From: Jurriaan Bendien (adsl675281@TISCALI.NL)
Date: Wed Feb 08 2006 - 17:09:32 EST
Hi Jerry, You were fortunate with Willi Semmler. I never had the benefit of a good economics education at the New School, I mean I just read some books and try to crack the riddle. Generally, you can improve if you apply yourself, but it's not like a real schooling by economists, you stay basically autodidact. If I hadda wouldda have done a thesis on public finance, that would have been a gain. Like you say, maybe life is what happens when you are making othere plans... in a certain phase of life anyway. A mature adult does actually have to make plans and stick by them. You wrote: Monopolies, like cartels, tend to be unstable over the long-term and are generally not permanent. It is precisely the higher than average rate of return on investments received by monopolies which encourages other firms to find a way -- somehow -- to break into the market and bust-up the monopoly. Yes, Mandel pointed this out to me in his big book. Which is why stamocap theories have to be relativised at least. You wrote: The situations that you describe, though, could be inflationary. If there is an increase then in the rate of inflation then the 'real' magnitude of profit would be less than the nominal magnitude of profit. Yes. Mandel also dealt with that, although his idea of credit is a bit simplistic. What if you bring down inflation to a low level, but you still have to deal with these mysterious Marxian value relations anyhow? You wrote: We seem to have a disagreement here. I'm still trying to figure out what the basis of that disagreement is. I think it is a micro/macro disagreement. I.e. I agree that accounting tricks and tax rules can change the _individual_ rate of profit for firms. The question is whether it can change _aggregate_ profits. This is not from my perspective primarily an accounting issue, it is a theoretical one. Oh, absolutely. Tax rules can mean that you simply cannot make a profit out of something, or are permitted to make a profit out of something. But part of it is a matter of definition. If a good part of tax-assessed depreciation is really undistributed profit, measured by the difference between economic depreciation and tax-assessed depreciation, then what is the total profit really? If you are a finance controller, thing to watch is the total revenue stream, that is what counts, I mean there a deductions here, exemptions there and additions there... In the end, what people are concerned with is a net income from a revenue stream. You wrote: I agree that the identity of value and price in Volume I assumes the exchange of equivalents. Well, in the "Resultate" manuscript Marx actually goes further and tries to say something about the valuation of gross product. Of course, he wrote that in the 1860s. Point I tried to make is that anybody trying to define gross product is already assuming a value theory and a theory of economic exchange - whether you are Marxist or whatever. Essentially, Marx is saying. assume supply and demand gravitate towards some kind of balance, what now explains the dynamics (laws of motion) of the economy? Why is this balance reached at this price level rather than any other level? You wrote: In any event, I agree that when we are considering the capitalist economy more concretely -- especially in the context of current conjunctural studies of the current world economy -- we can no longer assume the exchange of equivalents. The assumption needs to be dropped in order to comprehend the reality of UE. Why hasn't this been done more by Marxists? I think that many Marxists simply take the presumptions and assumptions of very abstract theory and apply those presumptions and assumptions to the analysis of more concrete topics. From my perspective, this is a *huge* methodological error. While it runs counter to Marx's own method -- I believe it may be a consequence in part of the incomplete state of Marx's project and the inability of many Marxists to interrogate capitalism in ways that went beyond Marx. That is true in my view. The discussion gets stumped at the TP. My own way over that hurdle was to look at real data, real accounts, and the epistemic problems you confront there. And really, most businesspeople have very little problem with the concept of value, although Marxists may have. They accept that you can have a "real value"or "real worth" regardless of what fluctuating prices may be. My own view of the TP is really that it's solved once we get clearer about the price form, all the assumptions involved in imputing and constructing prices of various kinds. I haven't had time yet to sort it out, and write it all that up though. The problem is that economic theory takes the price form rather for granted (even although financial analysts wouldn't). It's accepted that with prices you have counting units and can compute, no further questions asked. You wrote: How robust is the claim that EE is the exception and UE is the norm *empirically*? I.e. what is the rate of variation which has been observed empirically? Are the rates of variation statistically very significant or are they narrow? I cannot prove that just now although it seems as clear as day to me in the sense that this is inherent in the very meaning of market fluctuations and inherent in the process of the levelling out of profit rates through competition. I'd have to construct an empirical case to show what would be EE and what is UE. Jayati Gosh writes: "While developing countries as a group more than doubled their share of world manufacturing exports from 10.6 per cent in 1980 to 26.5 per cent in 1998, their share of manufacturing value added increased by less than half, from 16.6 per cent to 23.8 per cent. By contrast, developed countries experienced a substantial decline in share of world manufacturing exports, from 82.3 per cent to 70.9 per cent. But at the same time their share of world manufacturing value added actually increased, from 64.5 per cent to 73.3 per cent." http://www.networkideas.org/themes/trade/may2002/print/prnt110502_Exports_Developing_Countries.htm You wrote: Enough for now! You must be a quicker typist and/or a quicker writer and/or a quicker thinker than I! Well in economics you may think quicker than me, but I have been practicising writing faster. But just because I write faster, doesn't necessarily mean it's any good. I still have to deal with Ian's valid critique about the "simplest case" where Marx's argument doesn't seem to work. Simply put, you have M-C and C'-M' and in between a value product is produced which in some way has to determine the magnitude of C'-M' (since in the normal run you don't purchase your own product, except for intra-corporate transactions), and how do you model that; and isn't there a feedback problem. If have to tackle a few other problems just now, so maybe a bit tardy in replying. Better not overstrain my little brain... Jurriaan
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