tag:blogger.com,1999:blog-6263577133333272085.comments2023-12-16T16:11:07.558+00:00Boffy's BlogBoffyhttp://www.blogger.com/profile/08157650969929097569noreply@blogger.comBlogger2908125tag:blogger.com,1999:blog-6263577133333272085.post-11282722933536546322023-12-16T16:11:07.558+00:002023-12-16T16:11:07.558+00:00Two years later, Corbyn became leader, and half a ...Two years later, Corbyn became leader, and half a million young workers joined the LP. It rather smashed to pieces all the arguments of the sectarians and opportunists who had jumped ship to the Liberals, then Greens in search of handfuls of others who agreed with them, as they threw out their dummies.<br /><br />No doubt when those that had done the hard work of staying and fighting managed to get that result, those with that mentality expressed in the comments above, were only to keen to return. The fact that Corbyn's own strategy, led by his Stalinist advisors brought its own tragedy does not change that.Boffyhttps://www.blogger.com/profile/08157650969929097569noreply@blogger.comtag:blogger.com,1999:blog-6263577133333272085.post-36771751031305400672023-12-02T12:39:22.111+00:002023-12-02T12:39:22.111+00:00Having skimmed through this post, and comments, 16...Having skimmed through this post, and comments, 16 years on, its amazing, how, the "revolutionary optimism" contained in it, proved to be justified, in the success of the "Corbyn Revolution", in 2015, which totally destroyed the perspective of all those sects outside the LP, who had been claiming that no such thing was possible, leaving them high and dry, much as Engels Letter to the Americans had foretold.<br /><br />Of course, the weakness of that "Corbyn Revolution", was also that it was not led or guided by Marxists either, and collapsed, because of that. On the one hand, Corbyn himself was guided by his Stalinist advisors, on the other hand, a lot of those hostile to those advisors, were again motivated by their own sectarian politics, and attempts at "electoralism", in seeking to "use their sharp elbows" to obtain leading positions on the bodies of Momentum, for example, leading to the same kinds of division seen in previous such alliances.<br /><br />Even as the working-class is seeing one of its great upsurges driven by material conditions, as labour shortages strengthen the position of labour, it is not resulting in an equivalent rise in the strength of those sects. Rather it is the LP, even under the leadership of the miserable Starmer, that is the beneficiary of workers' votes. Boffyhttps://www.blogger.com/profile/08157650969929097569noreply@blogger.comtag:blogger.com,1999:blog-6263577133333272085.post-66037166051977246212023-08-11T08:35:46.682+01:002023-08-11T08:35:46.682+01:00Its in A Contribution To The Critique of Political...Its in A Contribution To The Critique of Political Economy.<br /><br />"How many reams of paper cut into fragments can circulate as money? In this form the question is absurd. Worthless tokens become tokens of value only when they represent gold within the process of circulation, and they can represent it only to the amount of gold which would circulate as coin, an amount which depends on the value of gold if the exchange-value of the commodities and the velocity of their metamorphoses are given...<br /><br />The number of pieces of paper is thus determined by the quantity of gold currency which they represent in circulation, and as they are tokens of value only in so far as they take the place of gold currency, their value is simply determined by their quantity. Whereas, therefore, the quantity of gold in circulation depends on the prices of commodities, the value of the paper in circulation, on the other hand, depends solely on its own quantity....<br /><br />Gold circulates because it has value, whereas paper has value because it circulates. If the exchange-value of commodities is given, the quantity of gold in circulation depends on its value, whereas the value of paper tokens depends on the number of tokens in circulation. The amount of gold in circulation increases or decreases with the rise or fall of commodity-prices, whereas commodity-prices seem to rise or fall with the changing amount of paper in circulation."<br /><br />(Marx - A Contribution To The Critique of Political Economy)<br /><br />https://www.marxists.org/archive/marx/works/1859/critique-pol-economy/ch02_2c.htmBoffyhttps://www.blogger.com/profile/08157650969929097569noreply@blogger.comtag:blogger.com,1999:blog-6263577133333272085.post-77525021730449922232023-08-10T10:34:48.999+01:002023-08-10T10:34:48.999+01:00"With fiat currencies that are not exchangeab..."With fiat currencies that are not exchangeable for any given quantity of gold or silver, then, as Marx sets out, their value is determined, solely, by the quantity of them thrown into circulation"<br /><br />Could you point me to where Marx says this? The most I could get on fiat money was Vol I where he postponed discuss on it until he has developed a theory of credit.Bolsh3https://www.blogger.com/profile/04238248165449578236noreply@blogger.comtag:blogger.com,1999:blog-6263577133333272085.post-10063252413862916122023-08-09T10:32:36.459+01:002023-08-09T10:32:36.459+01:00Correction: In para 2 should be five times as man...Correction: In para 2 should be five times as many not ten times as many.Boffyhttps://www.blogger.com/profile/08157650969929097569noreply@blogger.comtag:blogger.com,1999:blog-6263577133333272085.post-48229943565563851612023-08-09T10:30:14.067+01:002023-08-09T10:30:14.067+01:00Hi Ralph,
In A Contribution, and in Capital III, ...Hi Ralph,<br /><br />In A Contribution, and in Capital III, Marx demonstrates that the main determinant of the velocity of circulation, given any set of technical conditions (i.e. basically how banked the economy is, how efficient its monetary transmission mechanisms are) is the state of the economy itself, i.e. the number and speed of transactions. he also sets this out in Capital III, and in TOSV, in his detailed analysis of The Tableau Economique.<br /><br />If the pace of transactions rises, for example, rural areas sell products to urban areas 10 times a year rather than twice a year, and vice versa, any given piece of money will tend to perform 10 times as many transactions too. In industrial economies, this is tied to also the rate of turnover of capital. Marx also describes other aspects, relating to commercial credit, i.e. money as means of payment rather than means of exchange. In times of economic expansion, commercial credit automatically rises, as firms extend grace periods to each other, irrespective of what central and commercial banks might do.<br /><br />The condition in lockdowns I have also covered back in 2014 in my book "Marx and Engels' Theories of Crisis". In TOSV, Chapter 17, Marx demolishes Say's Law, and shows that at any one time the demand form money (increased saving, expansion of money reserves, hoarding) can be greater than the demand for all other commodities - an overproduction of commodities, as against an overproduction of capital. In that case, the velocity of circulation would slow, and each piece of currency, all other things equal, would rise in value, and commodity prices would fall, also consistent with a glut of commodities.<br /><br />I also dealt with this condition many years ago, showing how QE led to a deflation of commodity prices, and inflation of asset prices. In other words, as you set out, in the short term, individual market prices, as against the general price level, are determined by supply and demand, causing fluctuations around the price of production. In my series on The Poverty of Philosophy, I show why that cannot persist in the long-term, basically a rise in Market price will cause supply to rise, and vice versa. <br /><br />During lockdowns, as I set out in the post on QE and deflation, although the velocity of circulation in the real economy may be slowed, it washes out into the fictitious economy, inflating asset prices, which is what happened. I have also set out in my post "How Liquidity Flows From Assets", the way this is reversed, as asset prices fall. Either way, it is these monetary phenomena that are the cause of inflation/deflation not changes in costs of production/wages as the Keynesians argue, or imbalances in aggregate demand/supply, which would mean prices themselves falling when those imbalances are removed. Changes in costs of production/wages are, generally, though not always (crop failures, Brexit, trade wars) a consequence of inflation not a cause of it. What they do cause, is second and third round effects, because central banks, with fiat currencies, protect profits by increasing liquidity so as to allow firms to raise end product prices, i.e. an inflationary spiral.Boffyhttps://www.blogger.com/profile/08157650969929097569noreply@blogger.comtag:blogger.com,1999:blog-6263577133333272085.post-73191524314277984002023-08-08T14:56:42.604+01:002023-08-08T14:56:42.604+01:00It seems to me that a key assumption of monetarism...It seems to me that a key assumption of monetarism is the constancy of the velocity of money. I do beleive that long term MV=PQ as per the equation of exchange<br /><br />https://en.wikipedia.org/wiki/Equation_of_exchange<br /><br />However, I think that short term it is not clear what factors determine velocity. It seems to me not completely impossible that factors other than the money supply could affect it but haven't seen any serious work on its correlates. We can see for instance a clear drop in velocity during the pandemic for obvious reasons:<br /><br />https://fred.stlouisfed.org/series/M2V<br /><br />My reading of Marx in Value, Price, and Profit (1865 https://www.marxists.org/archive/marx/works/1865/value-price-profit/ch01.htm) is that supply and demand do in fact determine prices in the short term:<br /><br />"Supply and demand regulate nothing but the temporary fluctuations of market prices. They will explain to you why the market price of a commodity rises above or sinks below its value, but they can never account for the value itself. Suppose supply and demand to equilibrate, or, as the economists call it, to cover each other. Why, the very moment these opposite forces become equal they paralyze each other, and cease to work in the one or other direction. At the moment when supply and demand equilibrate each other, and therefore cease to act, the market price of a commodity coincides with its real value, with the standard price round which its market prices oscillate. In inquiring into the nature of that VALUE, we have therefore nothing at all to do with the temporary effects on market prices of supply and demand. The same holds true of wages and of the prices of all other commodities."<br /><br />I wonder if money velocity also can be away from equilibrium. Under this line of thinking we might say monetarism and the labour theory of value are both <i>equilibirum</i> theories but do not universally hold true. By this reckoning it could be sensible to talk of events as impacting money velocity and therefore prices under a fixed money supply.Raph Shirleyhttps://www.blogger.com/profile/07672282194105033031noreply@blogger.comtag:blogger.com,1999:blog-6263577133333272085.post-15433809799089328592023-07-16T16:47:21.910+01:002023-07-16T16:47:21.910+01:00The NATO countries are pouring money into Ukraine ...The NATO countries are pouring money into Ukraine as they are following the USA's lead of attempting to reduce Russia's military capability by using Ukraine's armed forces as a battering ram. But no matter how much <i>matériel</i> and training Ukraine's forces receive, it seems that the Russian forces are well dug in, and the Ukrainian offensive has more or less stalled. <br /><br />So what now? If Ukraine is to restore its 1991 borders, it will need a lot of assistance, and this would mean bringing in other countries, thus threatening a direct US/Russia confrontation, something which Washington has not so far wanted. Ukraine can't do this on its own. Similarly, other demands being aired -- ensuring Russia can't threaten its neighbours (that is, disarmament <i>à la</i> Germany under Versailles) or getting Putin before a war-crimes court (something not done to big-power rulers since Nuremberg -- and look what it took to do that) -- would require a massive escalation. <br /><br />It seems to me that the failure of Prigozhin's re-run of the Beer-Hall Putsch has enabled Russia to move to a broad defensive stance, as the head-banging nationalists who want to take more Ukrainian territory have been wrong-footed. We probably won't be seeing another Bakhmut, a gain of a few square miles at tremendous cost in men and <i>matériel</i>. If Russia stands behind a massive defensive screen, it will win a war of attrition, or at least hold out longer than Ukraine can afford in respect of manpower to pay.<br /><br />I think we're on course for a frozen war, more or less along today's front lines. The real question is how long will the NATO powers wish to keep the war going -- and thus spend billions, which will be taken from other areas of state spending -- before they call a halt and tell Kyiv to cut a deal with Moscow.Dr Paulhttps://www.blogger.com/profile/07163651179353887227noreply@blogger.comtag:blogger.com,1999:blog-6263577133333272085.post-59079163732194851802023-07-16T16:11:39.430+01:002023-07-16T16:11:39.430+01:00The problem facing the pro-Ukraine left, especiall...The problem facing the pro-Ukraine left, especially now it is fairly clear that the Ukrainian offensive has not exactly proceeded far, is that the demand of the Ukrainian government for the recovery of the entire 1991 territory, cannot be satisfied through the efforts of the Ukrainian armed forces alone, no matter how much <i>matériel</i> and training they receive, and that the forces of other countries will have to be involved if Russia is to be driven back. This is a qualitative escalation and threatens a direct NATO/Russia confrontation. How will the pro-Ukraine left respond to this? Dr Paulhttps://www.blogger.com/profile/07163651179353887227noreply@blogger.comtag:blogger.com,1999:blog-6263577133333272085.post-6630087925806107492023-03-13T10:27:46.356+00:002023-03-13T10:27:46.356+00:00The inflation, and the fall in the exchange-rate, ...The inflation, and the fall in the exchange-rate, are both a consequence of the increased (excess) currency supply.Boffyhttps://www.blogger.com/profile/08157650969929097569noreply@blogger.comtag:blogger.com,1999:blog-6263577133333272085.post-43039088761931179792023-03-13T05:41:58.880+00:002023-03-13T05:41:58.880+00:00Hi Boffy,
when you say that the exchange-rate of c...Hi Boffy,<br />when you say that the exchange-rate of currencies tends to fall "where currency supply is increased," it follows that "inflation", resulted by more supply of a national currency, also tends to devalue one currency against the other and it's not just the falling productivity that can weaken a national currency. am I right?Elijahhttps://www.blogger.com/profile/00839396529656286465noreply@blogger.comtag:blogger.com,1999:blog-6263577133333272085.post-7850885889636595912023-02-23T13:30:23.611+00:002023-02-23T13:30:23.611+00:00Having read through my post again, the only refere...Having read through my post again, the only reference I can see which might have led to it being put behind a warning is the reference to, and link to "Deep Throat", which maybe an AI had thought was a reference to the Linda Lovelace porno of that name, rather than to the source of Woodward and Bernstein and Hersch's sole inside source on Watergate, Mark Felt.Boffyhttps://www.blogger.com/profile/08157650969929097569noreply@blogger.comtag:blogger.com,1999:blog-6263577133333272085.post-34534611938680347882023-02-23T12:52:08.757+00:002023-02-23T12:52:08.757+00:00I have no idea why Blogger has put this post behin...I have no idea why Blogger has put this post behind a warning other than it dealing with the article by Seymour Hersch that sections of the bourgeois media, and apologists for imperialism and its war in Ukraine have taken fright at. It contains no nudity, sex, violence or otherwise offensive material, only a questioning of facts and arguments.<br /><br />The links in this post are also no to sites displaying any of the above characteristics, and the information provided is publicly available. I am aware that Hersch found opposition from the mainstream media to publishing his story, and others have found similar censorship on what should be a fairly straightforward issue of public discussion of great concern to everyone.Boffyhttps://www.blogger.com/profile/08157650969929097569noreply@blogger.comtag:blogger.com,1999:blog-6263577133333272085.post-41726357029944190732023-01-30T15:42:09.995+00:002023-01-30T15:42:09.995+00:00As far as dealing with imported inflation, the mea...As far as dealing with imported inflation, the measures flow from the above. Firstly, liquidity can be reduced. That doesn't mean an absolute reduction, only that liquidity rises more slowly than output, so that each money token becomes worth a greater proportion of total social labour-time. In extreme cases such as Weimar, Italy, Zimbabwe etc. it may also mean an absolute reduction alongside the rebasing of the currency. States don't like doing this where labour is strong, because it means limiting domestic prices too, which with rising wages means squeezed profits. It normally implies a curtailment of economic activity to undermine labour.<br /><br />Secondly, raise official interest rates. If Britain raises its official interest rates, US Dollars, and other currencies flow into Britain to obtain higher rates on savings deposits, and yields on government and commercial bonds. So, now, Britain can pay for its imports, not by using £'s to buy $'s etc., but simply by using the inflow of Dollars in search of higher interest rates. However, such flows are called "hot money". If the US or some other country raises interest rates the currency can disappear as quickly as it came in. Also, higher official interest rates may mean that firms borrow less to expand, and consumer borrow less to buy, so that an economic contraction arises, which is not in workers' interests.<br /><br />Thirdly, economies can impose import controls, as the US did under Trump. Some on the Left have misguidedly proposed such courses of action, and its part of the agenda of Sanders and co in the US. Engels in his articles on Free Trade explains why its against workers' interest. Firstly, it blames foreign workers, and so is innately racist, and divides workers internationally. Secondly, by cutting off the supply of the cheaper imported commodities, it forces domestic buyers to buy more expensive home produced commodities. So, it raises workers cost of living, as well as reducing the domestic rate of profit, and so capital accumulation, which weakens workers position. Marx and Engels set out the argument in relation to the Corn Laws.<br /><br />Finally, the economy concerned can raise productivity. The imposition of import controls is sometimes justified on this basis, as giving time for the necessary investment and adjustment to achieve it. It almost inevitably means actually just screwing workers more via speed up rather than real improvements in productivity. Workers have no control over it. However, its worth noting that, in the 1920's, US workers and their unions welcome the Taylorists who pointed out that a lot of the lack of US productivity was down to poor US management, lack of standardisation and so on. It can be used as an argument for workers' control of production, but ultimately its only workers' control of the economy as a whole that can effect such a change in workers' interests.Boffyhttps://www.blogger.com/profile/08157650969929097569noreply@blogger.comtag:blogger.com,1999:blog-6263577133333272085.post-40159841836410887592023-01-30T15:07:19.847+00:002023-01-30T15:07:19.847+00:00" It is changes in relative productivity that..." It is changes in relative productivity that changes the amount of universal labor represented by two national currencies, and therefore determines their exchange rates."<br /><br />The amount of national universal labour-time represented by a currency is a function of the standard of prices. Suppose you have an economy where an ounce of gold is the standard of prices, and is called £1. The ounce of gold is the proxy form of, say, 100 hours of universal labour, so the £1 is equal to 100 hours of universal labour. But, the country may decide to make its £1 standard of prices equal to 2 ounces of gold, and so 200 hours of universal labour, in which case, its domestic prices would halve, or vice versa. Similarly, if such a currency exchanged for $5, it would now exchange for $10.<br /><br />But, an hour of universal labour in country A might be equal to 5 hours of universal labour in country B. Previously, £1 would then have bought a commodity with a value of 100 hours in country A, but would also exchange for $5 equal to 500 hours of social labour in country B. But, this 500 hours of social labour in B, represented by, say, a hat, is only equal to 100 hours in A, also equal to a hat. After rebasing, £1 buys $10, and so would buy 2 hats, both in A and B.<br /><br />Assuming no rebasing of currencies, if productivity in B rises five fold, its hour of social labour is now equal to that in A, so that £1 would equal $1 ($2 assuming the above rebasing). So, still £1 buys 2 hats in both A and B. <br /><br />You are right about demand and supply for currencies, however, it actually works in he opposite direction that in your example. Oil is globally priced in Dollars, so that countries buying oil, must first buy Dollars, inflating demand for Dollars, and so raising its exchange rate. In some of my recent posts, I've set out how during the period of fixed exchange rates, inflation of US currency supply, enabled it to buy imported commodities cheaper than it otherwise would have done, had the Dollar been floated. It, thereby exported excess Dollars to exporting countries, inflating their prices.<br /><br />Similarly, with floating currencies, excess liquidity causing the exchange rate to fall, not only causes domestic prices to fall, but means more currency must be given up to purchase foreign currency to import goods, whose prices in the currency of the exporting country remain constant, but whose prices in the importing country rise. <br /> Boffyhttps://www.blogger.com/profile/08157650969929097569noreply@blogger.comtag:blogger.com,1999:blog-6263577133333272085.post-29411596652963233662023-01-30T08:47:33.028+00:002023-01-30T08:47:33.028+00:00Thank you. As for the first point, your explanatio...Thank you. As for the first point, your explanation helped me understand the process through which excess liquidity ends at inflation.<br />On the second point, as far as I understood, you mean that from the appreciation of a currency against the other, it can’t be necessarily concluded that one economy is relatively more productive than the other, this may be simply because of redenomination. It is changes in relative productivity that changes the amount of universal labor represented by two national currencies, and therefore determines their exchange rates. <br />Of course, it can’t be neglected that these foreign exchange rates are also determined by the market supply and demand. this may explain why some currencies (including the dinar of Kuwait, as an oil producing country) are more valuable than the US dollar. <br />By raising this question, I intended to focus more on inflation in those countries heavily dependent on imports, which are mostly denominated in US dollar, as the graph below shows:<br />https://www.imf.org/-/media/Images/IMF/Blog/Articles/Blog-Charts/2022/Dollar-Blog-chart-164.ashx <br />First of all, how can this kind of “imported inflation” be explained as a monetary phenomenon? Is it correct to explain this by the fact that when dollar-denominated revenues/costs of an exporting/importing country are converted into their national currency, it is as if more currencies have been put into circulation and so this leads to more inflation? Secondly, how is it possible to restrain the weakening of a currency against, say, US dollar and its subsequent inflationary effects? By raising productivity, imposing government restrictions on its foreign currency market or a combination of both? And last but not least, what practical program can be taken by labor unions in the interests of workers who are the main victims of such an inflation?<br />Elijahhttps://www.blogger.com/profile/00839396529656286465noreply@blogger.comtag:blogger.com,1999:blog-6263577133333272085.post-74013810374952608422023-01-29T11:31:35.610+00:002023-01-29T11:31:35.610+00:00On your second point, I think you have got a bit h...On your second point, I think you have got a bit hung up on the currency names, such as Dollar. Again the conversion of national currencies to Euros, for example, would be a good example. In other words, the question is how much social labour-time does the Kuwaiti Dinar represent as compared to the US Dollar. Or take the experience of Germany or Italy. I have some 10 million Italian Lira notes that my dad brought back from WWII, for example. Then, whilst keeping the name Lira, Italy issued new notes, dropping several zero's from their denomination, so that each note represented a million times more social labour-time. This appreciation of the Lira was not a consequence of rising productivity etc., but simply a redenomination. The same is true in Marx's description of Holland changing from gold as the base of its currency to silver.<br /><br />If the Kuwait Dinar represents 12 hours of universal labour, and the US Dollar only 4 hours, then 1 Dinar will equal 3 Dollars. As with Italy post WWII, or as with Germany post Weimar, Kuwait could halve the quantity of notes in circulation, and make each note equal to 24 hours of universal labour, with a consequent effect on Kuwaiti prices, and now a Dinar would equal 6 Dollars. But it wouldn't change the amount of Kuwait universal labour that exchanged for US universal labour, only its nominal representation in the respective currencies.<br /><br />What changes that is changes in relative productivity that changes the amount of universal labour represented by an hour of Kuwaiti labour compared to an hour of US labour. If Kuwaiti productivity halves compared to US productivity, then although a Dinar might be equivalent to 12 hours of Kuwaiti universal labour, it will only be equal, now, to 6 hours of US universal labour, and consequently, if the quantity of notes in circulation remains constant, the Dinar would fall in value relative to the Dollar to 1.5, from 3.<br /><br />Hope that explains it.Boffyhttps://www.blogger.com/profile/08157650969929097569noreply@blogger.comtag:blogger.com,1999:blog-6263577133333272085.post-31459456249619636442023-01-29T11:31:18.397+00:002023-01-29T11:31:18.397+00:00On your first point, in the series on the Critique...On your first point, in the series on the Critique, I have set out how Marx explains this process, both in regard to actual money and precious metal tokens, and in relation to paper tokens. I suppose, another practical way of looking at this would be to look at how prices changed when countries gave up their national currencies and adopted the Euro. Some prices were higher in Euros, where the national currency was of higher value, and vice versa. That's a one of conversion of nominal prices. But, when a currency is debased/devalued by its metal content being eroded, or the volume of tokens being inflated, its a process.<br /><br />For gold coins that are debased its complicated by Gresham's Law. Underweight coins cannot be converted to bullion at their nominal value. In Marx's example, 1600 coins have to be given up to obtain 1200 ounces of gold. So full weight coins are driven out of circulation, because owners of such coins turn 1200 of them into bullion, which can be exchanged for 1600 coins. So, a process in which only lower weight coins are in circulation. The market price of gold rises above its mint price, for this reason, but that is only one price along with all others. Eventually, the state recognises the reality by changing the mint-price of coins.<br /><br />With money tokens, the same applies, but unlike gold coins there is no full-weight note to convert. They are all the same. The state, for example, may want to buy various commodities, and rather than raising taxes, simply has the central bank print additional notes, which are handed to the government to spend. The state then spends those notes, creating additional demand that has no equivalent value - I have set out previously how, in some conditions, this CAN result in currently unused resources being mobilised, so that the equivalent value is then actually created, and there is no inflation - and so, in the spheres where this additional demand is manifest, suppliers raise market prices, and this gradually feeds into their suppliers, the wages of their workers, the suppliers of wage goods to those workers, and so on. That is why, it takes around two years for the effects of such changes in liquidity to feed into total prices. Marx's historical account of the debate between Lowndes and Locke, and Attwood and Peel explains this.<br /><br />Boffyhttps://www.blogger.com/profile/08157650969929097569noreply@blogger.comtag:blogger.com,1999:blog-6263577133333272085.post-81867139177767539262023-01-29T06:21:23.253+00:002023-01-29T06:21:23.253+00:00Hi Boffy. While re-reading your post and our previ...Hi Boffy. While re-reading your post and our previous comments, two questions came to my mind.<br />First, as you have explained here and elsewhere, when excess money tokens are put into circulation (MV), the total prices (PT) will have to rise in order to match it up. Theoretically, on paper, this equation sounds simple and understandable. but how and through what process does this happen in the real world? let’s suppose that the price of production of a commodity is 10$ (and each $ represents 1 hour of social labor-time). The capitalist doesn’t have the slightest idea that central bank has doubled the amount of liquidity, each $ has been devalued in half and the price should be now 20$. He still produces and sells at 10$. How is this excess liquidity finally and actually translated into rising price of this commodity?<br />And second. Before we had a brief discussion about “imported inflation” in Petro-dollar/ import-led economies. According to your explanation, if 1 US dollar is worth more than a national currency, it is because of the higher productivity in the US as compared to that of a less-developed economy, meaning that 1 hour of US labor produces more value than 1 hour of labor taken in another country. If so, how can it be explained that Kuwaiti Dinar is worth three times as much as dollar? Does this mean that Kuwaiti economy is more productive than the US?<br />All the best<br /><br />Elijahhttps://www.blogger.com/profile/00839396529656286465noreply@blogger.comtag:blogger.com,1999:blog-6263577133333272085.post-38989865962043881452023-01-20T09:34:30.289+00:002023-01-20T09:34:30.289+00:00You might also want to check out this post - https...You might also want to check out this post - https://boffyblog.blogspot.com/2009/02/water-and-diamonds.html - and do a search for my posts on Reclaiming Economics, and on The Austrian School Debunked.Boffyhttps://www.blogger.com/profile/08157650969929097569noreply@blogger.comtag:blogger.com,1999:blog-6263577133333272085.post-4307772921606375442023-01-20T09:20:35.618+00:002023-01-20T09:20:35.618+00:00Hi,
Lord Keynes posted a comment on my blog some ...Hi,<br /><br />Lord Keynes posted a comment on my blog some years ago, back in 2009, in response to my post - https://boffyblog.blogspot.com/2009/07/historical-proofs-and-origins-of-value.html. You will find my responses to him there, in the comments section.<br /><br />As I set out, I found his own posts very disappointing. There is nothing in them other than the same old tropes put forward first against Ricardo by vulgar economists, back in the 19th century, and dealt with by Marx himself in TOSV, Capital and A Contribution To The Critique of Political Economy, Poverty of Philosophy, and Anti-Duhring, or by Bohm-Bawerk, whose critique remains the most intelligent yet, but was itself demolished by Hilferding, and others later.<br /><br />I started writing a history of the development of value and value theory a couple of years ago, the posts for which you can look up on my blog, here, but which I have not had time to complete due to other commitments, but which still intend to return to perhaps some time this year, and complete.<br /><br />Hope these posts and comments help.Boffyhttps://www.blogger.com/profile/08157650969929097569noreply@blogger.comtag:blogger.com,1999:blog-6263577133333272085.post-40713281555487091212023-01-19T19:01:57.212+00:002023-01-19T19:01:57.212+00:00Hi
if you have time, could you reply to some of L...Hi<br /><br />if you have time, could you reply to some of Lord Keynes' posts against Marx's labor theory of value, his theory of the falling rate of profit etc.<br /><br />http://socialdemocracy21stcentury.blogspot.com/p/eventually-i-will-write-full-series-of.html<br /><br />Thank you!Tomislav Zahovhttps://www.blogger.com/profile/04131998326617930709noreply@blogger.comtag:blogger.com,1999:blog-6263577133333272085.post-2096933677264000662022-12-30T05:26:32.238+00:002022-12-30T05:26:32.238+00:00Thank you, I got my problem solved with your 3rd p...Thank you, I got my problem solved with your 3rd point. Elijahhttps://www.blogger.com/profile/00839396529656286465noreply@blogger.comtag:blogger.com,1999:blog-6263577133333272085.post-52824789507074398622022-12-29T12:52:55.637+00:002022-12-29T12:52:55.637+00:001) If social productivity falls, the unit value of...1) If social productivity falls, the unit value of each commodity rises, but whether more value in total is created depends upon whether the same quantity of commodity units is still produced, which requires more labour to be employed. If 1,000 hours of labour produces 1,000 units each has a value of 1 hour. If productivity falls by 20%, and only 1,000 hours of labour is undertaken, the amount of value in total remains 1,000 hours, whilst the number of units produced falls to 800, each with a value of 1.25 hours.<br /><br />2) If the mount of social labour-time remains 1,000 hours, and the quantity of money tokens remains constant, each continues to represent the same proportion of social labour, and prices rise accordingly to 1.25 hours, say £1.25, from £1. If the same number of units - 1,000 - is produced, that requires 1,250 hours of labour to be expended, so that is the amount of social labour-time, tokens must represent. If no more tokens are put in circulation, each represents a greater proportion of SLT, i.e. 1.25 rather than 1 hour, and prices would remain constant at £1. However, if the number of tokens is increased accordingly, to 1250, as against 1,000, each represents the same amount of SLT, and prices would rise to £1.25.<br /><br />3) Where you are wrong is confusing the total social labour-time/total of prices with the general price level which is an index of unit prices, not total prices.<br /><br />Hope that clarifies it, I have more on this in previous and coming posts on inflation, and on The Contribution To The Critique of Political Economy et al.Boffyhttps://www.blogger.com/profile/08157650969929097569noreply@blogger.comtag:blogger.com,1999:blog-6263577133333272085.post-36385298210819100062022-12-29T07:03:31.176+00:002022-12-29T07:03:31.176+00:00Thank you dear Boffy for this post. It is an inter...Thank you dear Boffy for this post. It is an interesting topic I am always gravitated to!<br />Reading your post, I ran into several problems.<br />We know that when social productivity falls in general, all commodities take more social labor-time to be produced. At first glance, it seems that the lower the social productivity, the more value has been created (?). <br />Then, if the volume of money tokens in circulation remains constant, it seems that each money unit now represents more value and the general price level of commodities doesn’t change. To clarify myself, let me give you an example:<br />Suppose a society where 100 hours of social labor-time are needed for the production of 100 commodities, and 100 $ is in circulation (Velocity=1). In this case, the price of each commodity is, on average, 1 $ and each represents 1 hour. Now, if the general social productivity falls by half, the total social labor-time needed for the production of the same 100 commodities must increase to 200 hours. so, each $ now represents 2 hours, but the general price level is still 100 $. no inflation.<br />I don’t understand where I am wrong.<br />Thanks in advance.<br />Elijahhttps://www.blogger.com/profile/00839396529656286465noreply@blogger.com