From: Paul Cockshott (wpc@DCS.GLA.AC.UK)
Date: Thu Nov 01 2007 - 19:58:38 EDT
Jurrian writes 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. Paul I am open minded on that. I do not yet have an feeling about whether the dispersion of profit rates will be the same during a year with a commercial crisis as in other years. The point though is that it is very hard to construct a dynamic model in which dispersions decline, in which disorder is reduced. In general if one is constructing a computer simulation of a dynamical system and one wants its behaviour to be damped, one has to have something equivalent to viscosity or friction. You need to have laws of motion that are non-conservative. But of course friction is nothing more than a way of taking large scale entropy or disorder and replaceing it with small scale disorder. What is the equivalent in an economy? 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. Paul I may be oversimplifying here, but I found Mirowski's arguments on this plausible - that Marx was trying to formulate conservation laws analogous to those of physics. The language seems to indicate a descent from Newton since, as far as I am aware the idea of laws of motion originated with him. Well formulated conservation principles did not become formulated until the early 19th century though. Jurrian 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. I would agree with this 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. Marx does not prove it, but he certainly believes it to be true. I think it should be provable for a barter economy, and thus for one involving gold money. Basically one knows that the amount of labour embodied in goods is fixed prior to the exchange process. Every exchange of two commodities must occur either at par, or with one selling for above its value and one below. Suppose iron contains 1 hour of labour per kilo and flour contains 1 hour of labour per 10 kilos. If I exchange 1 kilo of iron for 20 kilos of flour, I have made a gain of 1 hour of labour and the seller of the flour an exactly equivalent loss of 1 hour. Since every composite set of commodity transactions can be decomposed into such atomic transactions, any partitioning of the set of commodity exchanges will have the same property. 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. I would agree with that 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. That was what I believed until I read Zachariahs work. Allin and I had a 50% transformation position. That values were partial transformed to production prices and that the market price vector lay between the production price and the value vector. That seemed to be the case for the UK. Zachariah shows that it is not generally the case. 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. Agreed 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. Yes
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