Re: [OPE] Reply to Paul Cockshott on neo-Smithian Marxism andequilibrium

wpc@dcs.gla.ac.uk

I think you need to be clear that when people talk about thermodynamic 
equilibrium, they are
talking about a chaotic system. It is quite a different idea from the 
mechanical equilibrium
that neo-classical economics talks about. It also undermines the idea 
that inequalities in
income are in any way functional ( necessary for incentives etc ), and 
shows that they
are the inevitable result of blind chance operating under current 
relations of production.

On the basis of a superficial understanding of F&M's distribution 
theory, I think it is reasonable
to expect a deviation of the profit / wage ratio from 50 /50  as a 
result of globalisation since
this will lead to a wider spread of labour content per $1 price than in 
a more closed economy.
As I understand it, F&M's theory would predict a wider range of 
variation in the wage/profit share
under such circumstances.

Jurriaan Bendien wrote:
> Paul,
>  
> Fair enough, I have to get my head around it more too. My argument 
> would be that the average or aggregate approximate 50/50 distribution 
> (already noted by Eugen Varga) is in large part an 
> statistical artifact (in point of fact, in recent memory the 
> compensation of employees/operating surplus ratio has been more and 
> more skewed towards profits). As I have grappled with national 
> accounts data and the statistical concept of value added, I am 
> inclined to be a bit skeptical of official profit volume measures. The 
> chief merit of them is that they are calculated in a fairly constant 
> way across time, and thus can show the trend. As Dumenil & Levy have 
> shown, most profit volume measures trend in the same direction, even 
> if the level may be different.
>  
> All I am saying is that if you think that prices can secure an 
> economic equilibrium in the real world by themselves, you must be 
> kidding. There is no empirical evidence of that.  All that prices 
> achieve is a process of adjustment of effective supply and effective 
> demand, a calibration or equilibration process, which is sometimes 
> reasonably successful, and at other times spectactularly fails. No 
> serious policy maker or banker is very concerned with equilibrium 
> models, what they are really interested in is the adjustment process 
> itself, and price stability. At best the equilibrium models are only 
> an aid to understanding that. They know jolly wel that they're dealing 
> with a moving process in which, ultimately, price relations express 
> relations of economic power. There are price setters and price takers, 
> and that is how it is.
>  
> What are we to say of an economy which cannot even ensure that all of 
> the world's citizens can get their daily bread, even although there is 
> plenty food produced that can satisfy everybody? It's a monstrous 
> absurdity, a moral obscenity, as far as I am concerned. It means that 
> world society is deeply mistaken about its priorities about human life 
> itself. The pope may declare his commitment to human rights at the 
> Twin Towers, but that's not where it's really at. I mean, we can sit 
> here disputing about the concept of equilibrium while out there 
> there's people crapping out totally, because the trading system 
> doesn't enable them to obtain food, and speculators are 
> even speculating on food prices. How low can humanity go, I wonder? 
>  
> Yesterday I was dipping into the book "Moral Markets" recommended by 
> Herb Gintis. A few essays are quite sharp, but for the rest, what a 
> tremendous intellectual regression. Literally, they are trying to 
> build a theory of markets and values on the basis of Adam Smith, David 
> Hume etc. but they are mystified as to why bourgeois society effects a 
> bifurcation between commerce and justice in the first place. That 
> cannot lead to very profound insights.
>  
> What Marx is talking about is that the social order is ensured by a 
> pattern of social cooperation which is shaped by physical and 
> practical necessity, and this exists mediated by prices or in spite of 
> prices. In the Weimar republic, people survived too. In contemporary 
> Zimbabwe, people survive too. How can neoclassical theory explain 
> all that?  Interesting question. In his theory of economic 
> reproduction, Marx notes the difference between simple reproduction 
> (the surplus is consumed, wasted or hoarded) and expanded reproduction 
> (the surplus is productively invested). With simple reproduction, 
> people survive, but there is no economic growth. With expanded 
> reproduction, there is.
>  
> But that is just to say that the process of economic reproduction 
> permits of all sorts of variations with a broad margin, depending on 
> how exactly the surplus is utilized (Paul Baran's point). That is Part 
> 1 of my critique of Grossmann. Part 2 is that expanded 
> reproduction results in a lot of non-productive assets (the results of 
> accumulation) which can also be capitalized, and participate in the 
> capital accumulation process. Part 3 is the organisational structure 
> of capitalist production itself (Mandel makes this argument abstractly 
> in Late Capitalism, p. 36-37 though it has to be expanded): "it 
> disregards the fact that the part of surplus value marked for 
> consumption could be divided among a constantly decreasing number of 
> capitalists... if the entire mass of surplus value available no longer 
> suffices to valorize all the accumulated capital, the result would not 
> be the collapse of the entire economy but only the devalorization of 
> the "surperfluous" capital through competition and crisis". All that 
> Grossmann really proves, is that overaccumulation leads to 
> devalorization, but not that the valorization of capital itself 
> becomes impossible.
>  
>   
>  
> Jurriaan
> ------------------------------------------------------------------------
>
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