[OPE-L:2980] Re: Okishio and mathematical Economics

andrew kliman (Andrew_Kliman@msn.com)
Fri, 6 Sep 1996 12:37:49 -0700 (PDT)

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I think Steve has already dealt with Paul C's (ope-l 2975) objection to the
following. (That doesn't mean I agree with Steve; I'm still unsure). But I
have slightly different objections:

Steve wrote:
>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).

Why do you implicitly assume the process has to be set in motion (from an
initial state in which it did not exist)?

To explain why an event occurs, one need not locate its historical or logical
origin. I think you are confusing "why" with "how."

Even if there were some "original" firm the innate rationality of which was to
maximize profit, that is insufficient to explain the persistence
(reproduction) of the phenomenon. The self-reproductive nature of the
phenomenon, however, is sufficient to explain why it occurs (though not how it
comes into existence).

Even if there were some "original" firm the innate rationality of which was to
maximize profit, one cannot infer that all "subsequent" firms share the same
innate rationality; the predatory explanation, if true, is sufficient in their
cases. (In Steve's book on the FRP, he emphasizes the homogeneity of the
individuals in methodological individualist strictures concerning

In addition to the competition argument, Marx gives a very different sort of
explanation of this phenomenon-a *noncausal* one. Capital is self-expanding
value and the capitalist qua capitalist is the personification of this
process. *If* one is looking for a causal explanation, this one will not do,
but itsn't the demand that all explanations be causal a characteristically
Cartesian one? It seems to me that the fact that this explanation was given
shows that profit maximization need not be grounded in methodological
individualism. (I mean this descriptively; I'm not sure from Steve's account
whether he is making descriptive or prescriptive statements. My post in
response to Allin's query answered on the descriptive plane, which was how I
initially understood Steve's claim, but his response seemed to contain several
prescriptive arguments.)

Andrew Kliman