[PEN-L:9721] RE: Re: Gen. Equilibrium

["Craven, Jim" <jcraven@xxxxxxxxx>]

-----Original Message-----
From: Gil Skillman [mailto:gskillman@xxxxxxxxxxxxxxxxx]
Sent: Thursday, July 29, 1999 11:12 AM
To: pen-l@xxxxxxxxxxxxxxxxxxx
>Subject: [PEN-L:9716] Re: Gen. Equilibrium


Doug, I can't tell from your post what you're taking issue with:  that gen
eq was revived in the 1930s?  That it was considered "everybody's
economics"?  What? Gil

>Mark Blaug writes in Economic Theory in Retrospect (5th ed., p. 290):
>
>"Utility theory was gradually deprived of all its bite and reduced
>from cardinal to ordinal utility and from ordinal utility to
>'revealed preference'; cost theories of value were shown, not to be
>wrong, but only valid in special cases; and general equilbrium
>virtually disappeared by 1900, only to be revived in the 1930s by
>Hicks and Samuelson as 'everybody's economics....'"
>
>This isn't the story you get from Keynes or modern post-Keynesians;
>what's up here?
>
>Doug

Response Jim C:

I think Blaug is probably correct in this assessment. The retreat from
cardinal utility (patently dreamland) to ordinal utility (distinction
without a difference) to "revealed preferences" (the naked
tautology--consumers maximize total ultility as "revealed" in the structures
of spending or, consumers maximize what they maximize) is but one of the
many retreats among the marginalists as their Weltanschauung, core
assmptions contrived to form the contrived syllogisms, linear/unidirectional
causality and "ultimate" independent and dependent variables (meaning
further causes and effects beyond the ultimates are beyond inquiry and/or
not subject to "scientific" inquiry given what positivism defines as
"scientific") etc are exposed to simple but penetrating questions.

So we get the "retreat" from absolute to "bounded" rationality; we get the
"retreat" from perfect to "asymmetric" information and factor mobility; we
get the "retreat" from maximizing to "satisficing"; we get the retreat from
the crude and absolute Homo Oeconomicus to the modern and "sophisticated"
Homo Oeconomicus who can include "non-tangibles" like patriotism, peer
approval etc in his/her ultility functions; we get the claim of having been
doing "hysterisis" all along; we get a retreat from one particular
equilibrium position from the ultimate "givens" (like distribution of wealth
and income etc) to a definite "range" of possible equilibrium positions;
etc. But these retreats merely point out, highlight, but never repair, the
fundamental mystifications and contrivances of the whole bankrupt paradigm
and its rhetorical intentions and the class/system interests served by those
intentions.

I believe that the Social Structure of Accumulation concept has some weight
here. New times, new imperatives, emerging/intensifying contradicitons, new
forms of alienation and mass questioning/disaffection with the system, new
Zeitgeists, new balances of forces within among the capitalists etc demand
new theoretical diversions, mystifications, rationalizations, apologia,
focuses,"permissible" angles/parameters of "analysis" and discourse etc and
the revival of marginalism and its widespread reintroduction/acceptance as
"orthodoxy" served, and serves in the present, to create new generations of
the ilk of scum like Lawrence Summers (marginal benefits/utility versus
marginal costs of genocide) and to divert serious attention from the most
critical questions and most critical angles/parameters of analysis necessary
to deal with those critical questions.

With growing neoliberal globalism, the general equilibrium stuff is in some
ways made to order. The marginalists get to say "we have been dealing with
interdependence, feedback, integration etc--to ultimate solutions or ranges
of solutions--all along. The mechanical interdependences between "factor"
markets, product markets, financial markets, foreign markets etc producing
equalizations, progressively reducing shortages and surpluses, allocating
resources to most "efficient" uses, speicalizations according to
"comparative advantages, and turning disadvantaged regions into emerging and
relative centers of profit potential (and therefore centers of potential
job, incomes, tax revenues, investment creation and increases) or ultimate
leveling "trickle down" is made to order for the neoliberal globalists in
SSA terms.

Personally, I view the whole theroetical edifice of marginalism and its
applications through the policies and ilk of Lawrence Summers et al (truly
marginalism reductio ad absurdum/nauseum)to be a disease worse than and more
threatening than all the global epidemics of the most deadly diseases
combined.

That's just my opinion.

Jim Craven