RE: Re: RE: Re: : RE: Lies, damned lies, and econom ics

["Devine, James" <jdevine@xxxxxxx>]

Gene says:  > I've said about all I can say -- I think our disagreement comes down to this:  I think it is a mistake to give any ground, any voice at all, to neo-classical micro. <

 

I don't believe in compromising with NC economics. But I don't think that some theories that are identified as "neoclassical" (such as supply & demand) are the sole province of NC economics and thus wrong. Rather, it's how the NC types _use_ S&D that's wrong. 

 

>If I am not misinterpreting you, you think that after beginning with neo-classical a critique can be crafted that will put students in the picture.  (I didn't intend a pun there, but I kind of like it.)  <

 

I didn't say that and I don't know where you got that impression. I said that some valid elements of what's usually thought of as NC economics could be extracted. For example, cost curves make sense, more of less. I'd use Kalecki's idea that excess capacity produces horizontal short-run cost curves, for example.

 

I wrote : >>NC economics allows for non-competitive results with P > MC. <<

 

Gene writes:>Of course, NC economics allows for ANYTHING.  Every time a hole in logic or absurd assumption is raised, the reply is "Well, yes, but ... " and then a new wrinkle is trotted out to preserve the story/propaganda for another generation.  DeLong is doing a new wrinkle now (new to him, apparently) with the discovery that monopoly and discriminatory pricing is good for society.  These people cannot be topped or stopped -- only ignored by us.  <

 

Unfortunately, given the power that the NC types have (while they deny that power plays any role at all), we can't ignore them in practice. I think I'll ignore deLong, though.

 

BTW, on the issue of P = MC, I'd like to pick up something I said before: even if P does equal private MC, that doesn't mean that it equals social MC. That's an important point, i.e., that even the imaginary "perfect market" isn't perfect, because of externalities. (BTW, we might thank the NCs for clarifying this point: economists have known about externalities for centuries, but it was the NC conceit that there are some places where they don't exist made it clearer what their role was.) I think that this is more important than the P > private MC theory (i.e., monopoly), because I don't think the ideal perfectly competitive market ever has existed outside of a small sector. The emphasis on monopoly encourages the illusion that there once was a golden age of competition.

JD