Re: (OPE-L) Ajit's paper

From: ajit sinha (sinha_a99@YAHOO.COM)
Date: Mon May 31 2004 - 03:55:05 EDT

--- Rakesh Bhandari <rakeshb@STANFORD.EDU> wrote:
> Ajit,
> I look forward to reading your paper (and there is
> the one in Westra,
> et al.). A few quick points.
> 1. The money commodity should not be treated as any
> other commodity
> in a set of simultaneous equation: more than the the
> average rate of
> profit will tend to be secured in this branch (see
> Michelle Naples on
> absolute rent in the precious metal sector), and
> there is no
> mechanism by which to affect supply such that the
> average rate of
> profit will have been made in the "money branch"
> over the long term
> (see my OPE-L posts, based on my reading of Ricardo
> and Malthus:
> Fred Moseley has of course written on this (see his
> website).
Rakesh, None of these people can answer my very simple
question--the question that I asked you in the other
post, that you have not answered yet. So let me again
reiterate. Let's say somebody says, 'the value of a
commodity x is 10 hours of socially necessary abstract
labor'; Is this statement formally correct or
incorrect. If incorrect, then why and if correct, then
formally how can one arrive at the measure of 10 hours
of SNA labor?
> 4. While Hahn questions the assumption of input and
> output prices as
> equal in order to enter demand considerations to
> close the equations,
> Giusanni, Freeman and others question that
> assumption in order to put
> technical change into the formalism.

Hahn is coming from intertemporal general equilibrium
position. Whatever one may think of the GE, one cannot
deny that it is a theory of prices. For the A-D model,
different time periods define different commodities,
and thus can have different prices. But these prices
are determined by the determinants other than prices.
That's why it qualifies to be a theory of prices. If
they determined prices of a commodity in time t on the
basis of observed prices of the same commodity in time
t-1, then it would not be a theory of prices but
rather be simple mumbo-jumbo, which is what TSS is.
Hahn's critique of Sraffa on this score is not sound.
All Sraffa's equations are saying is that the rate of
profits is calculated on the basis of the replacement
coast of the physical capital items used up in
production. As far as technical change is concerned,
since technique of production is one of the
determinant of prices, a change in technique will
definitely explain change in prices, but it will be
the technique in use that must explain the prices at
any time. Cheers, ajit sinha
 That seems to
> me to be the real
> fight--about how and why to drop the static
> assumption in the
> Sraffian formalism when it comes to studying actual
> capitalist
> economies, ie. when one is doing more than
> critiquing popular
> mythology about the productivity of capital and
> profit as just
> reward. Sen implicitly recognizes Hahn's point but
> pays no attention
> to the Marxian criticism. But that's where the
> action is.
> Rakesh

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