Does anyone know of any work (either by an Austrian or non Austrian) that attempts to derive the value of money in terms of amount of some produce or an amount of hours worked. Perhaps something along the lines of, if there are X dollars in total in the society and (other things defined...) then on average each dollar will buy Y hours labour.
As an illustration, here is my own formulation: Imagine a very simple society in which there is only one commodity: sandwiches. Everyone in the land grows the ingredients for their sandwiches in their gardens. Often they will exchange sandwiches with their neighbours just for variety. There is no money in this society only barter. But then one day the king of the land says "I've just invented something I'm going to call money. It consists of metal coins called shekels. I will give everyone in the land 1000 shekels and from now on bartering is banned. All exchanges must be via the medium of exchanging shekels. What's more, nobody is allowed to eat their own sandwiches." The question now is: how many shekels will a sandwich cost? It may well be that on day one, people will not have a clue and all sorts of silly prices may get paid... but presumably over time the price will gravitate towards a certain value. What will that value be?
Labor is a good. The average price of labor is dictated by the amount of money people are willing to put towards labor and the amount of labor available for sale, just like anything else.
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That may all be true, but it doesn't go very far along the way to answering the question.
You're asking how prices would be derived...
You're trying to determine the labour theory of value, when it was refuted over 100 years ago.
If you find something evil that wobbles, push it. - Gary North
liberty student: You're trying to determine the labour theory of value, when it was refuted over 100 years ago.
A) I'm not - I simply want to answer the question.
B) The labour theory of value does not answer the question anyway.
C) I'd be perfectly happy if the question was answered through Austrian principles.
Due to the subjective theory of value (not the labor theory of value, as you seem to be asking for), we have absolutely no way to make a determination about what the final price would be. Individual human actors value the sandwiches differently, and the price will come about based on these subjective preferences.
I swear by my life and my love of it that I will never live for the sake of another man, nor ask another man to live for mine.
DD5:Mises Regression theorem
Sounds interesting... I shall look it up.
That basically is a retelling of the Ricardian LTV story. You're even using the same metaphors, that of gravitating toward a long term price. One of the problems with that sort of theorizing is that one commodity models often lead to profound misunderstandings of the market process. I have a blog post that you might want to check out, about how the simple model of the "corn economy" used by Ricardo and Smith led them to err in their respective capital theories.
If you really want to look at some models like this, there are some modern socialists (such as Paul Cockshott) and neo-ricardians working on this kind of issue. But I doubt any Austrian would even begin to take this kind of idea seriously.
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ziragt:That basically is a retelling of the Ricardian LTV story.
What does LTV stand for?.. and do you have a reference/link so I can follow it up?
Labor theory of value
"...The post-totalitarian system contrives to force life into its most probable states...This system serves people only to the extent necessary to ensure that people will serve it
Vaclav Havel
LTV= Labor theory of value
As for a reference, check out the comprehensive and aptly titled "The Labor Theory of Value"
ziragt:But I doubt any Austrian would even begin to take this kind of idea seriously.
DD5:The answer is that it cannot be done! No value in terms of these Shekels will be established. Look up Mises Regression theorem. But in short, money cannot be established by fiat or some collective agreement. It must evolve from a barter economy in a free market.
I just read The Origin of Money and Its Value about Mises Regression theorem, fascinating. It seems that LvM thought along lines extremely close to ideas I had whilst thinking about my "sandwich society". I like what he said, although it seems his theory (at least as described in that short article) would not have been able to solve my question because I explicitly state that the king ordered the creation of the money by fiat, there is no possibility of tracing back the origin of the money to anything of value (like gold).
Do you know of any more recent developments/tweaks/improvements to the theory since 1912?
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