Re: [OPE] [1] Marxian equilibrium & reply to Wright.

From: Dave Zachariah (
Date: Fri Feb 08 2008 - 15:12:29 EST

That was an excellent reply Ian.

//Dave Z

on 2008-02-08 20:34 Ian Wright wrote:
> Hi Alejandro
> My response below repeats many of the points I have made in our previous
> exchange.
>> The Marxian thesis that labour is the source of value and determines
>> prices as a last resort, rest upon a false hypothesis of equilibrium
>> that would be reached when a /natural price/ is formed away from
>> extraordinary economic surpluses, that some productive units are able to
>> obtain thanks to innovations applied to production. This thesis sustains
>> that competition let generalizes production methods till a point which
>> nobody is able to obtain extraordinary profits and is in this stationary
>> fictitious point where (1) prices oscillations end; (2) supply and
>> demand are no more useful to explain anything, and; (3) /individual
>> value/ of commodities matches their /social value/. A correlate to this
>> Marxian equilibrium is that work constitutes “the gravitation centre to
>> which fluctuate prices” and therefore is the labour content of
>> commodities which determines as last resort prices formed in the market.
>> According to Marxian thesis this fact would be demonstrated when
>> reaching that stationary point referred above. But just as neoclassical
>> models of equilibrium rests upon a false assumption of a well defined
>> individual or social utility function, this Marxian equilibrium model
>> rests upon a false assumption of a production function built of costs
>> that change in a pre-established direction, while the generalization of
>> production methods takes place, which goal is a state of equilibrium
>> where technological change ends. Just as Marxists Ian Wright has written
>> it, “deviations of prices from values are /social error signals/” (pp. 18).
> - The methodological approach of abstracting from supply/demand and
> technical change in order to theorize natural prices, which function as
> "centres of gravitation", is not specifically Marxian but rather
> Classical. So it's more accurate to additionally identify the Classical
> tradition, including the modern (generally anti-LTV) long-period
> equilibrium approach of the Neo-Ricardians, as targets of your critique.
> - In modern terminology a "centre of gravitation" is an attractor of a
> dynamical system. An attractor does not determine the dynamics of the
> system "as a last resort". It explains the dynamics of the system at all
> times.
> - An attractor can exist, have real effects, without the trajectory of
> the system ever reaching it. So the empirical fact that market prices do
> not realize natural prices in no way implies that natural prices are
> "fictitious" or have no explanatory role.
> - Are you asserting that *if* there is no technical change and no change
> in final demand *then* the market would *not* eventually realize natural
> prices? If so, you are simply wrong about this; for example, the
> literature contains families of cross-dual ODE models of the classical
> process of gravitation that demonstrate this proposition. My own paper
> demonstrates a process of gravitation in considerably more detail albeit
> in the simpler setting of simple commodity production. (That my paper is
> specifically concerned with the disequilibrium process of gravitation
> marks it as significantly different from the Walrasian equilibrium
> approach).
> - Or are you saying that *empirically* this process never reaches
> completion? No-one would claim otherwise. Sometimes Smith and Ricardo
> write as if the process happens very quickly; Marx is more subtle. For
> example, I make no claim whatsoever that my paper represents a theory
> that explains the trajectory of market prices. But you can't run until
> you learn how to walk.
> - Changes in technique of course disrupt the real-cost structure of the
> system, hence labour-values and hence the natural price attractor. A
> complete theory of the dynamics of a capitalist economy must theorize
> technical change.
> But perhaps it will help if we talk about air-conditioning rather than
> economics for a moment. Imagine a large office with a temperature
> controlled by an air-conditioning system that has a central temperature
> setting T. It heats and cools the rooms in an effort to maintain T.
> People come and go, doors and windows open and shut, the weather changes
> etc. Due to all these events at no time is the office temperature equal
> to T. But at all times the office temperature tends towards T due to the
> action of the air-conditioning system.
> Translate your reasoning into this setting. You are denying that T
> causally affects the trajectory of the office temperature.
> Let's further imagine that infrequently T is changed by the intervention
> of human "entrepreneurs": Bob likes it warm, Sue likes it cold, and they
> independently change the dial that sets T. And consider that a group of
> workers organize a futures market to bet on the office temperature.
> You would interpret this fact to imply that the objective laws
> controlling how temperature change are thereby abrogated and the office
> temperature is entirely subjectively determined.
> But both these conclusions are clearly misguided.
> To get to grips with the dynamics of complex systems you need delicate
> hands and advanced theoretical tools. In all seriousness a good place to
> start, from a methodological point of view, is Roy Bhaskar's "A Realist
> Theory of Science" (1975). His critique of "actualism" is very pertinent.
> Best wishes,
> -Ian.
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