[OPE-L:4393] Re: Re: Re: Re: Re: Re: Re: Re: Re: Re: Re: Re: Technical change and general truths

From: Steve Keen (s.keen@uws.edu.au)
Date: Wed Nov 01 2000 - 00:00:14 EST

Dear Rakesh,

I'm still recovering from the realisation that, if I am to accept your
first paragraph at face value, that you actually have understood part of my
argument. Yes, that is precisely my argument--with the caveat that in my
opinion Marx was not so much requires to extend his analysis beyond labor
power, but that the analysis was of itself general, and therefore did apply
to all inputs to production. I argue that Marx did apply this analysis to
machinery (in Capital I), but twisted the analysis to make it appear that
it reached the same result as his previous method based on the unique
aspects of labor.

On the remainder of your post, we're poles apart as usual. What I object to
about the way you characterise Marx can I hope be illustrated by reference
to how Keynes was represented.

Keynes put forward an analysis of capitalism in which he categorically
rejected what economists now call "Walras' Law", and which they used to
call Say's Law--that the sum of excess demands for all markets is zero.

This proposition was regarded as so evidently true by most
economists--since each effective supply must have a matching demand--that
Keynes was seen as being wrong, or at best pointing out some situation
which might apply out of equilibrium but could not apply in equilibrium.

Then economists like Clower argued that Keynes's argument was a
disequilibrium one--that while the sum of all 'notional' excess demands was
necessarily zero, the sum of all 'effective' demands might not be zero.

This was accepted by most 'Keynesians', so that Milgate could write in the
Palgrave "Received opinion, that Keynes’s General Theory is a contribution
to ‘disequilibrium’ analysis, was stamped indelibly upon the collective
consciousness of the economics profession at an early date–by critics and
converts alike (Milgate 1998).

In other words, Keynesians interpreted Keynes to be saying something which
was true in disequilibrium, but which could not be true in equilibrium.

In fact, I and many other post Keynesians argue that this was wrong--Keynes
was actually pointing out that the initial proposition that the sum of all
excess demands was zero was itself false.

Why this diversion? Because the way I interpret the way you portray Marx,
you appear to be saying that Marx was a disequilibrium theorist whose
propositions may be false in equilibrium, but are true in disequilibrium.

In my opinion, Marx's views are true in equilibrium and in
disequilibrium--but the way I read Marx, of course, invalidates the labor
theory of value.

You would acknowledge that the labor theory of value is 'false' in
equilibrium--in that it suffers from insurmountable logical inconsistencies
which you attribute to the equilibrium methodology itself, rather than the
underlying logic of the labor theory of value.

>From my point of view, you 'rescue' Marx in the same way that early
Keynesians 'rescued' Keynes, by saying that his propositions are not
generally true, but are true in disequilibrium--and that since equilibrium
will never apply, the fact that his statements aren't true in equilibrium
doesn't matter.

I see that as a rescue which loses much of the essence of what Marx was on
about. Marx's analysis should apply across all of 'phase space', not just
as something which works out of equilibrium but is invalid in it.

This DOES NOT mean that I think marxists should use equilibrium
methods--for god's sake don't throw that one at me again, because I work
exclusively in dynamics, and I know a lot more about what that means than
you do.

At 19:59 31/10/00 -0800, you wrote:
>re 4391
>>No Rakesh, it means you're never going to understand my analysis, and I am
>>never going to understand yours.
>I do understand your argument that Marx should have extended the use 
>value-exchange value dialectic beyond labor power.  I just don't 
>accept that Marx is compelled to give up his definition of value by 
>any logical implication of that dialectic. What in my response to you 
>indicated a lack of understanding of your analysis?
>*Do you understand that Marx did not think the equalisation of profit 
>rates depended on the suspension of competition?
>*Do you understand that since Marx defined surplus value as total 
>value minus cost price and the rate of profit as surplus value over 
>"cost price" or "total capital advanced" (terms which he uses as 
>synonyms in capital 3, ch 2) , he could not have thought that the 
>mass of surplus value and the rate of profit would remain invariant 
>if the cost prices are modified due a transforming of the inputs?
>*Do you understand that it is not logically implied by the need to 
>transform the inputs into prices of production that they be 
>transformed into the identical unit prices of production as the 
>What is it that is so hard to understand about what I write? That I 
>am not willing to give up value and thus the foundation of Marx's 
>disequilibrium theory of accumulation and crisis? Is this what makes 
>me difficult?
>The above three questions are reasonably clear, clear enough 
>certainly to be answered and not evaded.
>Yours, Rakesh
Dr. Steve Keen
Senior Lecturer
Economics & Finance
University of Western Sydney Macarthur
Building 11 Room 30,
Goldsmith Avenue, Campbelltown
PO Box 555 Campbelltown NSW 2560
s.keen@uws.edu.au 61 2 4620-3016 Fax 61 2 4626-6683
Home 02 9558-8018 Mobile 0409 716 088
Home Page: http://bus.macarthur.uws.edu.au/steve-keen/

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