[OPE-L:2436] Dynamical Systems

John Ernst (ernst@nyc.pipeline.com)
Fri, 31 May 1996 00:09:25 -0700

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There is much to be said about your post
concerning "Dyanmical Systems." (OPE-L:2432)
Here, let me take up one matter that seems to
be a part of what you are saying.

Among other things Alan says:

But the *paradigm* itself, the method of working, cannot impose
any particular set of transition rules. What it should specify
is the axiomatic foundation which any actual set of transition
rules should respect among which I would number

(1)true temporality (see above)
(2)a distinct category of value
(3)linear values and prices
(4)objective values; the value and price vectors are the same
for everyone
(5)value cannot be created or destroyed in exchange
(6)new value added in any period is directly proportional to
total hours worked
(7)physical stock conservation: total use value of each type
= previous total, less consumption, plus production.

John says:

Let me simply ask about point(6). Is the "new value" to which
you refer "social value" or "individual value"? I am assuming
that the "new value" is expressed in terms of prices.

If your answer is individual value, then I see no problem as long
as social and individual values can diverge within any period of
production. If, on the other hand, (6) refers to the social
values, it would seem that what we would be constructing is a
dynamic system with one HUGE constraint. Why would we do so?
To be sure, this may conflict with the notion that "the labour
value added in each period be defined independent of the
price level." So what? We have the idea of individual value
which gives us a point of reference within each period. Must
we force the social value to the level of the individual value
in each and every period? Does not this imply that for some
reason there is not enough effective demand to maintain the
prices above their individual values? Why make this assumption?
Rather should we not show within the system itself the how's
and why's of decreases in social value?

Well, those are enough questions for this post. Perhaps, I assumed too
much in posing them. But I do think in TSS models that go after Okishio
the two-period approach in which prices fall in the second period all too
often lead many to think that there is
something automatic or, if you will, axiomatic about price
decreases due to increases in productivity. Using this axiomatic
approach the decrease in the rate of profit rather an insufficient
mass of profit often becomes the basis for a theory of crisis.