[OPE] Reply to Paul Cockshott on neo-Smithian Marxism andequilibrium

From: Jurriaan Bendien (adsl675281@tiscali.nl)
Date: Sat Apr 26 2008 - 12:50:19 EDT

It is difficult to understand how a chaotic system can be a "system",  how a chaos can be determinate, how a chaos can be in equilibrium, or what the equilibrium in a chaos would consist of, beyond the constancy of chaos. 

Seems to me to be the task of theory to specify to what extent (in what sense) a system is determinate and to what extent it features indeterminacy. A minimal condition for a scientific theory is that it permits us to predict that some states of affairs are more likely than others, and that some states of affairs cannot happen. Random variability in a distribution would therefore exist only within certain specifiable limits.
If the phenomenon being studied is truly a chaos, it does not permit of a scientific theory about it. In reality, price movements are rarely chaotic, though if I relate price movements of completely different commodities I might find that there is no statistical correlation between them at all, and that their relationship do not follows any general pattern. But all that says is that from a certain point of view a phenomenon is chaos - from another point of view it is determinate.

Farjoun & Machover (1983, p. 15) themselves actually refer explicitly to a comment by Adam Smith on price equilibrium which I quoted previously, arguing that this is the same concept that Marx has, and that it implies a uniform rate of profit. They argue that the concept of a uniform rate of profit was "virtually unchanged from Adam Smith through Ricardo and Marx" (p. 14). 

But that is precisely what I dispute; in Marx's theory, the concept has quite a different status than in the theories of Smith and Ricardo. Marx is quite clear that the equalisation of the rate of profit DEPENDS on the ability of capital to migrate freely between different sectors according to profitability criteria. An "average rate of profit" always exists by definition since it is merely the statistical averaging of profit differentials, but the substantive thesis Marx has is that generalised competition must, as a general tendency, cause a convergence of profit rates, since owners of large masses of capital are unlikely to invest at 10% here if they can realise 20% there, and firms realising 20% are likely to out-compete firms realising only 10%. They search out opportunities for maximum profit. But that argument crucially depends on the ability to enter and exit freely from different sectors. Since there are in reality entry and exit barriers, such a process could only occur across an interval of time and a "ruling rate of profit" may not exist other than in the sense of a minimum level required to stay in business.  

Not accidentally, Farjoun & Machover say that they "ignore ground rent", arguing that "for a modern capitalist economy this is not a drastic oversimplification" (p. 112). Yet it is precisely in Marx's theory of ground rent that we discover the possibility of structural unequal exchange, causing a prolonged deviation of labour-values, production prices and market prices, which defy the assumption of a uniform rate of profit. An "economic rent" is derived from especially favourable production conditions from which competitors are blocked for one reason or another, but this surplus-profit implies precisely that a uniform rate of profit is not realised, and that a general production price exists only as a statistical average, not as a ruling norm.


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