[OPE] FW: Linear transformation between equilibrium prices and lab our values

I agree that one possible hypothesis is that the disorder we see in real profit rates arises from technical change. Another possibility is that it arises from variations in the turnover and depreciation rates of capital stocks in different industries and firms which would mean you have a large number of coupled oscillators with different periods which could have a similar dispersive effect.
Your earlier models evolved to a maximal entropy distribution which is what you expect of a conservative system with high degree of freedom. If your current one does not then it is likely to be non conservative in some way. Maxwells daemon must be at work somewhere. Dave Z suggested in conversation with me that the non conservative element might be the effect of price changes on stocks?

--- original message ---
From: "Ian Wright" <wrighti@acm.org>
Subject: Re: [OPE] Linear transformation between equilibrium prices and labour values
Date: 13th December 2010
Time: 9:02:15 pm

Hi Paul

> 1. Can the model reproduce the negative correlation between organic composition and rate of return
> for industries seen in the empirical data.

I've not measured this, but I expect it will not. My expectation is
based on the proposition that this relationship could only manifest in
circumstances of technical change, i.e. an economy undergoing
continual innovation in the methods of production. Do you agree?

> 2. What is the thermostat in the model. I mean thermostat in the classical thermodynamics sense of
> a heat sink, how does the initial entropy of a disordered rate of profit get dispersed into other degrees
> of freedom.

This is a deterministic model. I have seen entropy measures employed
in the analysis of deterministic dynamic systems, but I have not
explored it.

Local inventories wax and wane according to excess demands. So I think
an important degree of freedom are stocks of local inventories, which
act as demand buffers. The rate of change of local stocks is simply a
measure of excess demand. And prices adjust in response to excess
demands, effective rationing highly scarce commodities
out-of-equilibrium.

One of the pleasing aspects of the model is that market prices, which
reflect scarcity, gravitate towards long-period prices, which reflect
objective costs. The market dynamics effectively dissipate the
scarcity component of prices over time.

-Ian.

The University of Glasgow, charity number SC004401
_______________________________________________
ope mailing list
ope@lists.csuchico.edu
https://lists.csuchico.edu/mailman/listinfo/ope
Received on Tue Dec 14 04:28:46 2010