[OPE-L:3770] Re: RE: Re: Rational expectations Marxism

From: Michael Perelman (michael@ecst.csuchico.edu)
Date: Wed Sep 06 2000 - 17:13:47 EDT

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P.J.Wells@open.ac.uk wrote:

> Michael,
> 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

Yes, you are correct. The point is how difficult/impossible precise accounting

> 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...

In real life you are correct, but among economists ....

> 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.

Yes, but that is not necessary to make his point.

> 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).

I was not aware of that piece.

> 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.


> Julian

Michael Perelman
Economics Department
California State University
Chico, CA 95929

Tel. 530-898-5321 E-Mail michael@ecst.csuchico.edu

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