[OPE-L] bubbles and Marxian theories of value

From: Jerry Levy (Gerald_A_Levy@MSN.COM)
Date: Wed Feb 08 2006 - 15:55:21 EST

1. Bubbles occur  where "asset prices [are] unrelated to underlying 
values."   For instance, a  "house price bubble can be defined
simply as a deviation of the market price  from the fundamental value 
of the house."   Bubbles often arise  "when speculation in a commodity
or asset class causes the price to increase, thus producing more

2. As we all know,  there is disagreement among Marxians with regard
to our understanding of value (understatement).   One area of contention
is whether it is meaningful to refer to *price-value divergences*:  there are
those (including Marx) who refer to individual prices rising above or falling 
below values and there are those who claim essentially that there is an 
identity  between value and price.  For instance, surplus approach theory 
might  suggest that a dual accounting of price and value is "redundant"; 
value-form theory claims the money price is the sole autonomous 
representation of value. This leads me to my ...


*QUESTION*  :  how do those Marxian perspectives which don't
allow for price-value divergences explain the existence of bubbles?


I sat next to Gary this afternoon at a workshop given by Ed Nell
and Davide Gualerzi at the New School and the topic of bubbles
came up in their presentation on "Transformational Growth in the 
1990s."  This got me to thinking about the above and I asked Gary
afterwards if there was any literature from a surplus approach 
perspective on bubbles.  He couldn't think of anything off-hand but
did mention John Eatwell.  I thought this was an odd reference 
because -- last I heard -- John  had long since stopped being a 
surplus approach theorist.  Am I mistaken about that Gary?

I _almost_ asked Ed and Davide what theory of value they were
(implicitly) using to explain bubbles since the definition that they
gave obviously presumed _some_  theory of "underlying value".
I  was thinking of asking them ...


*What is the _theoretical_ explanation for bubbles?*


In solidarity, Jerry

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