[OPE-L:3179] Re: IVA and all that

JERRY LEVY (jlevy@sescva.esc.edu)
Sun, 29 Sep 1996 18:28:40 -0700 (PDT)

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While I certainly support Duncan's call in [OPE-L:3178] for us to
attempt to develop a "catalogue of the things we seem to agree on",
I am less clear than ever about what, if anything, we *do* agree on.

I *thought* this discussion concerned, in part, technical change and
the FRP. Am I correct?

Yet Duncan, John, and Andrew want us to focus now on a "circulating
capital 1-sector model." Duncan believes that "all of the
methodological points can be made in this context."

Can they?

* I thought that the discussion of technical change and the FRP by
Marx was made in the context of a "level of abstraction" (pace
Andrew K) where there was *competition*. How can you have competition
in a 1-sector model?

* I thought that the FRP concerned the tendency for the *general* rate
of profit to fall. Clearly the LTGRPD was presented *after* the
examination of the formation of a general rate of profit. Yet,
now we are being asked to (for the time being) not consider
different branches of production. Consequently, the possibility
of having different branches of production with differing compositions
of capital is assumed away through the methodological decision to
employ a 1-sector model. Is this legitimate?

* It has long been known (since at least the mid-70's) that *all*
1-sector "growth models" exhibit certain pecularities akin to the
"razor edge" in the Harrod-Domar model. Since we are discussing the
"transition" from one period to another, *why* are we then using
a 1-sector model? Yes, I know -- it simplifies the equations. But
at what cost? One thing is certain: whatever "agreements" we come
to in the case of where we are examining a 1-sector model, we can
not assume that either the results or agreements will be the same
when we examine a multi-sector model. (John: all of this stuff should
be old hat to you since you were at the New School in the mid-70's
when Ed Nell liked to talk about this issue).

* Why are we assuming a circulating-capital model? As far as I can tell,
the only reason is because *Okishio* (not Marx) made this assumption.
Of course, Roemer attempted to generalize the Okishio results in a
model where there was "fixed capital." I thought (and John seems to
agree) that in a discussion of the FRP in *Marx* _constant fixed
capital_ is important. Yet we assume it away -- all in the name of
simplifying the equations.

* I find it more than a little ironic that with all of our discussions
about the forms that technical change takes in the period of
"modern industry" and after our extended discussions of straight
and moral depreciation, we now assume a circulating capital model.

* At the very least, any suggestions that what we are discussing concerns
technical change, depreciation, or the FRP in *Marx* should be
dropped. Or, would anyone actually suggest that the process that
Marx examined can be explained within the context of a 1-sector
circulating capital model?

I don't ask that others agree with the above. Furthermore, if others want
to use a 1-sector circulating capital model to examine possible areas of
agreement and disagreement among the TSS, SSS, and standard
interpretations -- go right ahead. The above, however, is intended
to express my dissent with that procedure.

Yes, yes ... I know: they're just *assumptions*. Yet, assumptions have
to be examined ... and sometimes the assumptions specified can assume
away the very problem(s) under discussion.

In OPE-L Solidarity,