Re: [OPE-L] Teaching Tautologies : a response to David L

From: Gerald_A_Levy@MSN.COM
Date: Sun Mar 13 2005 - 22:29:38 EST

Hi David,

Thanks. You gave a much better summary of your paper than I did!

Picking up on a few points:

>  The real wage rate, w, is pushed below a  customary or standard
> level, w*, the workers' social condition deteriorates and they have no
> choice but to offer more labor at every wage: the supply curve of labor
> shifts outward.

The 'dual' of this is when the demand curve for labour (-power) increases,
then the real wage rate is pushed above w*.   But the corollary hasn't
followed historically: i.e. as w has risen,  there hasn't in general  been a
reduction in the quantity of jobs/family or overtime.  (I should add,
parenthetically, that if wages are 'sticky' in the short-run, then so
are the mandatory hours of work/job which are also contractually set.)

>  The *story* takes off from
> there; the Dobb Effect is the effect of the fall in w (below w*) on the
> real  supply of labor.  That is not a tautology.  In fact, it may not
> even be true!  If it is true, it may take effect in too long a time frame
> for it to serve as the basis for a policy impact in the short run.  And
> empirical  evidence is not too clear on it (of course, empirical evidence
> is not clear on the New Classical story either).

One might suggest that the 'propensity to work overtime' and the
'propensity to work more than 1 job' is crucially dependent,
given your assumption of fixed wage rates, on the *rate* of inflation.
Thus, there might be a 'threshold' rate of inflation beyond which there
is a radical shift in these propensities.

[What isn't part of this 'story', but was a significant part of the
historical experience in many capitalist social formations, was that
the more than 1 income earner per family trend was to -- at least some
degree --  affected by the feminist movement and the breaking-down
of barriers to the entry of women in different segments of the labour

> All economic models use some
> combination of behavioral assumptions, definitions (tautologies), and
> (where appropriate) equilibrium conditions.

Not all definitions, though, lead to tautologies.

As for equilibrium conditions, I agree that any non-equilibrium model
must stipulate equilibrium conditions since there is no other way of
knowing  whether there is disequilibrium.  However, to stipulate equilibrium
conditions does not necessarily mean that:
a) the model -- or the economy -- is in equilibrium;
b) the model -- or the economy -- is headed towards equilibrium;
c) if the model -- or the economy -- is in equilibrium that it will stay
in equilibrium.

>     Second, OPE folks need to be clear: this is an attempt at *immanent
> critique* of mainstream macroeconomics -- to get under their skin, in
> their own terms, and upset the dogma of policy ineffectiveness -- the main
> conclusion of the free-market hegemony.  For this purpose, I use *their*
> tools.  I use, yes, diagrams.  You need to answer one diagrammatic
> argument  with another one, not with something that could be taken to
> be a mooshy evasion.

I don't agree.  A methodological critique (which is usually what
diagram-intensive immanent critiques boil down to) is not a "mooshy
evasion".   There were no graphs of formulas in Joan Robinson's "The
Need for a Reconsideration of  the Theory of International Trade" or in
the section of the  text by Ian  Steedman on "The Heckscher-Ohlin-Samuelson
Theory of Trade"  but they constituted,  in my view, a *devastating*
critique of H-O-S trade theory.    Similarly,  does one need graphs and
formulas to refute the pernicious doctrine of  consumer  sovereignty?   I
think not.  To reveal, and thereby hold up for ridicule,  the assumptions
on which this doctrine is based is sufficient enough ... especially from the
standpoint of classroom instruction.

The marginalist _economists_ (as distinct from economics students) are the
ones for whom no theoretical claim not embellished with formulas (and
possibly graphs) is deemed to be "mooshy".    But, as the Cambridge
Controversy showed, even when they are logically cornered they just
blow the critique off.

> I simply assume, in this paper, the usual downward sloping AD
> curve.  *Of course* all of this needs to be questioned in the full light
> of  Marxist categories.  But the limited purpose of this one paper needs
> to be borne in mind.

Point well taken.

> If we can provide a simple, compelling case that makes the
> AS curve not vertical after all, and opens up a discussion of the wider
> social effects of fiscal and monetary policy, is that not something worth
> doing?


>     On a more theoretically rigorous terrain, we will then need to ask: is
> there a Marxist analysis of the capitalist short run?

I don't think that Marxians should necessarily accept the mainstream
definitions of 'short-run', long-run', etc.

But, if you are asking whether Marxians need to grasp developments
over a period of real time normally associated with the 'short-term', then
I would say that  we need to have such an analysis.  Indeed, I
would go so far as to say that concrete *class analysis*  requires
that we analyze both 'short-term' developments and 'micro' topics.
How this class analysis is connected to value theory is a trickier

> In other words,
> should we even bother to try to construct a theory of capitalist behavior
> in a period in which productivity, population, and physical capital stocks
> in place are all constant?

That is using the mainstream definition of 'short-run'.  If we think of the
'short-run'  in _real_ time then there is no reason to hold all of these
variables constant.  Tell workers on an assembly line that the productivity
of labor (if it is measured conventionally as output/worker/period of time)
can't increase in the short-run!  They know better.  They know that
the intensity of labor can, and often does, vary over the short-term.  And
they have the sweat to prove it!  Tell accountants who work for capitalists
that the capital stock and its value is constant in the short-run.  They
know better.  They know from experience about the meaning of
accelerated depreciated and a rate of technological obsolescence
which is not anticipated.

> This behavior would then be the basis for a theory
> of how the capitalist economy responds in the short run to (capitalist)
> government policy moves.

More significantly, it could be used as a basis for analyzing short-term
labor strategies.

> Is this a useful inquiry, or should we simply
> assume that it is submerged in the dynamics of accumulation, crisis, etc.?
> I am not sure, but I do think the immanent critical strategy is important
> to develop in the meantime.

The above should indicate that I think it is useful and important.
Workers want to know not only about 'long-term'  tendencies.
They want to understand their _current_ situation as well and what
are the likely consequences of different short-run strategies that
they might pursue.  Surely we should talk about L-R macrodynamics.
But, to _only_ talk about macro and the long-run is talking past workers,
imo. [NB: that's not what I'm saying David does.]

In solidarity, Jerry

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