[PEN-L:5230] Re: Profit-rate equalisation

[GSKILLMAN@xxxxxxxxxxxxxxxxx]

Thanks to Alan for his cogent and detailed response to my post on the
Kliman/McGlone/Freeman (et al.) understanding of Marx's writing on
value and prices.  I too am somewhat dismayed that a literature of
this age (since 1988 at least), size, and degree of internal
coherence has received so little critical attention.  I'm probably
not the right one to supply this attention.  However, here we are,
and so far I do not see a satisfactory answer to a fundamental
criticism of the approach.

However, before I get into that, a bit of separating wheat from chaff
is in order.  Recall I raised two issues with respect to what I'll
abbreviate as the KMF approach, one having to do with the
dynamic system being proposed (or reaffirmed) and the other
concerning the value-theoretic interpretation of that system.

From's Alan's post I see that my argument on the former point is
based on misinterpreting a possible outcome of the approach (i.e.,
iteration to the Sraffian simultaneous-equation solution on the
assumption of equalized profit rates in every iteration) as one of
its essential characteristics, and criticizing it on that basis.

Perhaps I can be excused for this misinterpretation, since
observation of this outcome didn't originate with me (e.g., double-
check above the subject heading under which this discussion arose!),
but in any case I of course agree that the KMF framework need not
suppose equalized profit rates or convergence.

A minor point:  while I agree with Alan that equalized profit rates
*per se* are not necessary to guarantee convergence, it remains the
case that *some* stationary distribution of profit rates must be
presumed, for the same reason that a constant technical matrix is
required.  Equal profit rates is the most obvious candidate, since
Marxian theory does not incorporate such considerations as risk
preference (and thus, for example, value theory cannot account for
systematic differentials between average rate of return on equity and
average rate of return on debt--but that's a separate post, speaking
to the desirability of eclecticism).

But then the substance of my remark still holds, although with much
less significant consequence:  presuming a stationary profit rate
matrix together with an iterating price matrix invokes an
analytically unjustified distinction in the market determination
process for profit rates and commodity prices.

That said, the bottom line is Alan's:  the basic question here is the
actual nature of the dynamic system, granting that it may not
involve a stationary profit rate vector or technical matrix.  Agreed.

Alan spices this and related comments with several zingers against
neoclassical economics which doubly miss their mark, first, because
I'm not a neoclassical economist, and second, because there is
nothing in the KMF approach which is *intrinsically* foreign to
neoclassical economics.  His paraphrase of Laplace could have as
readily been uttered by a neoclassicist as by a Marxist; Alan in
particular might be sensitive to the implied distinction between
*common or traditional* and *necessary* practice.

Of course, KMF interpret the results of their analysis in a
distinctly un-neoclassical fashion, but that leads us to the "wheat"
part of the discussion, which for manageability's sake I'll put on a
separate post.

Gil Skillman