From: Gerald A. Levy (Gerald_A_Levy@MSN.COM)
Date: Wed Feb 25 2004 - 08:28:02 EST
Good morning, Andrew T. > This is something that I am currrently grappling with, so it is very useful for you to raise it. My reading of the Grossmanite defence against the Say's Law charge is that Grossman assumes that prices are equivalent to values, as in Capital vs I and II, and therefore supply is assumed equal to demand. Now the same charge has been levelled against the Marxian reproduction schema that Marx assumes that supply and demand are in balance, and therefore Marx assumes Say's Law to hold. The reply might be that Marx considers the reproduction schema as a special extreme in which balanced growth takes place; he explores the unlikely conditions under which supply and demand are in balance. By demonstrating how difficult it is to achieve this balance Marx in fact falsifies Say's Law, showing that supply does not automatically create demand. Does this seem a sensible interpretation? < Shoul (_QJE_, 1957) is very good on this topic, I think (see reference below). A rather large part of Marx's analysis of the process of capitalist circulation in Volume II can be seen as a critique of Say's Law. His examination of the reproduction schema -- which reveal the abstract, formal possibility of crisis -- could be seen in this light. > Any comments gratefully received, or relevant references I should check out. < Have you seen Bernice Shoul (1957) "Karl Marx and Say's Law" in _The Quarterly Journal of Economics_, LXXI [reprinted in Joseph H. Spengler (ed.) (1960) _Essays in Economic Thought: Aristotle to Marshall_. Chicago: Rand McNally & Company]. Her dissertation is also relevant to this topic. Shoul was a follower of Grossman so her perspective on this topic is relevant. Oddly, Shoul's _QJE_ article wasn't cited by Rosenthal -- I guess John wasn't aware of it. It's good to hear from you again. In solidarity, Jerry
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