Re: [OPE-L] naive question on Sraffian model

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.

Anders Ekeland


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