[OPEL:6218] Re: What is the debate is about?

Ian Hunt (Ian.Hunt@flinders.edu.au)
Wed, 25 Feb 1998 12:55:05 +1030 (CDT)

I agree that economics is highly ideological which comes out most in its
applications to public policy, where it is currently being used to
dismantle all 'unproductive' expenditure by governments, etc.

It is less so in high theory, although there often seems to be a fair
degree of confusion over the interpretation of economic models. An
empiricist like Joan Robinson is quite justifiably exasperated at the
refusal of economists to explore how market economies operate in
non-equilibrium situations. However, if you accept, as I do, that the laws
of physics "lie", to use Nancy Cartwrights term though not with precisely
the same meaning (where will it end?), but can nevertheless be explanatory,
then you will not dismiss equilibrium analysis entirely. Physicists remain
better of than economists, because they can discover or construct
situations in which their abstractions approximate to reality, whereas the
abstractions of neo-classical equilibrium analysis can never be
approximated in reality.

In any event, I think there are uses for tendential analysis (what would
prices be assuming a balance between supply and demand and no technologicsl
change). Whta is wrong is supposing that this is a compl;ete or approximate
picture of real world markets.

My problem with the 'historical' analysis as I understand it (and I confess
that I have not out of pressure of time done enough work on it to be
confident that I have got it right) derives from a thought experiment. As I
understand it, thr historical analysis takes cycles of production, say M -
lp,c ...P.... C - M', and takes Marx's analysis in Vol 3 as a a discussion
of what happens in the course of that cycle. So, initially, money is used
to purchase labour power and means of production at prices equal to values,
and in the end a product is sold at a price which takes into acount the
distribution of surplus value between capitals. My difficulty is that any
such acount, as I see it, should work when there is no change in technology
or supply and demand, so that selling prices from one production period to
the next are the same.(I can't see why the relationships dealt with shoul;d
crucially depend on technological change or imbalances in supply an demand)
My difficulty then is that the selling price of a given commodity, say
steel, at the end of one production period must be the same as the purchase
price of steel in the subsequent period (if there is no middle man). But
then, on the historical analysis, this price will be both equal to and
different from the value of steel (which is also the same from one period
to the next as no technological changer has occured)

As I say, I might have misunderstood the theory. But what I am not doing is
assuming that equilibrium is everything. I use the case of equilibrium
because I can't see why the relationships being modelled should depend on
disequilibrium in production or circulation. Of course, real world markets
are in disequilibrium, so you will not be able to observe the difficulty I
have with the historical model, but I'm not such an empiricist that I think
this matters decisively. (while I think Paul'
s statistical analysis and Machover's probabilistic analysis are useful and
necessary, I don't discard other models just because they are not mirrored
in reality: the supposition that useful science results in models which
miorror reality may explain the willingness of neo-classicals to suppose
that reality is as they model it, or could be if only one could get
governments, trade unions, cartels, etc out of the picture.