Duncan K Foley (dkf2@columbia.edu)
Mon, 15 Jan 1996 12:34:48 -0800
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Next message: glevy@acnet.pratt.edu: "[OPE-L:788] Re: More Digression"
Previous message: Iwao Kitamura: "[OPE-L:786] Re: Digression:
two qestions and a proposal"
If you write down an explicitly disequilibrium model with time subscripts
differentiating commodities at different times, thus allowing for prices
of inputs and outputs to differ, one solution will be the equilibrium
prices where the inputs and outputs have the same (relative) prices. This
is also the easiest solution to analyze, and its existence is a good
indication that the equations make sense. As an historical aside, this
seems to be the approach Marx took, for example, in his work on
reproduction schemes.
_____________
As I have tried to show in my previous post, this reference to
equilibrium prices in the reproduction schemes turns a justifiable
simpflying assumption (contant value) in the context of the analysis
of a circulation problem into a controlling methodological postulate
for all economic analysis. As I have already pointed out, Marx is
explicitly talking about why prices of production change in vol 3,
part 2: the first reason, a change in the general rate of profit,
manifests itself clearly only in the long run, leaving us to assume
that manifest shorter term changes in prices of production are caused
by changes in the values of the commodities themselves. There are
countless references to changes in productivity, making it
unbelievable that Marx had not abandoned the assumption of constant
value or unit prices. There is simply no methodological reason to
import the completely unrealistic, albeit simplfying, conditions from
vol 2 into volume 3. And if Marx's value-theoretic equations for r
and prices of production make no sense due to the misuse of
assumptions retained because they give us "the easiest solution to
analyze", why should we leave Marx's value theory vulnerable on such
(flimsy) grounds?
Is it not possible to save honor all sides? There is indeed a
transformation problem in terms of the easiest solution to analyze
(equilibrium prices or simple reproduction); there need be no
transformation problem in conditions which pay the least respect to
reality, however more difficult these realistic conditions may be to
analyze.
Would any other theory but a revolutionary critique of bourgeois
society be thought to have fatal logical problems if only the
introduction of reality was needed for it to make sense?
All the best, Rakesh
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