[OPE] Farjoun & Machover - additional note

From: Jurriaan Bendien (adsl675281@tiscali.nl)
Date: Sat Apr 26 2008 - 14:43:36 EDT

To make it perfectly clear, Farjoun & Machover argue that non-convergence of profit rates is an essential feature of real-world competition (p. 18) and that a dynamic equilibrium does not depend on, or assume, a uniform profit rate. In fact, an equilibrium in which profit rates are uniform cannot exist (p. 26).  Profit rates are random variables with a probability distribution (p. 25). Fine and good.

The whole question is however what the "dynamic equilibrium" then consists of, i.e. what is the balance, what is being balanced, how is that balance achieved, and how do we know that balance is achieved. 

In this respect, Farjoun & Machover's book is crucially vague, but the suggestion is that via a probability distribution of random prices, the "capitalist system" achieves sufficient stability that it can perpetuate itself, neutralise fluctuations and grow. 

The explanation for this dynamic equilibrium is therefore sought in the price system. 

Now how does this differ from Adam Smith's "hidden hand" theory, except that we add that price distributions conform to statistical laws? How does it differ from the neoclassical thesis that markets, freed from impediments, willl spontaneously gravitate to an equilibrium state? 

What I am arguing is that for Marx, not only does a price equilibrium empirically never exist, but also that the system does not owe its stability to the price system - it owes its stability rather to the social reproduction of the social relations of production, i.e. to the physical necessity for labour-cooperation within a framework of property rights enforced by the state, which is only mediated by price movements, and constrained by value relations. 

Effectively, Farjoun & Machover only "describe" the conditions for systemic equilibrium in terms of a probability distribution of prices, but they do not "explain" it. If a certain probability distribution of prices exists, the system is in equilibrium, and if it does not, it isn't. As we can observe that the capitalist system is able to perpetuate itself, we can only surmise that a probability distribution of prices was achieved allowing this to occur. But that is not much of an advance over Adam Smith.



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