From: Jurriaan Bendien (adsl675281@TISCALI.NL)
Date: Thu Nov 01 2007 - 18:32:16 EDT
Paul, Seriously, I still fail to understand what the theoretical significance of your use of entropy is, pardon my ignorance. In an era of fairly stable economic growth, there may be a fairly stable dispersion of profit rates, but presumably at times of "system shocks" that would no longer apply. I am not sure that Marx's use of the term "Bewegungsgesetzen" or "Gesetzmäßigkeiten" has anything specifically to do with Isaac Newton, although Marx does e.g. refer to the natural necessity for human beings to continue producing and consuming as a "natural law". The idea that you could discover the scientific laws or lawlike regularities governing observable phenomena was a stance generally shared by Enlightenment thinkers and humanists. The transformation problem raises a general question of what the relationship between labour-values and prices is. The idea is that values "determine" prices in some way, i.e. that they set limits for price movements or regulate them; price fluctuations are, in some way, constrained by value relations. If output production prices deviate from output values by some margin, but total production prices equal total values and total output surplus-values equal total output profits, it is argued that it should be possible to "consolidate" the relevant capital transactions pertaining to production in such a way that these two identities hold, and if they do not hold, the theory is incoherent, i.e. the coherence of the theory hinges on the ability to achieve this consolidation. Well, making a few assumptions you can devise a model in which they will hold, but you can also show conditions under which they don't hold. But what does it really mean - or what does it prove, in particular given that commodity values themselves can only be expressed as quantities of abstract labour-time, as money-units (assuming a MELT), or as trading ratios? Marx hints at a "conservation law", insofar as he argues e.g. that if a set of newly produced commodities are sold below their value, this must mean that another set of commodities is sold above their value, in the same proportion. But I am not really sure whether this should be interpreted as a theoretical assumption, or as an accurate description of empirical reality. I would think it is more a theorem which is almost impossible to prove empirically for the economy as a whole. Presumably what Marx really aimed at was a demonstration, that the specific ways in which the production of output was reconciled with market demand by the movements of capital, through successive adjustments and approximations, was a law-governed process, consistent with the assumption of the law of value. But I am not convinced that the various solutions of the transformation problem on offer really achieve this demonstration at all. The concept of production prices may not have much explanatory power, if all you want to do, is to prove a strong empirical correlation between labour performed and output price-levels, i.e. prove that price-value deviations are, at least in aggregate, not very great. But if you want to explain the real economic behaviour of investors in competitive conditions, i.e. the "logic" of the dynamics of competition, it may have explanatory power, since in that case differentials between product-values, production prices and market prices can become highly significant (this becomes much clearer e.g. in Marx's treatment of ground rent and surplus-profits). That is just to say, "explanatory power" depends on what you want to explain, i.e. what you think the explanandum is, what the problem is. Given that Marx & Engels themselves explicitly recognised that the processes of value formation and price formation occurred semi-autonomously from each other, and that the two famous identities were only a theoretical assumption (justified if the discrepancies between output prices and output values, or between profits and surplus values, was in reality not very great), I don't think very much hinges on proofs that the two identities do, or do not hold, under assumed conditions. If much attention is devoted to those proofs, that is most probably because they are interpreted as stating an equilibrium condition. Equilibrium theory is an attempt to explain the relationship between the prices of different kinds of economic goods on the assumption that markets, unimpeded by extraneous factors, will tend towards equilibrium, and then the question is under what conditions market equilibrium can or will be achieved, or fail to be achieved. But I am not at all sure that this was Marx's problematic, nor indeed that you can prove very much about the actual existence of a market equilibrium. All Marx argues is that, in capitalist society, the production of output is conditional on capital accumulation, and therefore for capitalist society to reproduce itself on a larger and larger scale, it must meet or produce certain basic conditions, namely both the current requirements of capital accumulation and the physical necessities of human survival. And he shows how capitalist activity can produce those conditions. But this does not presume the existence of market equilibrium at any time, it is not a requirement of economic reproduction that market equilibrium exists. All you can really say is that that the system must operate within certain limits, and that if the system does not reproduce certain minimal conditions, it must break down. In fact, of course, Marx implies that in reproducing itself, the system endogenously generates imbalances which, at a certain point, causes a contraction of economic activity, or even a serious breakdown - but this is not a move from equilibrium to disequilibrium, but a move from relatively mild market fluctuations, to very severe market fluctuations. Jurriaan
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