RE: [OPE] Constant returns to scale - IRS

From: Michael Williams <>
Date: Wed Oct 08 2008 - 14:17:27 EDT

I cannot give you a specific dynamic model, since I do not do dynamic


I am merely exploring the difference, if any, between orthodox modelling
processes (Samuelson's successive approximations for example) and
Hegelian-Marxist notions of abstraction and concretisation. A starting point
is that neither of these methods assumes that the actual economy exhibits
unmediated the abstract processes. The use of comparative statics does not
assume that actual markets move unmediated from one stable equilibrium to
another; such changes are indeed mediated by dynamic processes that will in
general mean that there is no stable 'target' equilibrium towards which
markets continually move. It's no rocket science; but it's not 'magic'


The income effect is not an axiom, it is the result of a deduction from such
posits as economic rationality, adequate information and so on.


If comparative statics is a successful axis of abstraction, then it helps us
to identify economic forces that will still operate in the actual concrete.


If it is not, in some or all cases in which it is used, then it needs to be
criticized on that basis, not merely dismissed as 'magic' etc.


If you give me a specific dynamic model of how markets work, I dare say I
could investigate this methodological issue using it as an exemplar.




Dr Michael Williams, BA, MSc, PhD


Mob +447906172655

Home tel +4423 80768641

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From: []
Sent: 08 October 2008 15:05
To: Outline on Political Economy mailing list
Subject: RE: [OPE] Constant returns to scale - IRS


Hi Michael W:
I had asked you for an example to support the following statement
"comparative static abstractions can help in the difficult task of
dynamic models". But, I haven't heard yet a specific example of how static

analysis helped us to better interpret a dynamic model - indeed, you haven't

(unless I am mistaken) referenced a specific dynamic model.
The income effect could be thought of a simple axiom. And, yes, you
could employ that axiom within static analysis. Would this then
_help_ us interpret a dynamic model? I doubt it. The whole point
of dynamic models is to move beyond the 'snapshot' type of comparison
that we see in comparative statics.
I would like you to tell me concretely using a specific dynamic model
(of your choosing) _how_ comparative statics allows us to better interpret
the meaning of a dynamic model.
In solidarity, Jerry
PS: Let us assume that (disposable) income goes up. Does this result in
additional consumption spending? Even Keynes (who did _not_ present a
dynamic theory) would say no. In his theory, because of the role
of expectations.

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