From: Jurriaan Bendien (adsl675281@TISCALI.NL)
Date: Sat Nov 03 2007 - 09:46:48 EDT
Paul, Now I understand better what you mean. A few quick points. Social factors affecting the dispersion of profit rates could include e.g. the state, and the concentration of capital. The observed dispersion can obviously also be affected by the computation techniques used to obtain profit and capital totals. In the languages of continental philosophy and science (as contrasted with British empiricism), the expressions "laws of motion", "developmental laws", or "lawlike regularities" are quite normal and ordinary expressions. They need not explicitly refer to physical sciences, though sometimes they do, also "by analogy". Descartes, Leibniz, Spinoza, Kant and Hegel all used such concepts or similar concepts to state the causally necessary occurrence of relationships, states, processes, or events. It is true that Marx said he aimed to depict "the economic formation of society" (meaning the expansion of social relations through trade, and the transformation of nature - both human nature and physical nature - by industry) as a necessary evolutionary process of "natural history", but he is thinking more of Darwin, than of Newton, i.e. of an organic system, rather than an inorganic one. The application of theorems in physics and engineering to the social economy often leads to the depiction of the economy as a sort of "engine" (discussed by Ronald Meek in "The rise and fall of the concept of the economic machine", Leicester University Press,1965). If the famous two identities hold for total gross output, then I think it logically follows that a "conservation law" must hold, namely, in that case for every set of outputs sold by producers below its value, another set must necessarily be sold above its value in the same proportion, and vice versa. That is, the output value is a given quantity prior to exchange, and thus, however much price fluctuations may oscillate, they must always sum to a total which exactly equals to the output-value produced. However, abstracting from the specific (sometimes chaotic) characteristics of value formation and price formation in the real world, if e.g. - inputs and outputs are defined as a flow values, rather than stocks of capital at a balance date, - many more trade transactions occur in an economy than only producer's transactions, - structural unequal exchange occurs, it can be shown that the conservation law cannot hold exactly in reality, in that case. It can be shown that the MELT may change from moment to moment, also due to factors quite unrelated to the production of gross output since the volume and velocity of money circulating is influenced by the whole economy and not just by production. Therefore, most probably the determination of output prices by labour-values is better viewed as a "regulation principle" such as a limitation, or a distributional frequency, influencing the trading pattern. That is, even if the two identities do not hold in reality (or even in theory), labour-values may nevertheless regulate prices, if we interpret the determinism in a different way than an accounting consolidation. Marxists have often used I-O data to prove Marxian theorems, but if one understands what is involved in the statistical conceptualisation and aggregation of I-O data for national accounts, all computational results ought to be appropriately qualified accordingly (usually they are not). Namely, the components of inputs and outputs (or expenditures and incomes, or purchases and sales) in a national accounting sense are themselves not compiled in the same way as they are indicated in Marx's theory of capital, as I have illustrated with some examples in previous OPE-L posts. In particular, real net profit, interest and rent totals as well as operating expenses, are adjusted in national accounts, in conformity to the social accounting concept of "production" and "value added" applied - official totals deviate from the real totals such as they might be stated in business accounts, household accounts, government records or for tax purposes. In a general statistical sense, you can say that total generic profit from output produced is almost always understated in official totals, and that official data effectively dampen the amount of real fluctuation in true generic profit volumes. The metaphysics of the equilibrium concept (the natural tendency of markets to achieve balance) is used as a presupposition in studying the relationship between price movements for different types of economic goods. To the extent that the equilibrium concept in practice does no real work, i.e. is purely rhetorics and ideology to describe an adjustment of supply and demand, this does not matter, insofar as more insight is obtained in price relationships anyway. Where the concept of equilibrium becomes very problematic, is when the possible existence of certain economic relationships is ruled out by the adoption of the concept, restricting thereby the possibilities for explaining economic phenomena. A classical example of that is, when a persistent lack of equilibrium or even the tendency towards it is observed - to reconcile this with the metaphysical assumption of equilibrium, it is argued that the lack of equilibrium or the tendency towards it "must be due to extraneous factors" (factors external or exogenous to markets). This theoretical move is logically necessary, because the disequilibrium ultimately cannot be explained in any other way (in the short term, we could obviously say that you just have to wait a bit longer before equilibrium is reached). The effect is that either an economic law holds, or if it does not hold, this must be due to non-economic factors influencing economic phenomena. This strongly reduces the possible "explanatory power" of an economics based on the equilibrium metaphysic, because it means that "ad hoc" hypotheses must be introduced whenever persistent disequilibrium is observed. Another way of putting that is, that equilibrium economics is very limited in its ability to provide a market explanation for market phenomena. One result is a proliferation of eclectic interpretations, which, however insightful, have little scientific value because they combine elements which are not logically compatible. Another result is the disposition to believe that "if only phenomena were marketised or treated as analagous to market phenomena", then they would function in the way that the theory of markets says they do (the ideology of the benefits of market expansion). Economic activity is conflated with commerce, and the economy is conflated with the marketplace. My argument is really that the tendency towards the equalisation of profit rates can be conceptualised without any reference to equilibrium conditions or requirements, and without reference to a conservation principle. Marx was well aware that he could not scientifically "prove" his concept of economic value in any absolute way. However, he argues that using his concept of value enables a non-eclectic theory of capitalism, i.e. using this concept you can coherently integrate the explanation of capitalism and its history in a unitary theory - "the truth is the whole", i.e. the coherence of the whole theory, and its correspondence to the whole of the reality to which it refers. Jurriaan
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