From: Jerry Levy (Gerald_A_Levy@MSN.COM)
Date: Mon Mar 19 2007 - 10:20:19 EDT
> My experience from simulation was precisely that the models where
> much less stable than real existing capitalism, because everybody
> reacted (herd behavior) to the same price signals, but the
> heterogeneity of firms, the different/conflicting strategies makes
> the system more stable.
Hi Anders:
How did you *test* what the causes of relative stability were and how
important was each?
(Re 'herd behavior'):
There are, as you know, many different types of dynamic models.
Which one did you use it and why did you chose it over other dynamic
model types?
oooooooooooooooooooooooooooooooo
The questions I have (in answer to another question of yours) include:
-- whether you can plug in all of the relevant variables into the model of
the trade cycle and produce economically meaningful results;
-- whether the reality that the model seeks to describe is
overdetermined and can't be captured in a formal model.
Here are a few more of those variables (to be added to the ones I listed
before).
-- change in the size of the working population;
-- changes in the value of labor power;
-- changes in productivity;
-- changes in the hours of work;
-- changes in the rate of productive (v. unproductive) consumption of s;
-- to what extent the commodities being purchased by workers and other
classes are being produced abroad;
-- presence of obstacles to the mobility of labor power;
-- the extent to which there is oligopolistic pricing and which class or
classes pays the rent;
-- the effect of the petty commodity ('informal') sector and the
'underground economy' on the economy including the VLP and the
non-labor costs of production of firms;
-- changes in the debt burden of workers and others;
-- changes in expectations on the part of all classes (which can affect the
timing of savings, consumption, and investment);
-- changes in the composition of demand;
-- 'long cycles', including the timing of investments in constant fixed
capital including
-- the turnover time of fixed capital;
-- changes in the foreign exchange rate;
-- state policies on trade;
-- the effects of international working class struggles,
-- changes in health care costs, life expectancy, pensions, etc. (all of
which can affect the VLP),
-- the effects of regional trade associations (e.g. membership in the EU)
on everything else, etc.
It would be very easy to add to this list, would it not?
In any event, the best cure for my skepticism (which arose in response to
the exaggerated claims by other Marxians about what dynamic models
could be used to show) is to go ahead and produce a meaningful dynamic
model of any actually existing capitalist economy which includes all of
the relevant variables and to explain the choices which were made in the
selection and specification of that model.
In solidarity, Jerry
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