[OPE-L:3768] RE: Re: Rational expectations Marxism

From: P.J.Wells@open.ac.uk
Date: Wed Sep 06 2000 - 13:33:32 EDT

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A) Thanks for introducing me to Preinreich; I've only been able to skim his
stuff, but here are some initial thoughts:

        1) the problem he sets himself appears to be a kind of *reductio ad
absurdum* -- a phrase he himself uses (p. 20) -- of the "going concern"
principle of accounting valuation

        2) less politely, the result seems to be an elaborate way of saying
that if one doesn't know much about the future it will be hard to predict --
tho; of course it's always good to have a rigorous proof of what seems
obvious to intuition...

        3) unless my skimming has missed some crucial qualification, his
notion of income appears to be the straight Fisherian one -- that it is the
(subjectively-perceived) enjoyments flowing from the act of consumption.

Apart from general objections to subjectivist notions of value, this leads
to the curious implication that saving is not part of income (see Nicholas
Kaldor (1969). 'The concept of income in economic theory' in Readings in the
concept and measurement of income. ed. R. H. Parker and G. C. Harcourt
(Cambridge University Press)).

Obviously this doesn't invalidate Preinreich's maths. -- one can pour
whatever content one likes into the equations -- but (20 and (3) together do
prompt the thought that whatever Marx's theory is thought to be about --
dated labour, capital as self-expanding value -- it is about how what has
happened *in the past* has determined how much of it there is *now*.

The idea that what might happen in the unknowable future could affect this
latter seems to me like supposing that what I shall have for dinner this
evening has been the cause of the indigestion I suffer this morning.

        4) I note that in another work (Preinreich, G. A. D. (1939). 'The
practice of depreciation'. Econometrica 7(3): 235-265) he comes down,
against all subjectivist scoffing, to recommending straight-line
depreciation of book values as the best *practicable* method (p.257, p.259).

A similar conclusion has been reached more recently by another route
(Faucett, J. G. (1980). 'Comment on Estimation of capital stock in the
United States, by Allan H. Young and John C. Musgrave' in The measurement of
capital. ed. D. Usher. (The University of Chicago Press).)

B) Thanks too for the clarification of your CJE article: as you'll gather
from the above I'm unconvinced of the relevance of trying to *predict* moral
depreciation, though one obviously has to account for that which has taken
place already.


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