[OPE-L:5329] Re: is technical change continuous or discontinuous?

From: Rakesh Narpat Bhandari (rakeshb@Stanford.EDU)
Date: Wed Apr 04 2001 - 13:14:17 EDT

>Rakesh wrote in [5307]:
>>  we have criticisms of the falling rate of profit
>>  theory which smuggle in the methodology of
>>  comparative statics without justifying its use
>>  in the study of continuous technical change (as
>>  Ben Fine, Alan F and  Andrew K have
>>   pointed out).
>And as I have pointed out previously, we also
>have discussions of technical change with the
>assertion that it is "continuous", whereas
>all truly dynamic conceptions of technical change
>view it as a *discontinuous* process.  If,
>for example, we had continuous technical
>change then it would be very hard to claim
>that there are waves of investment in constant
>fixed capital that are related to the age
>stratification of fixed capital and the on-again and
>off-again process of moral depreciation. It would
>also be difficult to model "leaps" in technical
>change happening periodically if we view this
>process as continuous.

Jerry, well labor productivity does indeed seem to improve all the 
time. So I do find apposite Steve's distinction between discrete at 
the individual (firm) level and continuous at the aggregate (branch 
or economy) level. Improvements in productivity also result from 
better utilization of the means of production and re-organization of 
the work process--learning by doing, as the jargon goes.  Such 
incremental improvements do not require the scrapping of fixed 
capital. It is true that more radical innovations require the 
replacement of fixed capital. It may also be true that downturns may 
force replacement of the capital stock at the aggregate level.  At 
any rate, we need a distinction between incremental and radical 
innovation. Nathan Rosenberg has argued that Schumpeter overly 
emphasized the latter--see Inside the Black Box.

>For the above reasons, one might view the
>perspective of technical change as continuous
>as a quasi-static rather than a dynamic postulate.

Perhaps incremental improvements are continuous while radical 
innovations are discrete.

>A history of thought question might be to ask:
>which theorist first modeled technical change
>as continuous?

Well, I certainly read Marx as emphasising the continuous 
depreciation of unit values as a result of on-going 
techno-organizational change.

>Walras perhaps? Curiously,
>I think the Austrian marginalists well understood
>the importance of this issue.  Where did this
>tradition begin in Marxism?   I would be
>surprised to hear that Grossmann, Mattick, Sr.,
>or Blake (all of whom Rakesh has a high
>regard for) were part of that tradition. Which
>leads to the question: who was the first Marxist
>who embraced the conception that technical
>change under capitalism is continuous?

I'll have to re-read the Grossmann dynamics book.

>  I wouldn't
>be surprised if that same theorist assumed away
>constant fixed capital with a circulating capital-only
>model. Yet, what kind of  theory that purports to
>be dynamic can make this assumption?

Again, while constant fixed capital may be replaced by capital as a 
whole in a serious downturn, it does not follow as Steve has 
suggested that the re
placement of continuous fixed capital is not a continuous process at 
the individual level.

At any rate, Jerry, I thank you for raising questions of empirical 
relevance for as of late we just seem to be adding up the purely 
logical critiques of Marx.

Most recently,  we have Marx's logical contradiction in his analysis 
of double divergence and the average commodity (here Fred and Allin 
agree) to go with his logical error of leaving the inputs 
untransformed (on which most people agree from Sweezy to Duncan to 
Ajit) to go with his logical failure to think through the 
implications of his use value-exchange value dialectic (this is 
Steve) to go with his logical leaps in chs 5 and 6 (as Gil has 
argued). I think Bohm Bawerk would have been proud of  the  concerns 
and performance of OPE-L!

Yours, Rakesh

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