[OPE-L:3961] Gil on Successivism and TSS

andrew kliman (Andrew_Kliman@msn.com)
Fri, 10 Jan 1997 10:59:53 -0800 (PST)

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Gil's ope-l 3952 dealt with the Thompson Theorem and several other issues. I
have replied to his comments on the former in ope-l 3953; below I deal with
the other issues.

Gil had written that "I have repeatedly found that TSS advocates on this list
have made claims about supposedly intrinsic features of the 'simultaneist'
approach which are spurious at best." He now offers the following claim as
"one example among many":

"The usual justification for this [simultaneist value] equation [v = vA + L]
is the following: (i) Values are defined in Volume I, as the prices which
goods would sell for, if they exchanged at values."

And Gil says: "Not only is this characterization spurious--nobody has or
needs to justify
the simultaneist approach to value on this basis--but it's circular (thus
worse than spurious)."

I agree that, as written, the claim is circular. (I didn't write it.)
Instead of "they exchanged at values," how about "they exchanged in proportion
to the labor-times needed to reproduce them," or "profits were zero," or
"compositions of capital were equal"? These are different formulations, but
they all have in common the notion of values as particular prices (exchange
ratios). The only question, then, is, how "usual" are such justifications? I
think that, prior to Morishima, they were usual. But the Morishima
justification divorces values from exchange completely --- he says that values
are a technocratic assessment of labor requirements --- and nowadays many
adherents of the v = vA + L interpretation (such as Gil, Allin, and Paul C.)
are Morishimists.

Spurious at best? How about "not 1000recise"?

In any case, this example doesn't fit the bill. The claim was that this
justification is "usual," not that it is necessary to simultaneism. So it is
not a claim about "supposedly intrinsic features of the 'simultaneist'
approach," much less a spurious claim about supposedly intrinsic features of
the simultaneist (or "simultaneist") approach.

I had written: "I know that the notion that sequentialism or successivism is
"logically suspect" is an old one, shared by Marshall, Walras, and
Bortkiewicz, but I'm not aware of Gil or anyone else on this list having made
such a claim before, so I don't know what Gil's talking about and therefore
can't respond.

Gil replied: "But I have on at least two counts: the question of
measurement, and a
question of the absence or presence of markets to equate prices across time
(possible subject to a discount factor)."

The question of measurement, it seems to me, has nothing to do with
successivism, but with the *other* feature of the TSS interpretation, that
values and prices in Marx's theory are in one system, not two. Whether
markets are able to equate prices across time has nothing to do with *logic*.
Therefore there is no *logical* problem if one does not assume the full set of
conditions that would lead prices to be stationary.

But let me tackle the stationary price issue, anyway. In ope-l 2925, Gil
wrote, "... by allowing equilibria in which input and output prices diverge
other than by a given time discount factor, Andrew is implicitly assuming a
form of market incompleteness which requires explicit justification, since
futures markets do in fact exist in the real capitalist
world."

Similarly, commenting on the TSS interpretation of Marx's profit rate in ope-l
3952, Gil writes "This makes a certain (unspecified) claim about futures
markets. If these exist, input and output prices would certainly be
determined simultaneously. There is no uncertainty in this model to preclude
this."

Note that the issue is not one of logical coherence, but of the correspondence
of my assumptions to the real world; specifically, whether markets are
actually "complete" (and some other stuff that Gil declines to mention).

In any case, Gil fails to note that I have responded to this argument (and
have received no reply). In ope-l 2949, I wrote the following in response to
his ope-l 2925:

"In addition to the existence of futures markets for everything, rather strong
assumptions concerning the information available to agents and the nature of
their expectations need to be made, no? And even then, Gil, doesn't
neoclassical theory require a further assumption---no time preferences---in
order to ensure stationary prices?"

Thus, whereas Gil seems to suggest that the presence of some futures market,
somewhere, for some commodity, is sufficient to ensure that prices will be
stationary throughout all time, this is not the case. I may be mistaken, but
I think this is incorrect. I believe that the literature on this issue agrees
that the following conditions are needed for prices to be stationary: (a)
there is a futures market for *every* asset such that one can, at this moment,
contract to receive or deliver any amount of the asset at any moment in the
future, from now until the end of time. This includes the existence of such
"complete" markets for types of assets that do not yet exist. (b) All agents
have perfect knowledge of the future, from now until the end of time. (c) No
agent prefers present to future consumption, or vice-versa.

Please correct me if I'm wrong about this.

If I'm right, then it seems to me rather peculiar to say that I violate some
standard of "logic" if I decline to postulate the whole kit and kaboodle.
(In commenting that "There is no uncertainty in this model," Gil persists in
assuming that my "model" adheres to every feature of high neoclassical
intertemporal general equilibrium theory unless I state the opposite to be the
case. In ope-l 2949, I made clear, however, that I prefer to state what I
*do* assume, not what I don't assume. Since uncertainty exists in the real
world, I don't think I need to state that I don't assume perfect knowledge. I
don't assume it unless I state that I assume it.)

On the other hand, I'm perfectly willing to accept that, if the "real
capitalist world" were made up of Nostradami who were capable of trading Intel
2586 processors in 1776 to be delivered in the year 2026, who would never
experience any regrets about any trade they had made, who had no time
preferences, and who could somehow enforce their contracts on people living
250 years in the future, then prices would be stationary throughout all time,
for the simple reason that the whole future course of the world --- the best
of all possible worlds --- was thereby determined back in 1776. "There was
history, but there is no longer any." This is the ideological function and
import of simultaneism.

It is ironic that someone who protests against even thinking about a rising
VCC without a rising demand for labor would venture to suggest that there's
something "logically suspect" about not postulating such a fantastical "real
capitalist world."

There's also a thorny issue concerning whether these stationary prices
represent equal amounts of value, but it is too complex for me to address now.

I had written: "In general, my view is that simultaneism is logically
suspect, because it permits the price of a good to have two prices at the same
moment (as output of one period and as input of the next)." I meant "permits
a good to have two prices at the same moment."

Gil responded: "I don't understand Andrew's point here, since the
simultaneist definition of
value makes no reference to prices, so I can't see how "it permits the price
of a good to have two prices at the same moment."

Actually, there are two different simultaneist definitions of value. The
two-system one makes no explicit reference to prices (unless one thinks of
these "values" are particular exchange ratios, which is not un-usual), but the
single-system one (v = pA + L) does. There's also the simultaneist definition
of "price of production" (p = p(A+bL)(1+r), and other variants), which does
refer to prices.

In any case, if a commodity has two different values at the same moment, and
if, as Marx says, price is the monetary expression of value, and if a given
value has a unique monetary expression at a given moment, then Gil's concept
also permits a good to have two different prices at the same moment. These
aren't the prices for which it sells, necessarily, but what Shaikh calls its
"direct prices."

Gil: "But let me anticipate: suppose I buy some lumber for use in my
production process, pay the going price for it, and immediately use it in
production. That price simultaneously represents the price of an output
(somebody had to produce the lumber for me to buy it) and the price of my
input."

Very good. One commodity, one moment, one price. Now imagine equal
compositions of capital, or zero profits, or whatever you want to get the
result that the lumber sells at its value. So its value equals its price or
is proportional to its price, or whatever. Now, if technical coefficients are
different in period 1, in which the lumber was produced, and in period 2, in
which the lumber serves as an input, then we have the following:

(a) P[out, 1] NOT = P[out, 2], because of changing techniques
(b) P[in, 2] = P[out, 2], because of simultaneism
(c) P[in, 2] = P[out, 1], because the output of period 1 is "immediately
use[d] in production"

Together, (b) and (c) imply that

(d) P[out,1] = P[out, 2],

and (a) and (d) together imply that

(e) P[out, 1] NOT = P[out, 1].

One commodity, one moment, two different prices. This is among the reasons I
find simultaneism (b) logically suspect.

Andrew Kliman