Thanks Andrew, Just a quick comment. Your observation that a dynamic n-equation price model has 2n givens because initial prices are an intrinsic part of an ODE are of course obvious to me--in fact, you might remember an aside in a recent post that I rejected a paper I was given to referee because the author had both an equation for prices, and an equation for the rate of change of prices. So my comment about being open-dimensional does not relate to this at all. I said two things too--either you'd have to keep the system open dimensional to avoid a TP, or if you did close it, you would get the TP in a dynamic guise if you insisted on the premise that labor is the only source of value, and hence of profit. I don't per se object to open-dimensional analysis, by the way: strictly speaking, capitalism is open-dimensional because technical change keeps generating new products (and my colleague Russell Standish has written an excellent paper on that in "Commerce, Complexity and Evolution: [CUP 2000]). But I would object to it if it were undertaken solely to avoid the TP. Cheers, Steve At 23:37 21/10/00 -0400, you wrote: >In reply to OPE-L 4206. > >: I expect that if you set out a full TSS system of dynamic equations of >: expanded reproduction with technical change, you would have a system >: which either (a) had the same transformation problem flaws as the >: classic static model or (b) had more unknowns than equations. > >There is no flaw, no "transformation problem," even in the static case, >once one heeds Marx's warning not to "go wrong" by equating the value of >capital with the value of the means of production and labor-power. Lots >of people, on and off this list, by no means all proponents of the TSS >interpretation, will tell you that. > >As for counting equations and unknowns, and the "anything goes" >misunderstanding in general, we have heard this often. And we've tried >to clear up the misunderstanding. See especially pp. 50-51 of the paper >by Ted McGlone and I in ROPE last year, which you have. (The term >"anything goes" is the term we used in that paper -- I don't mean it as >a comment on the debate between Rakesh and Allin.) > >For simplicity, assume an n-sector economy with a uniform rate of return >on capital advanced, and no fixed capital or joint production. By >definition, the equations relating prices and the profit rate are > >P[t+1] = P[t]*M*(1 + r[t,t+1]) > >I assume all terms are familiar. > >There are n equations. It may look as though there are 2n + 1 unknowns >but, in a dynamic system, the n P[t] terms are givens, i.e. they are >already determined or initial conditions. So actually there are only n+1 >unknowns, the n P[t+1] terms and r[t,t+1]. Only 1 degree of freedom >remains. This is true for Marx, it is true for numeraire theory, it is >true for PK theory. It is just true. The differences among the theories >boil down to the differences among their (single) closing equations. >Simultaneism works slightly differently, but essentially it is a version >of numeraire theory. > >So it just isn't true that Marx's theory, as understood by its TSS >interpretation, cooks the books by having more degrees of freedom than >everyone else has. Nor does the TSS interpretation dodge internal >inconsistencies by invoking a perpetual disequilibrium in which "anything >goes" -- note again that the profit rate in the above equations is >assumed to be uniform. Rather, the TSS interpretation accurately >reproduces Marx's results because its closing equation *is* the >determination of value by labor-time -- assuming that the monetary >expression of labor-time is constant, the increase in aggregate price >(total price of output minus the total price of used-up inputs) is >the monetary expression of the living labor extracted. > >It seems to me that the foremost empirical virtue of this principle is >that it, unlike the other closing equations, predicts the deflationary >or disinflationary tendency of productivity growth. > >Andrew Kliman > > > > > Dr. Steve Keen Senior Lecturer Economics & Finance University of Western Sydney Macarthur Building 11 Room 30, Goldsmith Avenue, Campbelltown PO Box 555 Campbelltown NSW 2560 Australia s.keen@uws.edu.au 61 2 4620-3016 Fax 61 2 4626-6683 Home 02 9558-8018 Mobile 0409 716 088 Home Page: http://bus.macarthur.uws.edu.au/steve-keen/
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