[OPE-L:3825] Re: Rational expectations Marxism

From: Michael Perelman (michael@ECST.CSUCHICO.EDU)
Date: Sat Sep 16 2000 - 22:36:32 EDT

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Rakesh is right on target here. The Babbage problem is central to the problem
associated with Rational Expectations Marxism. In an economy with rapid tech.
change, no one can predict what an appropriate value-depreciation should be.

I first discussed this problem in my Marx book and then I tried to show how
this rapid depreciation of fixed capital led to to crisis in the U.S. economy
in the late 19th C. in my End of Economics. In other words, you can get a
falling rate of profit from an acceleration in the rate at which capital has to
be scrapped. Andrew Kliman and I came upon this idea separately -- his article
appeared shortly after my book, but he could not have been aware of what I was
doing -- although we seem to have taken our intepretation along different

Rakesh Bhandari [modestly] wrote:

> Not speaking to any particular point...
> Babbage's 29 on the duration of machinery may be worth revisiting.
> "Machinery for producing any commodity in great demand, seldom actually
> wears out; new improvements, by which the same operation can be executed
> either more quickly or better, generally superceding it long before that
> period arrives: indeed to make such an improved machine profitable,it is
> usually reckoned that in five years it ought to have paid for itself, and
> in ten to be superceded by a better."

Michael Perelman
Economics Department
California State University
Chico, CA 95929

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

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