[OPE-L:3946] Re: Frank Thompson's Theorem

Gil Skillman (gskillman@wesleyan.edu)
Tue, 7 Jan 1997 14:29:02 -0800 (PST)

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I won't presume to speak for Frank, but I would like to respond to a
particular claim by Andrew in characterizing Frank's paper. I have
repeatedly found that TSS advocates on this list have made claims about
supposedly intrinsic features of the "simultaneist" approach which are
spurious at best. I think the current case provides a good example. In
describing and assessing Frank's result, Andrew says:

>At the ASSA conference in New Orleans, Frank Thompson presented a paper, "The
>Composition of Capital and the Rate of Profit: A Reply to Laibman." I wasn't
>able to attend the session, since my own paper ("The Okishio Theorem: An
>Obituary") was for some reason placed by the URPE session organizers into a
>different panel at the same time, but I got a copy of the paper from Frank.
>In it, he has a beautiful theorem which shows that, if the Okishio theorem
>were true, then a rise in the value composition of capital cannot lower the
>equilibrium rate of profit and must raise the equilibrium rate of profit if
>the real wage rate is an increasing function of the demand for labor. Putting
>the same thing differently, simultaneism implies that a rise in the VCC raises
>the profit rate, instead of lowering it. Once more, then, simultaneism leads
>to a result that contradicts Marx's value theory.

Contrary to Andrew's claim, Frank's result has nothing whatsoever to do with
simultaneism _per se_, as he would have found had he examined the other two
papers in the session, by David Laibman and me (copies of which were and are
available). Using somewhat different analytical procedures, our results
show that the connection between the composition of capital and the rate of
profit depends not on simultaneism vs. sequentialism, but rather static vs.
dynamic contexts.

Employing absolutely simultaneist, but dynamic, models of an accumulating
capitalist economy, we show that a trend of (viable) VCC-raising technical
change leads to a tendential decline in the steady-state (my terminology) or
"consistent-path" (David's language) rate of profit under standard
assumptions about production conditions.

Of course, both of our frameworks share the "T" or "temporal" aspect of the
TSS system, the aspect I've always lauded it for. The "sequentialist"
aspect, where it is not logically suspect, is as far as I can tell
essentially beside the point, at least with respect to the question of
establishing a tendency for the rate of profit to fall.

David and my models also have the virtue, not shared by Andrew's 1988
account, of incorporating Marx's explicitly stated presumption that the rate
of profit is self-regulating via *endogenous* variations in the rate of
capital accumulation.


>This is a beautiful example of the incompatibility of Marx's value theory and
>simultaneism. Frank's theorem does not carry over to the successivist
>interpretation, because for us, and Marx, the profit rate can fall when the
>real wage rate falls.

But as discussed, Frank's result is **certainly not** " a beautiful example
of the incompomaptibility of Marx's value theory and simultaneism." A
dynamic simultaneist treatment also establishes a basis for tendentially
falling profit rate.

But again, the "temporal" aspect of the TSS approach is surely worth pursuing.