This is a response to Ajit's (3934). I think we have reached a fundamental methodological issue, which is progress. On Mon, 2 Oct 2000, Ajit Sinha wrote: > If something is "given", then you must know it. So could you tell us > what is the value of m in the US these days? Since you have already > admitted that you don't know what that "given" m happens to be, nor do > you know what determines it, then in plain English you are claiming that > your "m" is unknown. This is what people mean by unknown in mathematical > formulations. An unknown does not mean it is unreal, i.e. that it does > not exist. It only means that we do not know its value, which is what > you have admitted repeatedly with respect to m. Thus your above > equation has two unknowns. Cheers, ajit sinha Ajit begins with a very strong statement (emphasis added): "If something is `given', then you must KNOW it." Ajit seems to me to be saying that the only givens permissible in an economic theory are observable magnitudes. Ajit, do I understand you correctly? If so, then Ajit is presuming a type of EMPIRICIST logical method - that observable magnitudes are the only permissible givens in an economic theory. But empiricism is not the only type of logical method. It is also permissible to assume, or take as given, unobservable magnitudes. These unobservable magnitudes are then used to explain observable magnitudes and other observable phenomena. This would be a kind of HYPOTHETICAL-DEDUCTIVE logical method. I argue that Marx's logical method is this kind of logical method - that is assumes unobservable magnitudes and then uses these unobservable magnitudes to explain observable phenomena, etc. I think this is what is meant by all of Marx's talk of "essence" or the "substance of value" and "forms of appearance". The essence or substance of value (abstract labor) is unobservable (it has a "ghostly objectivity"), but it is used to explain the observable "forms of appearance" of value. I have argued that the variable m in Marx's theory (the money-value produced per hour of abstract labor) is such an unobservable given. But it is not just m that is unobservable and taken as given in Marx's theory. So also is L, the most important variable in the theory! L is a quantity of ABSTRACT LABOR. Abstract labor is not directly observable as such (because of unequal skills and unequal intensities). Therefore, if Ajit's empiricist method were followed, not only would it be impermissible to take m as given, but it would also be impermissible to take L as given. In which case, there would be no labor theory of value at all (at least as I understand Marx's labor theory of value). Marx's theory is not the only economic theory to take as given unobservable magnitudes. Microeconomic theory is also based on initial givens that are not observable - the utility function and the production function. No one has ever seen a utility function or a production function, and no one knows what they actually are in the real economy today (and there are millions of them!). And yet micro theory TAKES AS GIVEN these unobservable functions. Indeed, even the initial givens in "Sraffian" theory (as I may use the term loosely for now) - the physical quantities of inputs and outputs in each industry - even though these physical quantities are in principle observable, we certainly don't know what they are in the real economy today. The input-output tables are gross aggregations of tens of thousands individual industries into one hundred or so "sectors". We don't know what the quantities of inputs and outputs are for the tens of thousands of individual industries. Therefore, a strict interpretation of Ajit's empiricist methodology would also seem to rule out Sraffian theory. If we don't KNOW the actual quantities of inputs and outputs in the n industries in the economy, then we cannot take the quantities of inputs and outputs in these n industries as given. Ajit, what is the difference between Sraffian theory taking the unknown physical quantities as given and Marx's theory taking the unknown m and L as given? In any case, I insist that it is logically permissible to take as given unobservable magnitudes. Empiricist methodology is not the only permissible methodology. I look forward to further discussion. Comradely, Fred P.S. Gil seems to agree (in 3933) that it is permissible to take unobservable entities as given, as long as these unobservable entities are used to derive predictions about observable magnitudes. I argue that this is what Marx's theory does. I will respond to Gil's post soon.
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