[OPE-L:3953] Re: Frank Thompson's Theorem

andrew kliman (Andrew_Kliman@msn.com)
Thu, 9 Jan 1997 16:07:17 -0800 (PST)

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A reply to Gil's ope-l 3952. I'll stick to the issue of whether the Thompson
theorem shows the incompatibility of Marx's value theory and simultaneism ---
which was the point to which Gil originally objected --- and leave the rest
for another post.

I had written: "What Frank says, however, and what his theorem implies, is
that, in such cases, the rise in the VCC is not a CAUSE of the fall in the
profit rate. Instead the rising VCC tends to COUNTERACT the fall caused by
the rise in the real wage."

Gil replied: "Untrue. Our [Laibman/Skillman] results show that a time trend
of VCC-raising technical change
is a CAUSE of the fall in the steady-state (my language) or consistent-path
(David's language) rate of profit, in the sense that under the stated
conditions, there would be no such fall in the absence of that trend of
technical change. Thus in particular there can be NO sense in which a time
trend of VCC-raising technical change can be said to be a "counteracting"

Hmm. EXACTLY WHAT is "untrue" about what I wrote?

I find Gil's language very confusing. Note that what he has written gives the
impression of contradicting what I had written, but does not actually do so.
I wrote that "the rise in the VCC is not a CAUSE of the fall" and Gil responds
that "a time trend of VCC-raising technical change is a CAUSE of the fall." A
logician such as Gil should see that the latter is not necessarily the
negation of the former. I wrote that "the rising VCC tends to COUNTERACT the
fall," and Gil responds that "there can be NO sense in which a time trend of
VCC-raising technical change can be said to be a 'counteracting' tendency."
Again, the latter is not necessarily the negation of the former.

I'm wondering whether Gil is not merely saying that he and David are modeling
situations in which accumulation ACCOMPANIES a rising VCC, and the profit rate
falls. Taking the whole thing, the accumulation and the rising VCC, together,
and labeling it "VCC-raising technical change," we then have "VCC-raising
technical change" causing an FRP.

But of course. If you murmur magical incantations at a flock of sheep and
feed them arsenic at the same time, you'll kill them. The question is whether
the magical incantations THEMSELVES cause the sheep to die. To determine
that, you HAVE to hold the other influences constant. Don't feed the arsenic.
Abstract from accumulation. These are the conditions of the Thompson
Theorem. Hic Rhodus! Hic Salta!

I had written that "I would be absolutely flabbergasted if anyone could
produce even a single dynamic example that satisfies (a) through (f), that
exhibits nonincreasing labor demand, and that results in a falling
SIMULTANEIST profit rate."

Gil replies: "To state the problem in that way is to miss the central point.
Taking Marx's starting point of an *accumulating* capitalist economy as given,
it is meaningless to speak of 'non-increasing labor demand.' Of course it's

Well, this lets the cat out of the bag. Gil at first had said that "Frank's
result has nothing whatsoever to do with simultaneism _per se_." Now we learn
that what Gil means by "nothing whatsoever to do with simultaneism _per se_"
is that, when you retain the simultaneism of Frank's model, but also let labor
demand increase, you get different results than Frank gets when he assumes
that labor demand doesn't increase!!! The Lucas-Rapping results, by this way
of reasoning, have "nothing whatsoever to do with" rational expectations _per
se_, because sticky wage models with rational expectations come to different
results!!! The existence of animal life on this planet has "nothing
whatsoever to do with" oxygen _per se_, because it also depends on hydrogen!!!
Ope-l has "nothing whatsoever to do with" the existence of e-mail, because
if e-mail existed, but there were no Jerry Levy, there would be no ope-l!!!

Assume everything that Frank does, including simultaneism, and his results
carry over into a dynamic context. Assume everything that Frank does *except
simultaneism* and his results don't hold. Wouldn't it seem that they might
have a teeny weeny itsy bitsy bit to do with simultaneism?

Gil: "Andrew is insisting on a *comparative static* assessment of an
essentially *dynamic* phenomenon, which is exactly what David's and my
approaches reject."

I'm not insisting on anything. Pursue your approaches all you want. Reject
the Thompson theorem as a model of how technical changes actually occur all
you want. But if you want to determine whether simultaneism implies that a
rising VCC ITSELF can lower the profit rate, you need either to abstract from
increases in labor demand or to evaluate the impact of the rising VCC by
taking the first partial of the profit rate with respect to it.

ONE'S INCANTATIONS. Such obscurantism has rightly given "Marxian economics" a
bad name. I'm no analytical Marxist, but I have to say that Roemer has been
right to protest against it. He insisted that, when you want to examine
whether technical change ITSELF can lead to an FRP, you have to hold the real
wage constant. If one rejects such methodology, the doors are wide open to
obscurantism and apologetics.

I stand as confirmed as before that Frank's theorem is a beautiful example of
the incompatibility of simultaneism and Marx's value theory.

Andrew Kliman