I've been thinking about the cambridge criticism a lot recently, specifically in regard to a parellel I noticed about what happens to the marginal contribution of labour if you remove the simplifying assumption that the given hours are optimal. The actual marginalist theory (S.J. Chapman) argues that the hours arrived at through a competitive market would tend to not be optimal. So, it's not just the capital side that relies on a circular argument. I was thinking about writing this up then the other day when I had a look back at Chris Nyland's 1989 book and was struck that he brought up exactly this point.
"Hicks argued that Chapman had already stated all that needed to be said on the causal determination of changes to worktime. He recognized, however, that the fact that worktime had both a temporal and an intensive character made it difficult to utilise marginal productivity theory to determine the return on the various factors of
production. The critical nature of this point has generally been missed both by those who have accepted the validity of marginal productivity theory and by those who have criticized its use because of the difficulty of measuring capital. In other words, thuogh Hicks may not have been aware of the capital-measurement problem, he did realise that it was extremely difficult to calculate factor returns if one acknowledged that labour time could not be measured merely by its temporal dimension. To get around this problem he assume 'for the present' the existence of an optimum working day that would yield a greater supply of labour than any other."
Aside from Nyland, I am not aware of any other accounts that point to the magnitude of the labour-measurement problem as comparable to that of the capital-measurement problem. Nyland says only "this point has generally been missed." Is that perhaps an understatement?
The Sandwichman
PS: Michael, I
mentioned your name and passed on your contact info to a friend who is traveling to Venezuela.
"michael a. lebowitz" <mlebowit@xxxxxx> wrote:
What has
done ideological service has never been the neo-walrasian GE stuff
but, rather, the good old marginal utility everyone gets what she
deserves (as long as....) mantra. So, a challenge to the idea that
the return that capital is determined by its marginal contribution on
the basis that the very summing of capital requires the interest rate
did make folks a bit uneasy (a LOT more than-- what are you assuming
about perfect knowledge, absence of uncertainty?).