[PEN-L:9375] more Sraffa vs. Walras

[James Devine <jdevine@xxxxxxxxxxxxxxx>]

I wrote: >A long time ago, someone (Gil Skillman, I believe) argued
on pen-l that the Sraffa system was simply a special case of the
Arrow-Debreu general equilibrium model.<

He now writes: >>I confess I made a claim similar to this, but the
details of the argument are important.... why should we study the
Sraffian model?<<

Gil, I wasn't expecting such a detailed response from you. I was
simply recommending Dumenil & Levy's book, which seems to be going
beyond the strait-jackets of both Sraffian and Walrasian models.

They clearly have more affinity with the Sraffian model than with
the Walrasian model since they identify with the "classical"
tradition of Smith, Ricardo, and Marx. But their vision of
competition, price determination, etc. is highly superior to the
Sraffian system, which does not have any serious conception of
competition or price determination. (It's also superior to the
Walrasian story of price determination and competition, which is
laughable.)

Again, I recommend the comparison of the Sraffian and Walrasian
approaches in their chapter 4. I don't feel I could do their
presentation justice, however, so I won't even try a summary.

repeating part of my long quote from D & L, with my editorial
comments in the middle and at the end: >"There is also no denying
the fact that modeling is not neutral and, actually, was not neutral
in the development of economic theory. A model is based on a
specific set of mathmeatical tools, such as linear equations, or
dynamic systems. Here, it is obvious that there is a feedback effect
from mathematics on economic theory. For example, the development of
the so-called 'method of equilibrium' [that dominates mainstream
economics], paralleled the progress of mathematics, from linear
equations to complex fixed-point theorems. It is also clear that the
lack of interest in dynamics can be partially explained by the
comparative difficulty and late maturity of the mathematical field
of dynamic systems. [I would also mention the ideological
attractiveness of equilibrium conceptions. -- JD]<

Gil writes: >>Attractiveness to which ideology? Austrian economists
also firmly reject the notion of equilibrium.<<

But Austrian economists are not _dominant_ in mainstream economics.
(thank god!) Maybe they dominate one wing of the Economics
Department at the University of Chicago (which itself is only one of
two economics departments there), but they hardly dominate the
economics profession, which is currently very Walrasian.

>>On the other hand, Marx's assessment of capitalism as an
exploitative system would apply even if it were somehow in
equilibrium, understood statically or dynamically.<<

However, his _conception of economics_ (which is what's relevant,
not someonebody's interpretation of how his system would "apply") is
dialectical, not equilibrium-bound. (One can't separate what are
sometimes called Marx's "substantive propositions" from his method
as some would like, without doing substantial damage to his
political economy. To try to do so, to pin down his "assessment of
capitalism" independently from his dialectical method, ends up as a
scholastic effort to read the "holy books" out of context.)

BTW, in case there was any confusion, the long quote from D & L is
merely the preface to their development of a dynamic economic model.


in pen-l solidarity,

Jim Devine   jdevine@xxxxxxxxxxxxxxx
jim_devine@xxxxxxxxxxxxxx
Econ. Dept., Loyola Marymount Univ.
7900 Loyola Blvd., Los Angeles, CA 90045-8410 USA
310/338-2948 (daytime, during workweek); FAX: 310/338-1950
"It takes a busload of faith to get by." -- Lou Reed.