At 13:29 7-03-1996 -0800, Bruce Roberts wrote:
>Some quick thoughts in response to Massimo's numerical example comparing SA
>and TA approaches (parts 1 and 2 of his post #1357).
>
>I think his conclusions are a perfect example of an overreaction to
>differences that are largely apparent rather than real. His cases SA2 and
>TA2 keep the aggregate real wage in terms of corn constant, as total labor
>performed falls. The computations for SA, with which I have no problem,
>show a constant rate of profit (r = .6667) and the price declining from 1
>to .6. The corresponding TA2 calculations , for period 2, show a large
>decline in r (to .3793) and a price of .8.
>
>All well and good, *for period 2*. But the TA approach imposes a
>one-period lag in evaluating capital, so the results in period 2 are only a
>*partial* slice of the full effects of the change being analyzed. In fact,
>to see the full effects of the change, the TA calculations need to
>continue, so as to capture the further revaluations that are every bit as
>much the effects of the original change as are the numerical results in
>period 2. And when that is done, the TA calculations rapidly converge to r
>= .6667, p = .6, and all the other results that pop out of the immediate SA
>solution. This is not a new result, by any means, but it continues to
>surprise me that it is regularly forgotten or repressed by TA proponents.
>
>Massimo's (and Andrew's) "falling rate of profit" conclusion is an artefact
>of the lag structure imposed, and the fact that they stop after one period
>to evaluate the effects of the change. Lagged adjustment processes may
>well be important and worth examining, but if you try to draw conclusions
>from a one-period application of such an approach, you will end up with an
>extremely partial (in both senses of the word) conclusion. I would argue
>that there is no meaningful "falling rate of profit" to be seen here; the
>particular changes imposed in this example (higher productivity--fewer
>workers producing the same output--but also proportionally higher real
>wages) mean that the conditions of extraction of *surplus* labor haven't
>changed, even though the aggregate scale of labor performed has contracted,
>which is why it's entirely reasonable to see the rate of profit remain at
>(or return to) .6667. I can't speak for others, bit the SA approach I've
>always favored makes no claim that its r and prices will actually reign in
>any period, only that that r and those prices are the ones that represent
>capitalist equivalent exchange, and that they are therefore meaningful as a
>"center of gravity". And the TA approach reaches the same conclusion if it
>is extended far enough in time to allow for the full effects of the initial
>change to work themselves out through the lag structure. Drawing political
>conclusions from a one-period analysis seems pretty suspect, to me.
>
>Bruce B. Roberts
>broberts@usm.maine.edu
>Department of Economics
>University of Southern Maine
>Portland ME 04104-9300
>(O) 207-780-5503
>(H) 207-772-7047
>fax 207-780-5507-------------------------------------------------
I agree with almost all this post, except the reference to "centers of
gravity" a' la Garegnani. I would rather say "ideal points of reference" a'
la Pasinetti, which are not the same thing.
riccardo
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Riccardo Bellofiore e-mail: bellofio@cisi.unito.it
Department of Economics Tel: (39) -35- 277505 (direct)
University of Bergamo (39) -35- 277501 (dept.)
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