From: Anders Ekeland (anders.ekeland@ONLINE.NO)
Date: Fri Dec 03 2004 - 04:25:34 EST
At 19:11 02.12.2004, you wrote: >... 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). Dear Ian, there is no reason why class conflict should be "unmodelled". One migh use statistical patterns, regularities to modell the outcome of class conflict. My point is that there is among economists a tendency towards mechanistic thinking about distributional variables. This very often stems from the Euler theorem etc. - the view that wages and profits are some mysterious marginal productivity of labour or capital. This is the important point, to see wages and profits as the result of the fight over a surplus, the distribution of which is fundamentally open, undecided, that is acts of pure will, attitudes, strength of unions, of left wing groups etc. will fundamentally influence this distribution. The prime example is the significant wage increase in Norway after people had defied the elites and voted no to EU in 1972, followed by the enormous electoral breakthrough of the Socialist Left Party autumn -73, the strength of the Norwegian Maoist movement etc. etc. This scared the elites into giving "buying up" the working class with an extraordinary wage increase (20% in some cases !). This only shows that economics is not something isolated from the rest of society, not a machine that can be understood without relation to the wider political setting. Another example are female wages, they cannot be understood *only* by trad. ec. indicators and mental models. The women's movement surely has played and is playing a role. You just cannot model this type of event by interest rates, by any traditional economic indicator. In more tranquil times, some statistical relationship will be OK. The insterest rate is a dependent variable, has a statistical relation to wages and profits. In a dynamic/dialectical model it can of course have a certain independence, because the result in period t, is a precondition for what happens in period t+1. Workers take the interest rate seriously when considering what wages they need/want. How one end up modelling "class conflict" depends on a lot of factors, but that it in principle should be a part of any model of growth and distribution is clear. There has been done a lot of econometrics on this in Norway, search for Barth, Moene, Holden, Wallerstein and you will find models using central/decentralized wage bargaining, unemployment, share of union membership and other proxies for the strength of the working class in economic models. Regard Anders Ekeland >-Ian.
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