Gary: > Obviously this is a huge issue, so let me make a small point. The terminology > of "simultaneous" versus "prior" is perhaps a little misleading here. The > simultaneous equation formulations of Marx's value theory don't take a stance > on the temporal priority of determination: they simply maintain that if the > real wage is given the profit rate cannot be explained INDEPENDENTLY of prices > of production. If one accepts this proposition then there are two options for > reading Marx: either (i) the rate of profit he has in mind is an altogether > different entity from what is traditionally understood by the normal rate of > profit: he's talking about a different concept from the one Smith and Ricardo > had in mind when they referred to the profit rate; or (ii) Marx's explanation > of the profit rate, if he means by "profit rate" what Smith and Ricardo meant, > is incorrect. > > Gary > > Diego: I agree in that the simultaneous equations formulation does not mean to forget the dynamical approach. Let's me put an example. We can have declining costs of production if we depict a curve cost with respect to real time. But if we cut in a moment of this period we can imagine a typical U cost curve (with respecto to Q, the firm's output). An U curve is not a mistake per se. Which is a mistake is interpret it as something relating to time. From this point of view, in real time we would have in fact a succesion of different U curves each one of them below the previous one (in general). Likewise, a simultaneous equations formulation gives us the values at moment t. The subsequent moment will give us different values (moment t+1). But due to the greater complication of dynamical formulations, anybody interested in a dymanic approach may and should be interested in the simpler approach offered by static methods (as a first step). I disagree with you in the second part of your paragraph. The real wage you seem to have in mind is not the actual "real wage", but a kind of wage deflacted with theoretical production prices. As you have to accept therefore a difference between actual and normal rates of profit, why do not you accept another difference between the direct-price-rate of profit and the production-price-rate of profit, with the former acting as the regulator of the latter? This is one of the reasons why Marx is above Smith and Ricardo. Comradely, Diego
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