From: Ian Wright (iwright@GMAIL.COM)
Date: Thu Dec 02 2004 - 13:11:55 EST
Dear Riccardo, Anders etc., Thanks for taking the time to respond to my question. I found a review essay in Review of Political Economy Vol 16 No 2: "Sraffian research programmes and unorthodox economics" by T. Aspromourgos. Quoting: "Two possible alternative `closures' of the distribution system -- via the accumulation rate or via the rate of interest -- have also been systematically pursued, especially the former route. The essential basis of the former is that given the equilibrium equality between saving and investment, an equality can be postulated between the ratios of saving to the value of the capital stock, and investment to capital. If the latter ratio could be conceived of as an independently determined rate of accumulation, and the former decomposed into a distribution-weighted average of saving out of each functional income category, in a ratio to capital, then a causation from accumulation to distribution could be posited -- the 'Cambridge Growth Equation' causation. On the other hand, the essential insight of the interest closure approach is that given the equalization of interest rates and profit rates (net of compensation for differential asset characteristics such as illiquidity and risk), if profit rates are free to vary in equilibrium, at least within limits, and interest can be independently determined in money markets -- including, in the latter determination, central bank behaviour (monetary policy) -- then a monetary determination of profit rates, and hence income distribution more widely, can be posited. The absence, so far, of a more considerable development of this latter programme is the most unfortunate omission from the Sraffian project as a whole -- although further development of it properly should not amount to another theory of profit rate determination, different from the Cambridge Growth Equation, but similarly mechanical and indifferent to the role of wider social forces. ... So long as only one degree of freedom is available for determining distribution, both of these approaches cannot be sound. ..." The Cabridge Growth Equation causation sounds very complicated! ... For what it's worth, the last sentence is another example of the fallacy of non-contradiction (positivist habit): it assumes that there cannot be multiple mechanisms that simultaneously function to attain contradictory ends (e.g., distribution). Anders, I think it is important to close the model and not leave distribution to unmodelled notions of class conflict, particularly as empirically it seems that distribution is pretty much constant, but it is technology that changes over time (which is the inverse of the Sraffian model that assumes fixed technology and investigates the effect of changing the distributional variables). -Ian.
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