[OPE-L:7409] Re: Interpretations of the "numeraire"

[Rakesh Bhandari <rakeshb@xxxxxxxxxxxx>]

Gil replies to me in 7408:

> > So yes isn't there a big difference between a theory which must
> > select (and construct) a numeraire with (as Blaug emphasises) no
> > real world significance in order to close a system of equations and
> > thereby  throw into analytical relief a wage/profit frontier and a
> > theory which attempts to explain why in the bourgeois mode of
> > production the form of appearance of economic magnitudes has to be
> > money which as a result of this function carries the seeds of
> > economic contradiction and crisis?
>
> But as I explained in 7403, there is no necessary formal difference
> between the two systems on this score.  The money commodity in the
> latter theory can be represented in a manner that is *mathematically
> identical* to the numeraire good in the former system--suggesting
> the potential relevance of such things as "wage/profit frontiers"
> for the system Marx intended to analyze.
>
> Gil

Yes but from the former you cannot derive a theory of the nature of
money such that it has functions other than as a numeraire, i.e., as
a store of value, a means of payment, hoard, capital,  etc. For more
on this, see Alfredo Saad Fihlo's book, last chapter.

The timelessness of an analytical apparatus built on simultaneous
equations also makes no room for the problems which arise from
failure to complete the circuit of money capital in a determinate
time; if one assumes that the technical conditions are given and the
only problem is the the determination of distribution + relative
prices with an arbitrarily chosen numeraire--and  Peach and Blaug
seem correct that the Sraffian standard commodity does not solve
Ricardo's truly intractable problem of invariant measure which holds
over time--then money is just reduced to being a numeraire alone and
it is difficult to see how one then proceeds logically to make room
for money as capital the turnover of which must be completed in a
determinate time. There simply seems to  no theoretical way of
escaping what Aoki characterizes as the classicals' thin conception
of money.

Before one handles input output relations, one has to grapple with
what Marx calls the qualitative value problem or the problem of
money--that is why it is exactly in the bourgeois mode of production
individual labor has to be transformed into general abstract social
labor in some specified time. Once this problem is solved, it seems
obvious that  the money commodity cannot be put along side all the
other commodities or as just one more equation in a system of
equations which can be closed since such a system of equations seems
to lose the contradiction between commodities on one side and money
on the other.

That is why I think Fred's approach which takes its given or starting
point in money or in other words begins with money as capital rather
than with given technical conditions is superior to the linear
production approach, though I am not fully convinced by Fred's
approach.

All the best, Rakesh