[OPE-L] Dynamic model?

From: Jurriaan Bendien (adsl675281@TISCALI.NL)
Date: Tue Mar 13 2007 - 14:55:51 EDT

In his reply to Makoto Itoh, Anwar Shaikh claims "the transformation problem
is "an analytical issue" and not an "historical one" and that prices of
production "never exist as such" and specifically there is "never any state
of equilibrium in which market prices converge to prices of production".
Nevertheless he states "Prices of production function are the inner
regulators of market prices".

I am having a severe problem following the argument here - prices of
production which do not exist, nevertheless act as "inner regulators of
market prices". Okay, then Shaikh refers to the significance of prices of
production in terms of his iterative method. Point is that if we create a
computational model of the type suggested by Ian Wright, and if Shaikh is
correct, we'd be modelling a pattern of economic activity (some kind of
dynamic equilibrium) never realised in real life. What is the point of that?
How does that differ from Arrow-Debreu stories?

In reply to Anders:

Robin Blackburn wrote "The traditional aim of socialist thought has been to
become nothing less than the self-awareness of capitalist society. In a
society profoundly ignorant of itself, it was the task of socialists to
comprehend the principles on which the society worked. By discovering the
real nature of capitalism, they were attempting to recapture an economic
system that had escaped social control. Today the task remains as formidable
as ever, because capitalism is by the law of hits own nature in a continual
state of restless transformation. The true character of capitalism has to be
discovered by each new generation". ('The new capitalism", in Robin
Blackburn, ed., Ideology and Social Science, Fontana, 1976, , p 164). The
point here is that, let's face it, any comprehensive and sophisticated
understanding of the capitalist system as a whole, such as it exists now, is
simply lacking among the current generation. If anything, bankers understand
it better. All that we seem to achieve on OPE-L is conclusions of the type
that certain approaches definitely cannot generate such an understanding. We
seem to devote a lot of time to discussing extraordinarily abstract
hypotheses, but what their relationship is to the empiria is anybody's
guess. A critique of capitalism is OK, many people engage in it, but we have
to be sure about what the purpose of it is - and presumably the purpose is
to prove that capitalism as a whole obstructs human development more, than
it promotes it, and that alternatives are possible which are preferable. Bob
Sutcliffe writes: "I believe that it is important for socialists today to
recapture the egalitarian spirit which was at the heart of the historical
utopian socialisms, including Marxism. Equality in this tradition is very
far from homogeneity or conformity; it means the protection of freedom
through equal civil and political rights and distribution according to need
and not according to the ability to pay." (100 ways of seeing an unequal
world, Zed Books, 2001, p. 2). But this requires a very deep understanding
of the morality of power and the power of morality, since any system that
distributes resources according to need, is also vulnerable to terrible
abuse, and pits the needs of some against the needs of others, with both
claiming an equal right to have them satisfied. If you instate the principle
that people are entitled to certain resources as of right (by law), this
does not automatically imply that, having claimed those resources, people
will make a constructive contribution to society or show solidarity with
others. They very often don't, these days. This is the biggest problem of
European social democracy, but it is also a problem for socialists, and it
is probably not resolved except through a culture which has real popular
exemplars and models of how life ought to be lived, how it can be lived. In
that sense, liberals and socialists are probably not far apart, at least in
their aspiration.

In reply to Jerry:

I think that is not quite fair to Freeman/Kliman, on two counts. 1) Marx
tried to discover how the law of value would operate in a developed
capitalism, but he never got around to finishing his manuscripts on it.
Therefore he didn't trace out and formulate the full implications of his own
idea, insofar as he understood them. Thus one could claim consistency with
Marx in this regard, while acknowledging some implications were not
recognised by Marx himself. Marx comes close to saying that in particular
situations there would be no determinate relationship between prices of
production and labour-values, especially of course in situations where the
supply of a good was monopolised and surplus-profits were obtained from it.
2) I don't think Kliman/Freeman would claim at all that getting back to what
Marx actually said and intended is the whole story. It is more seen as a
"project of recovery" after long years of Bortciewiczian detours that is the
necessary prerequisite for a better theory. So then you would emphasise that
"first step" because, if the fundamentals aren't even understood, then any
attempt to arrive at a better theory would fail. A more fundamental
criticism possibly is that, in reality, equilibrium rhetoric is invoked
these days to defend the benefits of (free) trade as such, so really it is
the benefits of trade that we ought to be discussing. As anyone knows,
people are usually unwilling to trade, unless they gain something from it,
but some could gain vastly more from trade than others - so the issue is
really what kinds of trade are beneficial or harmful, and on what basis they
should be conducted. That aside, the discovery of "non-equilibrium
economics" is not unique to TSSI (see e.g. Shaikh's paper cited in the


This archive was generated by hypermail 2.1.5 : Sat Mar 31 2007 - 01:00:12 EDT