DRAFT 21st CENTURY PROGRAMME.
September 5, 2016 8 Comments
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THEPLANNINGMOTIVE.COM 
Near the beginning, you talk about an elite numbering 1.3 million individuals. It kinda sounds right but what’s your source for this number?
These are the individuals/families worth over $10 million dollars. Source is Credite Suisse
Thanks for the insights. I was wondering if you could explain this a little more:
“But why should the deflator merely reset price rises back to 0% when in fact prices should be falling in line with the fall in actual costs of production –labour time. Hence capitalism always underestimates the actual increase in real productivity because it seeks to reset prices to 0%.”
The question of price rises or falls has to do with the nature of money under capitalism as well as movements in actual costs of production (labour time). If we assume that overall demand and supply are in balance so that price levels are not disturbed by the business cycle then prices can move for only two reasons. Firstly if their actual cost of production (measured by their weighted average labour times) changes or if the value of money appreciates or depreciates. It follows that if labour times fall but money depreciates even faster then prices will actually rise. This is the real problem facing the statistical bureaus, the measuring of net output based on money that is not holding its value. Accordingly what they attempt to do is to compensate for the behaviour of money using deflators. Their purpose is to deflate prices to 0 so that increases in production can be viewed as the physical increase in production itself. So if the economy is expanding in nominal terms at 5% with inflation at 3%, subtracting inflation from the nominal expansion yields an actual growth in the physical economy of 2%. Here the deflator is 3%. Assuming the number of hours worked remains constant, then that 2% physical increase in output is the measure of productivity as well. Except that it is not. It all depends on the deflator they use. If the deflator is lower than the actual depreciation of money it will be understated. If the deflator is understated because it is designed to only reduce prices to 0 (no increase) then it will misrepresent the actual growth of the physical economy. This is particularly acute at the moment due to a whole raft of prices for both manufactured industrial and consumer goods tumbling. As these price falls are not being adequately captured in the national accounts it results in an understating of the growth of the physical economy. Productivity therefore can only be measured accurately in a socialist economy because money for the first time – based on universal labour time – has been made invariable in a manner unavailable to capitalism.
First off, thank you for your reply and thank you for maintaining this site. And I apologize for the remedial nature of my questions, but economics is still very new to me.
Second, I guess I do not understand how this works:
“It follows that if labour times fall but money depreciates even faster then prices will actually rise.”
Aren’t price levels the measure of money appreciation/depreciation? If so, how does money depreciate while prices go up?
And I guess I do not understand how labor time influences prices. Except that I thought decreasing labor time would presumably allow workers to produce more goods in a given space of time, and the market for those goods would be flooded, and the price of those goods would go down.
Finally, I figure the best way to learn about Marx is to read the man himself. Would it be inadvisable simply to jump right in to Capital vol 1?
Price is the complex interaction of the movement in the actual costs of production and its measure, money which itself is variable. Accordingly price is the combination of two variables and not the one you suggest, the movement in the value of money alone. Of course it could be the case that were labour times to remain unchanged the subsequent movement in prices could be attributed to the appreciation or depreciation of money alone. But that is the exceptional case. I find Chapter 10 of Volume 3 very enlightening. Here Marx introduces the concept of market value to replace abstract value. Market value is the weighted average labour time needed to produce a given product. It is therefore the concrete expression of socially necessary labour time. I would recommend however that you do read Das Kapital in its entirety. Das Kapital is a walk up the mountain which requires dedication and stamina but the view of capitalism it provides is breathtaking
Hi great reaading your post
Thank you. I consider the programme to be the most important document on the site.