Re: [OPE-L] Okishio Theorem - do anyone think it is relevant?

From: GERALD LEVY (gerald_a_levy@MSN.COM)
Date: Wed Oct 31 2007 - 08:39:09 EDT

>If my memory does not fail me - as it did when I wrote Meek instead
>of Dobb - there is a theorem that says that three deterministic
>difference equations is enough to create a path with no clear pattern
>inside some rather wide boundaries. On top of that you have conscious
>players trying to do arbitrage, make policy, defend their interests - so
>the macro result of all this micro behavior becomes very hard -
>but not entirely impossible to predict. But it is like weather
>forecasting - a lot of non-linear processes makes this still a
>difficult sport more than a couple of days ahead - sometimes not even that
>is possible, when there is a lot of movement (wind).

Hi Anders:

The range of variables in meterology is much smaller than in
political economy and it is much easier to collect precise data
on the variables concerning the former rather than the latter.
For that -- and other -- reasons, I think the analogy of weather
forecasting to dynamic macroeconomic modeling is misleading.

At best, dynamic macro models can only identify alternative
scenarios.  Too many assumptions about the variables are
required to result in accurate predictive rankings of
probabilities. This is a failing (or, perhaps, the better word here
would be limitation)of all  probabilistic and econometric
models which seek to model capitalism.  To the extent that we
are specifying models concerning the capitalist macroeconomy,
I think that "fuzzy logic" (not to be confused with wooly logic)
is a better way of thinking about the real subject matter.  At the
end of the day, all we can identify is different variables and
possible outcomes.  I think this was understood by Marx as well:
hence in Volume 3, Ch. 14 he listed (some) "counteracting factors"
but made no attempt to precisely rank those factors or identify how the
inter-action of all of the variables would play themselves out in the
development of a particular period of capitalism.  To the extent that
he identifies some factor as being especially important, it is stated
primarlily in terms of *past* debelopments (history).  I think this is how
we should interpret his statement that the reduction of wages below
their value has been "one of the most important factors in stemming
the tendency for the rate of profit to fall."  Note that he only says that
it is _one_ of the most important factors. As against this, there are
sometimes references in his writings to "inevitability" so there is some
sort of a tension here that isn't completely explained or fully worked
out, but I think that the strand of thought in his writings in which future
outcomes are "open" and undecided is the more important analytically.
In any event (regardless of whatever Marx wrote) the future is open
(i.e. undecided) and we should not fall into the predictive conceit of
mainstream macroeconomists.

In solidarity, Jerry

This archive was generated by hypermail 2.1.5 : Fri Nov 02 2007 - 00:00:19 EDT