I'm mostly in agreement with Duncan's response to Alan's quiz.
(I'm sorry, but I'm no more inclined that Duncan reveals
himself to be, to abide by the letter of Alan's request, i.e.
that we should attempt to predict each other's responses.)
I would perhaps differ on two points of emphasis.
> Competition enforces a tendency for profit rates to equalize. But we
> shouldn't expect to see this tendency fulfill itself concretely for
> several reasons: 1) the market and technological situations are always
> changing, and thus upsetting the apple cart and creating new deviations of
> profit rates from the average in various sectors; 2) competition itself
> takes several forms, including monopoly, protection, and barriers to entry
> which frustrate (or modify) the tendency for the rate of profit to be
> equalized by the movement of capital from lower to higher profit rate
> sectors.
Here, *competition* tends to equalize, but various *other* factors
(monopoly etc.) impede equalization. I would say that the equalization
tendency is but one aspect of competition: what I would call the
"passive" aspect -- i.e. the tendency of capital to move into
sectors (or, to take a recent point of Alan's, into particular
technologies or production processes) already showing above-average
profit. But the "active" aspect of capitalist competition is
profit-rate *dispersing*: the pro-active development of new technologies
and products that simultaneously (a) garner super-profits and (b)
push certain existing producers into low profits or losses.
Following Farjoun and Machover (predictable, no?) the "equilibrium"
to which this gives rise is not an equalized profit rate, but rather
an equilibrium degree of dispersion of rates.
> Even if concrete profit rates don't equalize, it still might be very
> helpful for theoretical clarity to analyze models on the assumption that
> they do (that is, of situating the discussion at that level of
> abstraction).
Up to a point, yes. Presumably the "clarity" is due to the fact that
the assumption of an equalized profit rate offers a determinate
price vector, as opposed to the idea that any old market prices might
reign. But there is another determinate option available in the
history of economic thought: the idea that prices correspond to
embodied labour-content, which also offers "clarity". Clearly,
Ricardo tended to think in these terms, regarding the alteration
in the equilibrium price vector due to profit-rate equalization as
a second-order effect. I am unrepentant in believing that Marx shared
this thought; and that it is not far off the mark.
Allin.