Re: [OPE-L] Dynamic model?

From: Jerry Levy (Gerald_A_Levy@MSN.COM)
Date: Mon Mar 12 2007 - 13:16:56 EDT

> - That the classics (Smith, Ricardo, Marx) had a fundamentally
> different -  and dynamic model of capitalism is clear, but on can
> discuss if Marx was successful in "proving" his dynamic mental model,
> his main results in a static framework (= the transformation problem
> as conventionally defined).

Hi Anders:

Putting aside the question of whether Marx was successful in proving
"his dynamic mental model", where was it even formally presented?

To believe that capitalism is by its very nature dynamic is quite
different from developing a formal analytic theory which shows
this to be the case.

Doesn't the following listing show that Marx did NOT develop
a dynamic model?

>  From the perspective of Marxian economics a dynamic model would be
> able to handle:
> - different and changing technologies - with increasing returns to
> scale - where *demand* determines the SNLT
> - where there are conflicting plans, not all plans get realised and
> consequently learning, change of strategies
> - where there is *waste*, that is labour time not being recognized as
> socially necessary - modelled explicitly, that is bankruptcies etc.
> In short - a dynamic model must not be an "Harmonilehre", that is a
> model of imaginary harmonious state, but to show how the incomes of
> the rich is actually based on the exploitation of other peoples work
> - out of a non-existent equilibrium, to quantify the amount of waste
> in order to show that a planned economy would be more rational and
> efficient (and "just" and "fair").
> A dynamic model would show *all* the transformations ("averaging")
> from the private labour of each specific   instance of each specific
> product until (labour)value is "frozen", socially accepted in the
> form of a market price.
> A dynamic  will be able to visualize the why the "simple" LTV model
> is the best predictor of market prices and is true in this sense (=
> grasping the essential), but that the simple LTV model is to simple
> since it does not model technological change, does not model the
> tension, the fight over the surplus.
> It follows from this, that market prices are more real - and just as
> important as "prices of production". Market prices have no inferior
> A dynamic model would treat money - not as a commodity money - or a
> commodity numeraire shares, but as the expression (a complex one) of
> value. Money (and shares, bonds, debt, derivates, interest etc.)
> would be seen as part of a "control" system that creates "order out
> of disorder", i.e. socializes the individual labour, regulates the
> conflicting claims to the goods and services produced (now and future).
> Only in a dynamic model can you model business cycles, i.e. the macro
> results of weakly coordinated micro behaviour.


> A lot more could be said about this, but the important point is to
> realize that static equilibrium models are very uninteresting for the
> study of real capitalism. The "new solution" and even TSSI is still
> too "static", or to "un-dialectic" - although on the right track.

Freeman and Kliman like to talk the talk about  capitalist dynamics but
they  have yet to walk the walk.  Whether they are on the "right track"
is another question.  Simply claiming that dynamic analysis is needed
and that Marx's theory was dynamic is not enough: it  has to be shown
rather than merely asserted.

It seems to me that some of  the TSSI authors are caught in an impossible

On the one hand, Kliman and Co. seek to show that the quantitative aspects
of Marx's theory are internally consistent. Yet, as Fred has argued
convincingly  (in my opinion) citing definitive textual evidence, prices of
production in  the Kliman-McGlone perspective can change for reasons other
than those specified by Marx.  Indeed, to believe that Kliman-McGlone
interpreted Marx correctly on what can change PoP then you have to believe
that Marx didn't  comprehend the meaning of the word "only"!

This means that one of the two following propositions are even
hypothetically  plausible:


a)  Marx was wrong and Kliman-McGlone corrected him;


b) the Kliman-McGlone interpretation of Marx is wrong.

b) leaves open the question whether Marx's theory was internally consistent.
For the moment, I'll even consider a) to be an open question. In any event,
both a) and b) can't both be true.  Kliman-McGlone need to face up to this
and defend either a) or b), but -- of course -- I don't expect them to do

Returning to the point about the TSSI and dynamics,  for many years we
have heard bluster but where's the proof?   Dynamic theory is needed,
but how many years (if ever) will it be before they develop that theory?
I am reminded of an old Wendy's advertisement -- "Where's the beef?".
It seems to me that Freeman-Kliman are NOT primarily interested in
developing dynamic theory.  Rather, they have the much more limited,
and in my opinion much less interesting, goal of showing that Marx's
quantitative theory was logically consistent.

In solidarity, Jerry

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