[OPE-L:2940] Re: Okishio, etc.

John Ernst (ernst@nyc.pipeline.com)
Sun, 1 Sep 1996 11:59:08 -0700 (PDT)

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Allin states among other things:

3. Autobiographical notes may not cut much ice, but
when I learned my "marxian economics" it was mostly
from reading Capital, with only a small input from
interpreters such as Sweezy and Mandel. And when I
read Marx's argument about technical change and the
falling rate of profit I understood it exactly in the
sense that is vulnerable to Okishio. That is, I
thought Marx was saying that a discrete technical
change, profitable at existing prices, could -- once
generalized, and once prices had fully adjusted in the
absence of any further "disturbance" -- lead to a fall
in the general rate of profit by increasing the organic
composition of capital. I found the argument persuasive,
and when I first came across the Okishio result (as
retailed by Steedman) I thought it must involve some
sort of micro-macro confusion. But it doesn't. It
really does show that what I had taken to be Marx's
argument was wrong. Some on the list have suggested
that if the Okishio theorem is right, it is nothing
other than Perron-Frobenius. I don't agree. I
think it is a substantial intellectual achievement
to see that a certain result on eigenvalues has
definite implications for economic theory -- even if
those implications happen to be uncongenial from a
Marxist standpoint.

John says:

I think Allin's reading of the manner in which
technical change is described in CAPITAL is the rule,
not the exception. Indeed, we could call Allin's reading
typical. Before we jump to an appreciation of
Okishio, however, let's question the reading itself.
Consider, the following.

1. In Part I of Vol III, Marx introduces the idea that
as machines replace machines, capital saving takes
place. (See Ch 6, pargraph 9) This makes no sense
in the typical interpretation.

2. In Part III of Vol. III, Marx again refers to capital
saving as the norm when machines replace machines.
(See Ch. 15, Sec 4 -- note the difference in the portion
of that section written by Engels.) Again this makes no
sense within the typical interpretation.

3. In the January 1863 outline for the third book of CAPITAL,
Marx planned to introduce rent prior the "The Falling Rate
of Profit." In that same time frame Marx points out that
it is the rising cost of raw materials that causes the
FRP. This, again, does not fit into the typical

4. In the world of Okishio, et. al. Chap 9 of Vol III contains
Marx's crude attempt to set up an equilibrium model of an
economy. Yet, in describing this section, Marx himself notes
that the "model" excludes all sectors of the economy that
produce rent. This must be ignored if Part III of Vol III is to
be seen as "The Law of the Equilibrium Rate of Profit to Fall."

5. As van Parijs pointed out, using a one commodity model, Tugan
first presented the Okishio Theorem albeit in a simpler, cruder
fashion. Yet, in Ch 12 of Vol III, Paragraph 35, we find Marx
himself stating that "if productiveness of labour uniformly
cheapens all elements of the constant, and the variable,
capital", the rate of profit will not fall. At the very least,
this implies that Tugan's refutation of Marx is little more than
an illustration of what Marx intended as part of this notion of

I could go on, but, hopefully, this is enough to cast doubt on an
all-too familiar reading of Marx. What then is the refutation of
of Marx presented by the Okishio? It is a refutation of a carefully
edited Marx. One must snip away that which does not fit in order
to pass it off as a refutation. Yet, I do not think there is clear
evidence of bad faith, just poor scholarship. Moreover, for one
to fall into the typical reading is understandable. In Vol I,
Marx dwells on the transition from the period of manufacture
to the period of large-scale industry. In that transition,
capital-using technical change is the norm. Technical change
within the period of large-scale industry is seldom
described by Marx. Indeed, in the above, note that
the references are not from Vol. I but from Vol III. The lesson
of all this seems to be that to refute Marx one first
has to read his work CAREFULLY, then state his hypothesis, and
finally move to a refutation. We still seem to be at the first