[OPE-L:3843] Re: Re: Re: Re: Rational expectations Marxism

From: Steve Keen (s.keen@uws.edu.au)
Date: Mon Sep 18 2000 - 23:25:49 EDT

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Here's one where I *disagree* with Ajit!

For a formal statement as to why, you might check my critique of Steedman's
"Questions for Kaleckians" in ROPE: Answers (and Questions) for Sraffians
(and Kaleckians)", Review of Political Economy, Vol. 10, No. 1, 73-87.

For a brief f'ristance of the argument there, one mainstay of static price
theory is that the sum of any column of the input-output matrix must sum to
less than one (colloquially; technically, the dominant eigenvalue of the IO
matrix must be less than one). Steedman uses this to critique Kaleckian
markup pricing, and it can also be used to rule out any IO matrix which
breaches that rule since the equilibrium price vector it will generate will
have negative prices.

However, in a dynamic context, such a matrix is feasible, since it can
result in rising prices which will always move away from the negative
equilibrium vector. Thus what is not feasible in an equilibrium setting is,
in this instance, quite feasible in a dynamic setting.

However, this does not constitute any support from me for the TSS approach,
I might add. I would want to separate out various stages of the dynamic
process--for instance by distinguishing technical change from the
underlying IO dynamics initially, and then introducing technical change in
a logically coherent and, if possible, separate representation.

At 06:04 PM 9/18/00 +0530, you wrote:
>clyder wrote:
>> > 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.
>> Does this not vitiate the whole premise of the formation of a uniform rate
>> of profit?
>> Is the idea of a transformation from values to prices of production still
>> tenable
>> if the valuation of fixed capital is indeterminate?
>I think a theory of prices is essentially a static problem. There cannot be a
>dynamic theory of prices, particularly when technological change is taken
>consideration. You simply cannot have any means of consistent measurement.
>Ricardo did want to have a theory of prices in a dynamic context of technical
>change. But all the works have shown that this was "will o' the wisp".
>ajit sinha
Dr. Steve Keen
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