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 speculation." 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? -------------------------------------------------------------------------------------------------- Background: 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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