[OPE-L:3190] Re: IVA and all that

Steve Keen (s.keen@uws.edu.au)
Mon, 30 Sep 1996 12:53:11 -0700 (PDT)

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I have to side with Jerry on the uselessness of trying to establish the
TSS case using a one sector model. While a couple of his points are not
exactly right--there are one sector models which don't have the
knife-edge effect (specifically nonlinear ones a la Kaldor & Goodwin,
and a reworked form of Hicks's bastardisation of Harrod)--he is spot on
that such a model simply can't make or break the TSS interpretation.

The simplest reason is that what the hell do prices mean in a one-sector
model? You need at least 2 sectors to have even relative prices.

Duncan's defence that the 1-sector model is a special case of the
general contains a fallacy. The one-sector neoclassical growth model is
a "special case" of a multi-sectoral model too, but that one-sectorality
was a large part of the critique Sraffa developed (which, Steedman
apart, we should never forget was developed specifically to undermine
neoclassical theory). More importantly, the "dimensionality" of a
problem can and normally does have a profound effect on it: a change in
dimension fundamentally alters the problem, so that a "n-1" dimensional
problem is not a special case of an n-dimensional one, but an entirely
different ballgame.

The best illustration here is the "3-body problem". The gravitational
influence of one heavy body on another can be solved analytically. That
of three heavy bodies on each other is insoluble, and gave rise to chaos

I would argue that TSSers should start with at least a 2-sector model
(Marx, after all, used 2 or 3 sectors), which makes it possible to bring
in relative prices based on the labor value of each sector. Technical
change which alters the production method for "constant capital" would
then have a price to alter.

Steve Keen