? Given the rampant environmental and resource crises we face, and the challenges that poses for the realization and coordination for the investment of "resources", just how relevant is any projection of the future accumulation and distribution of "wealth" in terms of monetary claims anyway? Shouldn't whatever "tools" of economic analysis that we can muster be focused on such "real" issues, rather than on the settlement of effectively fictitious monetary claims?john c. halaszhttps://www.blogger.com/profile/17176419625607679150noreply@blogger.comtag:blogger.com,1999:blog-5154389358831836369.post-82748195896058287592014-09-28T12:47:24.611-04:002014-09-28T12:47:24.611-04:00But no one ever really owns "real" capit...But no one ever really owns "real" capital beyond tiny household size enterprises. They own an equity contract that gives them certain rights of control and limits their liabilities. These really aren't so different than risky financial assets like junk bonds. It's interesting to think of equity as a liability. A Hhttps://www.blogger.com/profile/06916657901677009228noreply@blogger.comtag:blogger.com,1999:blog-5154389358831836369.post-74277914424926146542014-09-22T10:27:22.128-04:002014-09-22T10:27:22.128-04:00Thanks for the clarifying comment. As I re-read yo...Thanks for the clarifying comment. As I re-read your post and the MisterMR comments, I could see that my comment was not well focused.<br /><br />I picked up on this quote to better understand the thrust of this blog thread. <br /><br />" It's more in the spirit of the other core Marxian idea about capital, that it is a social relation between people."<br /><br /> I hope I am getting the thrust correctly.<br /><br />I take the controversial position that money is property, that money is ALWAYS property. This stance frequently puts up a flag for many bloggers.<br /><br />If money is property, then it is also "capital". That association places money in the same category as land, factories and other means of production.<br /><br />Now, should we think of "capital" as having a social contractual arrangement with society? I would think 'yes', the whole question of ownership is a social decision. Someone always "owns" capital, whether the "someone" is an individual, a collection of individuals, or is state ownership. In every case, ownership;is ultimately a decision about who exactly (and specifically) makes decisions about the use of property.<br /><br />You are having an interesting discussion here. Thanks for making it visible in this blog.<br />Roger Sparkshttps://www.blogger.com/profile/01734503500078064208noreply@blogger.comtag:blogger.com,1999:blog-5154389358831836369.post-67869063381935779142014-09-21T23:48:40.837-04:002014-09-21T23:48:40.837-04:00Roger-
That would be a difficult problem, but in ...Roger-<br /><br />That would be a difficult problem, but in some ways I'm suggesting just the opposite. I'm suggesting we should analyze the system of money payments independently of the other stuff we call "economic."JW Masonhttps://www.blogger.com/profile/10664452827447313845noreply@blogger.comtag:blogger.com,1999:blog-5154389358831836369.post-77254292660351347742014-09-21T11:28:08.261-04:002014-09-21T11:28:08.261-04:00What a difficult project! Completely describe an(t...What a difficult project! Completely describe an(the) economic system!<br /><br />In the past, I have described an effort to describe an economic system as being similar to asking four blind men to describe an elephant: One will notice a thick, long, flexible tube, another a thin, hairy, long flexible tube, another a thick post that has one bend, and the fourth, a huge balloon mysteriously suspended in the air. We who see the whole elephant know that each is only describing the part of the elephant that they are feeling(experiencing).<br /><br />The lesson from the blind men is that a very complete understanding of the economy is necessary before an accurate description can be made. <br /><br />Many rhetorical economic descriptions of the economy begin from a "labor theory", "capital theory", or other assumed framework. Perhaps this is necessary due to the brevity of human attention spans, but these descriptions each assume a view of the elephant that is very limited. It should be no surprise that discussion based on a partial description concludes with disjointed conclusions.<br /><br />Thus we see that conclusions resulting from rhetorical discussions based on the labor theory do not mesh at all well with conclusions resulting from rhetorical discussions based on capital theory. Both discussions were based on incomplete descriptions of the economy.<br /><br /><br /><br />Roger Sparkshttps://www.blogger.com/profile/01734503500078064208noreply@blogger.comtag:blogger.com,1999:blog-5154389358831836369.post-35768308302228152232014-09-19T19:50:56.830-04:002014-09-19T19:50:56.830-04:00There are some things that I was thinking about af...There are some things that I was thinking about after I read Piketty, but couldn't explain very well, that I think I can explain using this concept of social value, so here I go:<br /><br />1) The most important difference IMHO between Marxian economics and other economic theories, is that Marx places a lot of importance on the idea that capitalists are wealth accumulators, not utility maximizers. if we think in terms of social value, we could say that capitalists accumulate wealth not to satisfy their needs (consumption) but to increase their social power (that in Marxian terms is represented in terms of labour value, which however is not a real thing but a social relation). In this sense the relationship between Marx and Ricardo is more something like: Yes, I agree that your economic theory is correct, but the whole system is based on the continuous increase of social power of capitalists, and only indirectly on the satisfacions of the needs of consumers.<br /><br />2) The r>g thing. Piketty poses this as an empirical observation, he doesn't try to explain it (other than with weird theories about the efficiency of capital). However if we think in terms of social value, and if we believe that capitalists try to increase their relative social power, not to increase their future consumption, it is natural that capitalists discount growth and want to increase their wealth in relative terms to total income, not just in "real" terms. In fact if we think in terms of the LTV, one hour of labour automatically "revaluates" times the productivity increase. This might seem a weird mathematic abstraction but in reality it makes sense: for example if guy A has a wage of 1000$, and a new iphone enters the market, A generally doesn't think "whoa my real wage just increased!", unless s/he is planning to buy a cellphone. For the same reason someone who has a bank account or some property won't think "the real value of my account/property just increased", s/he will be interested in the relative value, not the real one. If actually capitalists/wealth owners think in this "intuitive LTV" way, they will perceive rg, and that when r<g there are economic crises. As a consequence the Marxian theory of the tendential fall in the rate of profit is way more similar to Piketty's findings than usually assumed, and has nothing to do with a supposed tecnologic tendence to higer capital intensity. The problem is just that capitalist tend to continually ammass wealth, either in "money" or "asset" form (thus either by building more factories, pushing up the price of land, or buying bonds). Thus the story is the same but the causality is reversed: it's not that capital increases because it's very efficient and this causes an increase in the profit share, but rather that a capitalist system needs to constantly accumulate "assets" (or a crisis will ensue) and keep a certain profit rate (or volatility will become excessive), and this means that the profit share has to increase in time.<br /><br />4) Going back to my 4 kinds of capital, so is this true that we can ignore difference between "financial" and "real" capital? In my opinion, not so: the point is that "real" capital (type 1), in Marxian terms, is that capital that is actually produced by (paid) labour. This means that, if for some reason there is too much wealth accumulated in capital, and some is in bonds, some in high value of land, and some in factories with large overcapacity, the fall in value of land can be managed, the bonds can be inflated away, but if the factories have to close this will likely cause unemployment, unless something limits this effect (e.g. a shorter working week or strong limits on overtime).<br />MisterMRhttps://www.blogger.com/profile/03806545811376548828noreply@blogger.comtag:blogger.com,1999:blog-5154389358831836369.post-27371205963466155412014-09-19T19:50:14.448-04:002014-09-19T19:50:14.448-04:00[sorry for the super-long, not 100% relevant comme...[sorry for the super-long, not 100% relevant comment]<br /><br />Thanks for the very thoughtful answer! Also thanks for the "classical Marxist perspective" - this flatters me a lot.<br />I now realise that I completely misunderstood what the "money view" is. In these terms I agree very much with it.<br /><br />Reading this post, it occurred to me that, in some sense, also the "labor theory of value" is a "money view". The reason is this: if we take a materialist view, we have situation like a fisherman who owns a boat and gets 5 tunas a day. How can we relate the tunas to the boat? Is the "efficiency" of the boat of five tunas/day? How can we relate this to a factory that produces 10 cars a day - is the factory more or less efficient than the boat? In these terms we can't answer, because all elements are eterogeneous. Marx, who believes in the sort of equilibrium theory that is the LTV, confronts the "values" of the tunas, cars, boats etc., not the things in themselves. Not only this, but since he uses "labor time" as a unit of measure, he is rooting (or trying to root) his theory in a view of social relations, for example if we say that a guy has a bank account that has a price equivalent to 150 labour hours, we are clearly speaking of a social relation of this guy with the rest of mankind, disguised as money (this of course doesn't negate your point about passive cooperation and all the other activities that are not monetized).<br /><br />This shows a difference between Sraffa's view and Marx's view: Sraffa sees production as a material activity and calculates "value" in terms of a "standard commodity" that is a weighted basket of phisical stuff, whereas Marx calculates "value" in terms of a particular kind of social relation, that can be quantified in terms of labour time.<br />Contra Piketty, Marx knows that there are productivity increases, in facts in the Grundrisse he states that tokens representing labour times couldn't work as money, and one of the reason is that this would be deflationary because of productivity growth (he says that tendetially all commodities depreciate vs. labour, but this is just another way of saying productivity growth). This shows IMHO that labour values in Marx are actually social values, not "real" values in the sense currently used in economics. [small totally irrelevant detail: while Sraffa and most economists see profits as a markup on the production costs, Marx defines labour values as the sum of the wage and the additional profit it generates. This doesn't change things but could cause some confusion.]<br /><br />[continues]MisterMRhttps://www.blogger.com/profile/03806545811376548828noreply@blogger.com