[OPE-L:2967] Re: Okishio and mathematical Economics

Stephen Cullenberg (Stephen.Cullenberg@ucr.edu)
Thu, 5 Sep 1996 10:04:45 -0700 (PDT)

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In response to Andrew's points in ope-l 2951:

1. I think it is a dodge for Wolff/Roberts?Callari, and whoever else, to
say that an equal rate of profit condition is a structural abstraction and
not the outcome of a process. Why this particular structural assumption?
One can point to the literature, of course, and the fact that such an
assumption is commonly made. But that assumption is made most often
understood as the outcome of a competitive process. Thus, the WRC
explanation is only a step removed from being the outcome of a process, and
that's why it can be called a dodge.

2. WRC, and others, could argue that an equal rate of profit condition is
a counterfactual question such as "What would prices of production have to
be in order for a certain uniform real wage, technical conditions of
production, and an equal rate of profit to hold?" But what is interesting
about that question, and those prices? I have some idea why people ask
about Pareto optimality, as well as why they shouldn't. So, I don't find
that a satisfactory response.

3. I don't think you can get competition to enforce capitalist firms to
maximize profit, unless you assume a pre-given rationality of maximization
and predatory behavior. Why do firms squeeze out the maximum profit?
Because some predator is forcing them to. Well, why is the predator doing
it? Because another predator is loose. Etc. Sooner or later, you come back
to the fact that some firm is maximizing profit because that is its
rationality (which sets the whole process in motion). And, in a Cartesian
world, where adequate explanation is assumed to be one where difference
needs to be reduced to prior homogeneous parts, in this case social atoms,
all the atoms, or in this case firms, are modelled as having the same
rationality. If you don't assume this homogeneity (of structure and norm
of behavior) across firms one is hard-pressed to make the argument of
profit rate entropy. Sidney Winter in a long Yale Economic Papers essay in
1964 (?) made the case against competition enforcing profit equalization
against the likes of Alchian and Milton Friedman when heterogeneity of firm
structure and motive is assumed. Basically, firms have a vast variety of
competitive options for survival, as we well know given the world today.

4. I didn't include the work of John, Alan or I in the book as I wasn't
really familiar with it then.


>In ope-l 2929, Allin asks for my response to Steve's judgment that "lurking
>behind an equal-rate-of-profit condition is an (not always explicit)
>assumption of methodological individualism."
>It seems to me that Steve is right when, but only when, (a) the equal
>rate-of-profit condition is invoked as the (realized or unrealized) outcome of
>a competitive process of individual capitals seeking maximum profit AND (b)
>the search for maximum profit is attributed to some "pre-given rationality"
>(to use Steve's expression) shared by the individual capitals. It is not
>clear to me that, for instance, Wolff/Callari/Roberts invoke (a) when they
>assume a uniform profit rate. I think that Bruce (Roberts) justifies this
>assumption as a structural abstraction, not the outcome of a process. And I
>think that Marx, for instance, does not adopt (b), but argues that competition
>forces capitals to try to maximize profit.
>Having read and reviewed (for ROPE) Steve's book on the FRP debate, I think he
>is on more solid ground in his broader argument that the Okishio theorem
>debate has taken place on the terrain of the Cartesian totality and
>methodological individualism. Were Steve to have included the work of John,
>Alan, or I in his discussion of the debate, however, I think that this
>argument would be weakened, since we dispute the theorem on value-theoretic
>grounds, and not in terms of its modeling of individual goals and behaviors.
>Andrew Kliman

Stephen Cullenberg office: (909) 787-5037, ext. 1573
Department of Economics fax: (909) 787-5685
University of California Stephen.Cullenberg@ucr.edu
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