Global Price Unit Equals the Law of One Price!
by Douglas Ungredda
Mr Oliveira'S proposal assumes same accounting and technological standards.
This proposal falls short of reinstating the Law of One Price espoused by Purchasing Power Parity theorists back in the XVI century, where one good made in countries A and B bears a same price equalized by the going exchange rate.
Mr Oliveira proposes the dismantlement of the currency markets transforming prices just like it was a temperature unit of measurement or a unit of length, or what might have you for argument' s sake.
This could also be Marxist theory of value revisited. Same work under the same conditions should bear one same salary. The point here is that qualitative differences cannot be compared because of subjective values and supply and demand conditions of labor, natural resources and climate, etc.
China's labor costs are a fraction of Japan's, better off at robotics. If its difficult to accurately asses the resources needed to produce anything with a Leontief's input output table, now its impossible to engage in such an exercise.
Other considerations follow.
1-Hypothesizing uniform methodologies and production processes to a price unit standard, these suffer from the same distortions as currencies.
2- Currencies serve as a pricing unit denominator for millions of variables that play into an economy, being technology, labor input, services, consulting, climate, natural resources, just a few. Attempting a price standardization exercise becomes impossible.
3- In a sense, Mr Oliveira eliminates a currency to create zillions of new pricing standards in exchange. How could we envisage one same price standard for many qualitative differences among goods and services?
4- Last but not least, the world currency market has approximately 125 currencies (pricing standards) and still falling. His methodology could prove useful if he managed to reach one and same pricing standard, dispensing with billions of qualitative considerations required to compare goods among themselves.