Re: [OPE] Models and Marx

Hi Howard

> In oher words, Ian says "My starting premise is that dynamic multisector
> models of capitalist competition . . . are a necessary prerequisite to the
> investigation of issues  in the theory of economic value."  Because I'm
> looking for capital's simplest determinations, its real definition, and
> because I understand Marx to pursue this by abstracting precisely from
> competition, Ian and I wind up doing very different things.

The background of my statement is (i) the post-Marx history of
controversies in the theory of economic value, specifically the fact
that the theoretical problems in value theory do not arise in
single-sector models (e.g., problem of invariable measure,
transformation problem, re-switching and capital controversies etc.),
and (ii) the unfortunate prevalence of attempting to deal with these
issues in the context of static models, when it must be emphasized,
the classical theories of value, especially Marx's version, are
irreducibly dynamic theories, and furthermore, it is not possible to
resolve claims about what, if anything, money represents without an
investigation of the causal relations (i.e. dynamics) between money
and possible referents.

> Third, Ian explains that he outlines a macrodynamic model of "a hypothetical
> or 'ideal' capitalist economy."  This raises questions that are difficult
> for  me and I have some  questions.  Ian emphasizes the importance of
> abstraction and I agree; this is how we access the unobservable as I
> explained in the excerpt I attached a few days ago.  I referred to
> 'selective attention' as a form of the power of abstraction; we disregard
> some things to focus on others that are the target of inquiry.  Also, I
> think we can hold particular features  of  a  model constant the way we can
> hold pressure of a gas constant in studying molecular motion.  I'm less
> certain how we work with hypothetical properties  or mechanisms or when it
> is appropriate to do so.

Formal approaches (such as mathematical modeling) allow us to reason
more effectively, but in general they impose tougher constraints on
what can be specified. To take one example, I model the lending of
money to firms and the receipt of interest income in terms of a
single, instantaneous rate of interest and a smooth aggregate flow of
borrowing and interest repayments. In reality, money flows are not
smooth and firms finance production in a variety of ways that have
different repayment terms and rates of interest. This kind of
abstraction is not motivated by selective attention or the desire to
hold something constant, but is motivated by the practical necessity
of working with a tractable model and generating some insight and
results in a timely manner. Adding the term structure of interest
rates, and loans of different duration, introduces some mathematical
properties to the model that significantly increase its complexity. So
this abstraction is a simplification, and in this sense the model is
"hypothetical". I'd prefer not to have to do this, but no tool is a
silver bullet, and there's a trade-off between model complexity and
causal insight. My underlying assumption is that including the details
of financing wouldn't give much "bang for buck" given the scientific
question under investigation (which, in my case, is some conceptual
issues in the theory of value).

In contrast, the assumption of fixed technology is intended to "hold
some things constant".

But this is why I hedge at the beginning of the paper. It would be
wrong to claim that this is a model of an actually existing capitalist
economy. And it would also be defocussing to spend time on
methodological issues, such as the different uses and justifications
for abstractions.

> I mean by this that mostly he seems to me to abstract to real causal
> properties of  the relations and processes he investigates.

I agree that this is what Marx tries to do. But how do we know whether
an abstraction gets at "real causal properties"?

Ultimately, don't we need crucial experiments and contact with empirical data?

> By contrast,
> Althusser argues that Marx's object is ideal:  "Marx, therefore, does not
> even study the English example, however classic and pure it may be, but a
> non-existent example" R.C. 194.  In the section from Capital as a Social
> Kind that follows the one I gave an excerpt of I draw as sharp a
> distinction as I can between this appropach and my own.

I agree with you here. "Ideal" in Marx does not mean "non-existent"
but an attempt to grasp in thought some causal mechanism considered in
isolation from the interference of other determinations.

> Marx studies
> capital as a social structure in England, Germany and elsewhere.  He
> abstracts to really existing features that are common, and distinctively so,
> to the entities that fall within the extension of the term 'capital'.  He is
> not studying social relations that are hypothetical or ideal.

Agreed. And that is not my intent either.

> Fourth, I find Ian's treatment of the transformation problem interesting and
> important, but I am not convinced that he has made the problem go away.
> Social kind analysis, I think, must have ramifications here, but I will have
> to turn my attention to the issue before I an able to say anything
> meaningful about it.

I look forward to what you may have to say about these issues in the
future. I have got your book on order, and am looking forward to
reading it.

Best wishes,
-Ian.
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Received on Mon Feb 14 16:58:26 2011