From: dlaibman@JJAY.CUNY.EDU
Date: Mon Mar 14 2005 - 09:12:55 EST
Hello Paulo,
YOur question is, I think, an old one -- and a good one! My answer -- in order to give *both* the New Classical *and* the New Critical positions some space to work with -- is that a demand increase causes P to rise, even though income is short of full-capacity utilization, due to: bottlenecks, speculative behavior, whatever. (I can't use pressure from the side of the labor market in the context of the New Critical Dobb Effect arguemnt.) It might be possible to imagine that more intensive use of a given stock of physical capital causes diminishing returns and upward cost pressure on prices. Productivity in the sense of output per worker thus falls, a change in productivity that occurs even though we are in a period in which technical change is not being implemented.
Again, I am assuming no more and no less than the models of the standard macro texts. The AD shift pulls prices up along a rising short-run AS curve. The question then is, which way does this curve shift? All I am suggesting is that by bringing into the picture the effect of the price increase on the "entire position" (Dobb) of the workers, we find AS shifting to the right -- a huge de-centering of the standard dogma that Y tends to Y* and P alone is driven by AD. The door is now open for consideration of a range of *political-economic" effects of policy, i.e., a move in the direction of a political economy of government policy (cf the superficiality of the mainstream view), and therefore toward a Marxist analysis of the capitalist conjuncture, or short run. I do not propose that my intervention in macro theory is a *substitutte* for that actual Marxist analysis! But it may help us to think about what that analysis may contain.
Best,
David
----- Original Message -----
From: Francisco Paulo Cipolla <cipolla@UFPR.BR>
Date: Monday, March 14, 2005 8:18 am
Subject: Re: [OPE-L] Teaching Tautologies : a response to David L
> Hi David Laibman, may be you could explain tome the following
> question:If we are in the short run the stockof capital is
> constant (Keynesian terms, as
> you suggest). If government increased expenditures pushes prices
> up it is
> because there is no excess capacity, otherwise prices need not go up.
> If the is no excess capacity to absorb the greater supply of labor-
> hours and if
> the stock of capital is not allowed to increase in the short-run,
> then how could
> the extra supply of labor-hours be effectively employed?
> Paulo
>
> Gerald_A_Levy@MSN.COM wrote:
>
> > Hi David,
> >
> > Thanks. You gave a much better summary of your paper than I did!
> >
> > Picking up on a few points:
> >
> > > The real wage rate, w, is pushed below a customary or standard
> > > level, w*, the workers' social condition deteriorates and they
> have no
> > > choice but to offer more labor at every wage: the supply curve
> of labor
> > > shifts outward.
> >
> > The 'dual' of this is when the demand curve for labour (-power)
> increases,> then the real wage rate is pushed above w*. But the
> corollary hasn't
> > followed historically: i.e. as w has risen, there hasn't in
> general been a
> > reduction in the quantity of jobs/family or overtime. (I should
> add,> parenthetically, that if wages are 'sticky' in the short-
> run, then so
> > are the mandatory hours of work/job which are also contractually
> set.)>
> > > The *story* takes off from
> > > there; the Dobb Effect is the effect of the fall in w (below
> w*) on the
> > > real supply of labor. That is not a tautology. In fact, it
> may not
> > > even be true! If it is true, it may take effect in too long a
> time frame
> > > for it to serve as the basis for a policy impact in the short
> run. And
> > > empirical evidence is not too clear on it (of course,
> empirical evidence
> > > is not clear on the New Classical story either).
> >
> > One might suggest that the 'propensity to work overtime' and the
> > 'propensity to work more than 1 job' is crucially dependent,
> > given your assumption of fixed wage rates, on the *rate* of
> inflation.> Thus, there might be a 'threshold' rate of inflation
> beyond which there
> > is a radical shift in these propensities.
> >
> > [What isn't part of this 'story', but was a significant part of the
> > historical experience in many capitalist social formations, was that
> > the more than 1 income earner per family trend was to -- at
> least some
> > degree -- affected by the feminist movement and the breaking-down
> > of barriers to the entry of women in different segments of the
> labour> market.]
> >
> > > All economic models use some
> > > combination of behavioral assumptions, definitions
> (tautologies), and
> > > (where appropriate) equilibrium conditions.
> >
> > Not all definitions, though, lead to tautologies.
> >
> > As for equilibrium conditions, I agree that any non-equilibrium
> model> must stipulate equilibrium conditions since there is no
> other way of
> > knowing whether there is disequilibrium. However, to stipulate
> equilibrium> conditions does not necessarily mean that:
> > a) the model -- or the economy -- is in equilibrium;
> > b) the model -- or the economy -- is headed towards equilibrium;
> > c) if the model -- or the economy -- is in equilibrium that it
> will stay
> > in equilibrium.
> >
> > > Second, OPE folks need to be clear: this is an attempt at
> *immanent> > critique* of mainstream macroeconomics -- to get
> under their skin, in
> > > their own terms, and upset the dogma of policy ineffectiveness
> -- the main
> > > conclusion of the free-market hegemony. For this purpose, I
> use *their*
> > > tools. I use, yes, diagrams. You need to answer one diagrammatic
> > > argument with another one, not with something that could be
> taken to
> > > be a mooshy evasion.
> >
> > I don't agree. A methodological critique (which is usually what
> > diagram-intensive immanent critiques boil down to) is not a "mooshy
> > evasion". There were no graphs of formulas in Joan Robinson's "The
> > Need for a Reconsideration of the Theory of International
> Trade" or in
> > the section of the text by Ian Steedman on "The Heckscher-
> Ohlin-Samuelson
> > Theory of Trade" but they constituted, in my view, a *devastating*
> > critique of H-O-S trade theory. Similarly, does one need
> graphs and
> > formulas to refute the pernicious doctrine of consumer
> sovereignty? I
> > think not. To reveal, and thereby hold up for ridicule, the
> assumptions> on which this doctrine is based is sufficient enough
> ... especially from the
> > standpoint of classroom instruction.
> >
> > The marginalist _economists_ (as distinct from economics
> students) are the
> > ones for whom no theoretical claim not embellished with formulas
> (and> possibly graphs) is deemed to be "mooshy". But, as the
> Cambridge> Controversy showed, even when they are logically
> cornered they just
> > blow the critique off.
> >
> > > I simply assume, in this paper, the usual downward sloping AD
> > > curve. *Of course* all of this needs to be questioned in the
> full light
> > > of Marxist categories. But the limited purpose of this one
> paper needs
> > > to be borne in mind.
> >
> > Point well taken.
> >
> > > If we can provide a simple, compelling case that makes the
> > > AS curve not vertical after all, and opens up a discussion of
> the wider
> > > social effects of fiscal and monetary policy, is that not
> something worth
> > > doing?
> >
> > Sure.
> >
> > > On a more theoretically rigorous terrain, we will then
> need to ask: is
> > > there a Marxist analysis of the capitalist short run?
> >
> > I don't think that Marxians should necessarily accept the mainstream
> > definitions of 'short-run', long-run', etc.
> >
> > But, if you are asking whether Marxians need to grasp developments
> > over a period of real time normally associated with the 'short-
> term', then
> > I would say that we need to have such an analysis. Indeed, I
> > would go so far as to say that concrete *class analysis* requires
> > that we analyze both 'short-term' developments and 'micro' topics.
> > How this class analysis is connected to value theory is a trickier
> > topic.
> >
> > > In other words,
> > > should we even bother to try to construct a theory of
> capitalist behavior
> > > in a period in which productivity, population, and physical
> capital stocks
> > > in place are all constant?
> >
> > That is using the mainstream definition of 'short-run'. If we
> think of the
> > 'short-run' in _real_ time then there is no reason to hold all
> of these
> > variables constant. Tell workers on an assembly line that the
> productivity> of labor (if it is measured conventionally as
> output/worker/period of time)
> > can't increase in the short-run! They know better. They know that
> > the intensity of labor can, and often does, vary over the short-
> term. And
> > they have the sweat to prove it! Tell accountants who work for
> capitalists> that the capital stock and its value is constant in
> the short-run. They
> > know better. They know from experience about the meaning of
> > accelerated depreciated and a rate of technological obsolescence
> > which is not anticipated.
> >
> > > This behavior would then be the basis for a theory
> > > of how the capitalist economy responds in the short run to
> (capitalist)> > government policy moves.
> >
> > More significantly, it could be used as a basis for analyzing
> short-term
> > labor strategies.
> >
> > > Is this a useful inquiry, or should we simply
> > > assume that it is submerged in the dynamics of accumulation,
> crisis, etc.?
> > > I am not sure, but I do think the immanent critical strategy
> is important
> > > to develop in the meantime.
> >
> > The above should indicate that I think it is useful and important.
> > Workers want to know not only about 'long-term' tendencies.
> > They want to understand their _current_ situation as well and what
> > are the likely consequences of different short-run strategies that
> > they might pursue. Surely we should talk about L-R macrodynamics.
> > But, to _only_ talk about macro and the long-run is talking past
> workers,> imo. [NB: that's not what I'm saying David does.]
> >
> > In solidarity, Jerry
>
>
> -----------------------------------------------------
> This email has been automatically scanned for viruses.
> However, it might still contain undetectable virus(es).
> Addressee should take precautions in opening any unsolicited emails.
> -- DoIT, John Jay College of Criminal Justice -1-
>
>
This archive was generated by hypermail 2.1.5 : Tue Mar 15 2005 - 00:00:01 EST