[OPEL:6223] RE: What is the debate is about?

Ian Hunt (Ian.Hunt@flinders.edu.au)
Thu, 26 Feb 1998 13:22:58 +1030 (CDT)

Andrew's response to the thought experiment is to say that he doesn't want
to envisage any circumstance in which prices stay constant from one period
to the next. But the essence of my thought experiment was to suppose
circumstances where they did, so it is changing the subject a bit to
introduce another situation where prices may change. It is true that I only
assumed technology and a balance of supply and demand for two periods, but
I am willing to change the thought experiment so that these assumptions are
extended back for as many periods as it takes to have the selling price of
steel the same from one period to another.

"I hope Ian will also agree that the input prices of a period may be
determinants of the subsequent output prices of that same period." I agree
that they are *a* determinant, but if there were a different technology in
use in period 0, I don't know that it follows that from " Ian's
assumptions, we know that the ceteris paribus condition is satisfied".

Andrew then ends up with a resumed attack on the "equilibrium" view. My own
view is that you cannot deal with technological change with a model which
assumes one technology (as most equilibrium models do). So, of course,
there will be problem grafting a one technology model on a situation where
there are at least two technologies. At the very least, when you have
technological change, you need to move to an "average technology" model (ie
where the price determining technology is some weighted average of the
technologies in use, which seems to be what Marx tends to do in Vol 3, and
which Dumenil and Levy develop in a number of papers) or you have to say
that you have prices relative to various technologies (systems), and that
the market price is some function of these.