From: Dave Zachariah (davez@kth.se)
Date: Tue Mar 18 2008 - 11:40:33 EDT
glevy@pratt.edu wrote: > Well, > that relates to - as you say - "long-run movements". The > questions at hand > in an economic crisis are generally short-run: i.e. > how long will a particular crisis > last and how bad (for different > classes and groups) will it get? I think you > need to look at > other variables to explain the short- to medium-run changes. > Jerry, there is a difference between variables used as indicators and variables used in explanations of those indicators. The fraction of capital making a loss is a direct indicator of the state of the economic system. A predictor of how long an economic crisis will last could be the time derivative of the size of this fraction, once the fraction is shrinking average conditions for profitability are restored. Predictors of how the crisis will affect the working class are union density and the proportion of employees in firms within the low profit rate bracket. In general --- by analogy from control theory --- a system is in a "crisis" when its regulatory mechanisms fail to correct the trajectory of its states to a stable path. I take the approach that historical processes have causes that are either proximate or ultimate. The proximate causes for a crisis may be short-term fluctuations in e.g. effective demand which are inherent to the system. They may be small perturbations which cause the system to diverge from a stable path. In that case the search for an explanation must look toward more ultimate factors: why could the system not cope with such common fluctuations anymore? What were the underlying causes? They are often changes that have occurred over a longer period of time than the proximate causes. //Dave Z _______________________________________________ ope mailing list ope@lists.csuchico.edu https://lists.csuchico.edu/mailman/listinfo/ope
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