Re: [OPE] The micro dimension of the Financial Crisis.

From: Alejandro Agafonow <>
Date: Sun Nov 09 2008 - 05:09:52 EST

Jerry, the fact that “advances in communications technologies allow for consumers to make their preferences known on a 'just in time' basis” only makes possible a more efficient management of inventories and queues. I advocate indeed that advances in communications technologies allow for reducing the increasing costs to scale of the administration in Market Socialism.   You seem to think that this is equivalent to the Marxian claim in favour of the ex-ante allocation of resources. No, we keep allocating them ex-post, and Dickinson’s point is that even a planned economy needs the primary data of the market. At least a Langian market like that supporting Cottrell & Cockshott’s model.   So, prices that distort labour values never will be redundant. You are missing this fact and this is the basic mistake of most Marxists. Alejandro Valle-Baeza expresses very well this mistake when he writes:   «In a planned economy, prices that distort labour values must be redundant: for example: it would be possible to use labour values to organize social labour, and workers would be aware of the labour time consumed by society and surplus time destined for accumulation. So a social practice that considers redundant prices as a distortion of values is necessary, in order that the money form of value should disappear.» (Valle-Baeza, Alejandro, “Prices for Regulating and Measuring Marxian Labour Values”, pp. 16)      So, in our debate about the shortcomings of mathematics to model human conduct we are confusing several kinds of model:   1) DESCRIPTIVE MODELS: they can tract stable patterns of human conduct.   2) EXPLANATORY MODELS: they can deductively explain the evolution pattern of stable conduct.   3) PRESCRIPTIVE/MANDATORY MODELS: this is the nature of the models behind the “derivatives” that caused the financial crisis. Why they failed? Because mathematics only can deal with classical environments characterized by: A) absence of externalities, B) absence of local saturation of preferences, C) total divisibility of factors of production, D) convexity or absence of increasing returns to scale, and E) temporal homogeneity.   These last models might only fairly work based on institutional/non-axiomatic knowledge. I’m not sure if Cottrell & Cockshott are aware of this, but their model would fairly work thanks to this non-axiomatic design.   Regards, A. Agafonow ________________________________ De: GERALD LEVY <> Para: Outline on Political Economy mailing list <> Enviado: domingo, 9 de noviembre, 2008 1:10:37 Asunto: RE: [OPE] The micro dimension of the Financial Crisis. > Just as Dickinson described the situation several decades ago: >  “The most efficient statistical service in the world will not make it possible to predict, > without a large margin of uncertainty, whether spots will be more popular than stripes > next season.     Hi Alejandro:   That shouldn't be a problem since it shouldn't  take a year to change the design of clothing from spots to stripes.  There asre relevant technological advances which can speed the process both of production and ordering.   On the production side,  there are integrated CAD/CAM technologies employed throughout manufacturing. Furthermore, more efficient  'lean production' systems decrease the need for excessive inventory and allow for faster changes in batch composition.  The consequence is that the 'lead time' required for such minor changes in output composition has been drastically reduced.   On the ordering side,  advances in communications technologies (including the Internet and the cell phone)  allow for consumers to make their preferences known on a 'just in time' basis (this dovetails nicely with the just in time advances in production technologies).  Most people wouldn't at all find it difficult to decide this week whether they prefer a shirt with spots or stripes next week. Hence, Dickinson's claim is being made irrelevant by technological advances.   > How a new film or musical play will go, what will be the reception of a > novel, a gramophone record, or a mechanical ‘Mickey Mouse’.”   People can be asked in advance to make reservations and output composition decisions can then be based on their clearly stated preferences.   One of the positive developments in the USSR was that concerts, musicals, films, etc. were often made freely available to workers. Indeed, performances were often in the factories themselves.   In any event, you should consider - once again - how technological advances affect this process. For example, books and records can be replaced with digital books and digital recordings. This drastically lowers the production - and, especially, the reproduction - costs (not to mention the shipping costs). If someone wants a book or a recording, then all they will have to do is download it.   We need to think of socialism as it is now possible in the 21st Century and not be limited in our vision to what was experience in the 20th Century. It is a new world, Alejandro. A new world that Dickinson did not live to see.   In solidarity, Jerry

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