I hope Duncan's and John's post are not treated by OPE as a digression because
in my view the question Duncan raises is the nub of the whole matter and I am
very glad he raised it.
Duncan wrote in OPE 787:
"If you write down an explicitly disequilibrium model with time subscripts
differentiating commodities at different times, thus allowing for prices
of inputs and outputs to differ, one solution will be the equilibrium
prices where the inputs and outputs have the same (relative) prices. This
is also the easiest solution to analyze, and its existence is a good
indication that the equations make sense. As an historical aside, this
seems to be the approach Marx took, for example, in his work on
reproduction schemes."
The thing that has to be solved to take political economy forward, in
my view, is exactly *how* to write down an explicitly disequilibrium model.
I think this is the most difficult and challenging problem we face.
I agree that the existence of an equilibrium solution indicates the
equations make sense and do not pose dynamic nonequilibrium models
as a 'way out' of the transformation problem.
The problem is that for most of the marxism we have inherited, Marx's
work on reproduction has been taken as the epistemological basis of
value; that is, we are stuck with a conventional definition of value
which defines it as the equilibrium solution. I would have thought it obvious
that this could not be the basis on which the non-equilibrium equations are
formulated, but this seems very poorly understood. We have to break free
of this straight-jacket in order to be able to formulate non-equilibrium
models. This requires that we have a definition of value and of money
which is completely independent of the assumption of equlibrium.
Otherwise we don't have genuine dynamics but comparative statics,
which I think is simply an adaptation of Walrasian general equilibrium.
I hope this discussion is taken up and will try to contribute more as
I regard it as indeed a Secret of the Lost Ark.
Alan