[OPE-L:1362] Re: Temporality vs simultaneity

Bruce Robert (broberts@usm.maine.edu)
Thu, 7 Mar 1996 13:29:45 -0800

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Some quick thoughts in response to Massimo's numerical example comparing SA
and TA approaches (parts 1 and 2 of his post #1357).

I think his conclusions are a perfect example of an overreaction to
differences that are largely apparent rather than real. His cases SA2 and
TA2 keep the aggregate real wage in terms of corn constant, as total labor
performed falls. The computations for SA, with which I have no problem,
show a constant rate of profit (r = .6667) and the price declining from 1
to .6. The corresponding TA2 calculations , for period 2, show a large
decline in r (to .3793) and a price of .8.

All well and good, *for period 2*. But the TA approach imposes a
one-period lag in evaluating capital, so the results in period 2 are only a
*partial* slice of the full effects of the change being analyzed. In fact,
to see the full effects of the change, the TA calculations need to
continue, so as to capture the further revaluations that are every bit as
much the effects of the original change as are the numerical results in
period 2. And when that is done, the TA calculations rapidly converge to r
= .6667, p = .6, and all the other results that pop out of the immediate SA
solution. This is not a new result, by any means, but it continues to
surprise me that it is regularly forgotten or repressed by TA proponents.

Massimo's (and Andrew's) "falling rate of profit" conclusion is an artefact
of the lag structure imposed, and the fact that they stop after one period
to evaluate the effects of the change. Lagged adjustment processes may
well be important and worth examining, but if you try to draw conclusions
from a one-period application of such an approach, you will end up with an
extremely partial (in both senses of the word) conclusion. I would argue
that there is no meaningful "falling rate of profit" to be seen here; the
particular changes imposed in this example (higher productivity--fewer
workers producing the same output--but also proportionally higher real
wages) mean that the conditions of extraction of *surplus* labor haven't
changed, even though the aggregate scale of labor performed has contracted,
which is why it's entirely reasonable to see the rate of profit remain at
(or return to) .6667. I can't speak for others, bit the SA approach I've
always favored makes no claim that its r and prices will actually reign in
any period, only that that r and those prices are the ones that represent
capitalist equivalent exchange, and that they are therefore meaningful as a
"center of gravity". And the TA approach reaches the same conclusion if it
is extended far enough in time to allow for the full effects of the initial
change to work themselves out through the lag structure. Drawing political
conclusions from a one-period analysis seems pretty suspect, to me.

Bruce B. Roberts
Department of Economics
University of Southern Maine
Portland ME 04104-9300
(O) 207-780-5503
(H) 207-772-7047
fax 207-780-5507-------------------------------------------------