Re: [OPE-L] Incoherence of the TSSI - consensus?

From: Ian Wright (wrighti@ACM.ORG)
Date: Sun Oct 28 2007 - 18:01:39 EDT

> Ian, you are not distinguishing between classical
> Walrasian GE and the inter-temporal GE. The Walrasian
> GE has uniformity of the rate of interest as the
> condition of equilibrium and it does require some kind
> of notion of aggregate capital independent of the rate
> of interest. The inter-temporal GE does not require
> uniformity of rate of interest as a condition for
> equilibrium and deals with capital as vector of
> physical goods. Thus it does not need capital
> aggregation. The Sraffian critique applies to the
> classical Walrasian GE but not to the inter-temporal
> version. When Samuelson talks about GE, he means
> inter-temporal version of GE. Garegnani thinks that he
> could extent the Sraffian critique to the
> inter-temporal version as well, as their version of
> savings and investment is not safe from the
> reswitching type of problem. On another note, as we
> have shown in our 'equilibrium paper' if the condition
> of the rate of profits to be uniform must be
> maintained, then even in the inter-temporal framework,
> input prices must be equal to output prices. Cheers,
> ajit sinha

No I am relying on Bidard's analysis in "Prices Reproduction and
Scarcity" (1991) where in Chapter 21 he shows that the "marginal
productivity of capital" is well-defined in Sraffa-type models and is
equal to the rate of interest even in multi-sector models. Bidard
points out that Gargegnani's critique is based on a self-contradictory
definition of the "marginal productivity of capital" that depends on
the numeraire; when the concept is defined in this way "it is
pointless to enter into a discussion on whether it is equal to the
rate of interest".

Sraffa-type models have been used to critique the neoclassical,
Austrian and Marxist theories of value, and this has been viewed as a
"radical" critique. But on closer examination of the literature I am
gaining the impression that the critique does not hold up: rather than
excluding various theories of value, Sraffa's work under-determines
the theory of value. In Sraffa-type models the neoclassical marginal
equalities hold true (once "marginal productivity of capital" is
correctly defined, cf. Bidard), and also Marx's invariance conditions
hold true (once "labour-value" is correctly defined, cf. my recent
work). Hence contrary to the claims of Sraffa's interpreters both the
neoclassical and Marxist theories of economic value are logically
coherent in the special case of static linear production models. I
have not studied the case of Austrian value theory, but suspect a
similar story.

In my view a theory of economic value is necessary to understand
economic dynamics. And theories of economic value are intimately
linked to distributional justice and the contending claims of the
economic classes. So the fact that Sraffa's work denies the logical
possibility of any theory of value suggests to me that, whatever the
author's intentions, it has functioned as a classic petty-bourgeois
class-compromise theory, since it ultimately denies the validity of
the theoretical claims of the contending classes of capitalist
society, leaving the distribution of income to be set
"conventionally". But I cannot fully develop this line of thought
within the context OPE-L, and my time is very limited at the moment.

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