simple repoduction; reply to Keen

[djones@xxxxxxxxxxxxxxxxxxx (jones/bhandari)]

Thanks to Steve for the reply:

> if that economy is to achieve simple reproduction,
>then (a) for a while until actual depreciation matches fixed
>capital output, it will grow; and (b) the demands for labor
>in fixed capital output will grow dramatically.

As I understand it,  Marx has  assumed that there is no accumulation in
department I so (b) is not true--the demand for labor does not grow
dramatically in this department. However, in order for the constant output
from department I to be realized,  department II must so dramatically
expand that the requisite population growth over a four year period is
untenable.  This is what Grossmann is emphasizing in the passage quoted in
the last post.

He is pointing to the continuous threat of the overproduction of fixed
capital and the dynamic effect it has on the entire structure of bourgeois
society. More about this in a follow-up post.

>there is nothing illicit in such analysis with beginning
>with a system which is already successfully executing simple
>reproduction--i.e., your initial conditions do not have to
>be "zero", they can be, for example, the equilibrium
>conditions.

But that is what Grossmann does in the already cited passage.  He shows
that only at an instant can Marx's system  successfully execute simple
reproduction; however if we take time to be a continuous flow,
overproduction in Div I is certain.  Just to be clear: if we take
Professor Halevi's scheme in any of the first three years, it is only
possible to avoid overproduction of fixed capital by positing an
unrealistic growth in population.

In other words, the system could never reach simple reproduction. It is
important to show  that Marx was never attempting to show the  possibility,
much less the probability, of the system executing or arriving at simple
reproduction or achieving any sort of equilibrium. His scheme of simple
reproduction is, as Grossmann argued, only a step in his approximation to
reality. A careful discussion is required to determine exactly what Marx
derived from this approximation.

Why have I worked myself "into a lather over this interesting, but in the
end, unimportant problem" (as Steve puts it)?

Well, I find very powerful the dynamic analysis which Grossmann derives
from this problem of overproduction.  I will quote a huge chunk of it in a
follow-up post.

Rakesh



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