[OPE-L:5146] RE: Re: comparative statics

From: Gerald_A_Levy (Gerald_A_Levy@email.msn.com)
Date: Sun Mar 11 2001 - 08:34:03 EST

Re Steve K's [5132] and Gary's [5134]:

1) Response to Steve:

Thanks for your post. I think it serves as a good
starting point for accessing which Marxist models or
illustrations are  actually dynamic models and
which are non-linear and chaotic.   I take it that
you would agree that some dynamic models can
be simply specified -- in fact, you have a
whole category called "boring" dynamic theories.
I don't think, though, whether a model is "boring"
can serve as a test for whether it is valid and
you never really explained what was wrong
with "boring" models other than having the
subjective characteristic of being boring.

When we discuss dynamic non-linear models, I think
we should also ask whether the axioms
and assumptions of the model are consistent
with modeling a dynamic non-linear process. E.g.
I don't consider the axiom that a unit of abstract
labour creates the same magnitude of value everywhere
in the world during all periods of capitalist history to
be consistent with the process of viewing the creation
and distribution of value as a dynamic non-linear
process. Instead, it is an axiom which might only
have limited meaning in the context of comparative
statics. Similarly, I think that the conservation of
value axiom which has been taken by some to
imply that value can only be redistributed and can not
be destroyed except by use is not consistent
with viewing value in a dynamic non-linear
context. Rather, I believe that these assumptions
and axioms are employed for the reason that
they reduce the number of unknowns and make
the math simpler. Yet, I believe there is an
injustice to understanding the process itself
*as a dynamic process* when such axioms
are employed.

 2) Response to Gary

I was waiting for someone else before responding.
But your post was either surprisingly uncontroversial
or no one wants to touch it. I'll touch.

If your basic point is that comparative statics has a
legitimate place in political economy, including
Marxist political economy, then I agree. If your
related point is that all subjects need not employ
dynamic and non-linear tools, then I also agree.
Yet, this leaves the major question unanswered:
when is it appropriate to employ comparative statics
and when is dynamic non-linear modeling

> > We might begin with a point that I think every competent economist --
> > orthodox, marxian (all variants), sraffian, post keynesian, Austrian,
> > whatever -- would accept: that a useful explanation of how a market
> economy
> > functions must eventually deal with issues that fall under the heading
> > dynamics.

 I think I agree with you, but for some of these
schools they only give lip service to "eventually":
when and where, in terms of the order of analysis
and the order of presentation, that eventuality
is supposed to happen is left open. Kind of like
"Waiting for Gidot".

> > Well, to the extent that he's saying that there are certain kinds of
> > questions -- extremely important ones, I contend -- that aren't
> susceptible
> > of analysis within the traditional long-period comparative static
> > framework, he's not saying anything that Smith, Ricardo, Sraffa, or
> > Marshall and Pareto, for that matter, would deny. I've never understood
> the
> > position that one must take an either/or stance: comparative statics on
> one
> > side versus some version of dynamic analysis on the other.
> > "Horses for courses", as they say. There are different types of
> > in economics, and they frequently call for different methodologies.

Again, this doesn't answer the question I pose
above. Even if there are different horses for
courses, one has to place the question of which
horse to employ within the context of the subject
matter, capitalism, where that mode of production
is understood as a unity of many determinations
and where those determinatioins must be explained
in a layered and ordered way. Thus, some horses
which may be of use when presenting the most
abstract theory may have to be abandoned for
other horses as the level of concretion advances.

> > Questions relating to the fundamental mechanisms that operate on prices
> and
> > distribution, it seems to me, ought to be sorted out, in the first
> > instance, via the traditional method.

("Traditional"?  I'm not convinced that we ought
to embrace the "tradition" of mainstream economic

Implied in your statement above is the proposition
that prices and distribution are the "fundamental
mechanisms" that have to first be explained at
a very abstract level. On the contrary, I think
that the category of price, as distinct from
relative price, is a very complicated category
that has to be understood at varying stages of
the analysis. E.g. prices of production are not
market prices and the order in which market
prices, the more concrete category, should be
introduced is after the more abstract category
of POP. If we forget to do this consistently then
we run the risk of collapsing a very rich
and detailed and complex and layered analysis of
the subject of capitalism to a much simpler yet
inadequate theory that does not integrate and
endogenize essential variables necessary for
comprehending that subject matter. E.g. if our
theory only understands money as numeraire,
then our theory can not comprehend important
aspects of the subject matter, e.g. credit money
and fictitious capital.

> > For a start, I don't see how technical change and transitional processes
> > can be modeled without relying on suppositions that are much more ad hoc
> > than what one finds in, say, Sraffa-type long-period models.

I don't exactly understand *why* you "don't see"
this. While I agree that one has to question the
appropriateness of what you call "ad hoc"
suppositions, I don't understand why the
analysis of technical change *requires* such

> > The upshot is that for the anlysis of dynamic questions it might be more
> > appropriate to adopt the approach of Adam Smith and Marx: look at
> > and institutions.  By all means, supplement the history and
> > analyisis with formal dynamic models when the latter can shed light on
> > complex processes that have a systematic dimension.  But in the end, I
> > think that formal modeling is less helpful to the analysis of
> > temporal trajectory than good old-fashioned in-the-trenches historical
> > institutional work.

I agree that historical and institutional analysis,
or what might be called "class studies", should
form part of the analysis and presentation. Indeed,
I think it can be *every bit* as empirical as
statistical and econometric work (even though
most economists don't weigh its worth as above).

Indeed, I would especially argue that serious
historical and institutional analysis is required
rather than relying on pseudo-historic "stylized

> Isn't this what Marx was doing throughout most of
> > Capital, and Smith was doing throughout most of the Wealth of Nations? I
> > don't think the basic approach is outmoded.

No, I don't think that was Marx's method.
Certainly there is a lot of historical and
institutional detail in _Capital_, but the method
employed is one of abstraction which *presumes*
a prior analysis of the concrete (so that the
subject matter can be reconstructed in thought)
rather than a  historicist/institutionalist/
empiricist method.  Indeed, I think that the
historical detail could have been omitted from the
main presentation and relegated to footnotes
without doing his theory an injustice. On this matter
listmember Tony Smith wrote that the distinction
between "Denken" and "Vorstellung"  is
significant.  "Vorstellung", Tony writes, may be
translated as "picture-thinking" or "imaginary
representation" (_The Logic of Marx's
Capital: Replies to Hegelian Criticisms_, p,11).
The historical details, thus, are presumed to
be generally understood as a precondition for
the reconstruction of the subject matter in
thought, but are not necessary in terms of the
actual presentation. Indeed, one might say that
the historical presentation is "redundant".

In solidarity, Jerry

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