Rakesh: You are raising an issue that is far beyond my comparative advantage, dare I use such a Ricardian term. I wasn't referring to Blaug's critique of linear models. Rather, the edited volume by Mandel and Freeman, Ricardo, Marx, and Sraffa, is quite critical of linear models. Unfortunately, I haven't kept up with the debate in this area. peace, patrick At 11:46 AM 5/25/00 -0400, you wrote: >Patrick, thank you for this reply. > > >>I think I understand your argument. Consider the following. >> >>1+r(p1*a11 + p2*a21 + w*L1) = p1 >> >>1+r(p1*a21 + p2*a22 + w*L2) = p2 >> >>Are you saying that the technical coefficients (a11, a12, a21, & a22, L1, >>and L2) are determined simultaneously with the price system? > >Well yes. How could the technical coefficients, which are industry >averages, be determined beforehand or at least before the determination of >the level of output for each commodity unless one wanted to simply make the >supposition that there are *fixed* proportions between inputs in every >industry so that nothing *by defintion* depends on the scale at which >output is produced. Only by this assumption does it seem to make any sense >to *begin* with the so called average technical conditions of production. >The assumption seems unwarranted to say the least to me, so I am going to >begin the way Fred does in his monetary-macro interpretation in which "the >inputs of constant and variable capital are taken as given in price terms >in the determination of prices of production and thus do not have to be >transformed from value magnitudes to price magnitudes." (Fred, 1991; see >also Mattick Jr and Carchedi). > >It seems to me that the real problems with the labor theory of value are >not in terms of the transformation problem (transforming the inputs, the >two equalities); rather the attack made by the lion of the anti Marxists >Bohm Bawerk remain the most potentially damaging. It's possible that even >Marxist economists who are themselves comfortable with static equilibrium >models in which money is kept on the margins feel more at home with >Bortkiewicz, Sraffa and Samuelson in this shadow world of the >transformation problem than they would confronting the philosophical issues >raised by Bohm, so Marxist economists are guilty of keeping the debate on >this narrow and now well worn terrain? > >>Some have made this criticism of linear models. > >That old communist Blaug? > >Yours, Rakesh > > > >