From: "Mark Jones" <jones118@xxxxxxxxxxx>
To: "Steve Keen" <keen@xxxxxxxx>
CC: "Ipe@Csf. Colorado. Edu" <ipe@xxxxxxxxxxxxxxxx>
Subject: RE: Debunking Economics
Date: Thu, 18 May 2000 19:49:57 +0100
Since Keen inter alia debunks 'Marx's labour theory of value', which Marx
did not actually entertain, and even if he did, was not herewith debunked,
it is hard to feel that this book, despite Keen's self-satisfied assertions
that he is devoid of error, is anything more than a waystation between the
brothels of mendacious neoclassical pleasure and the calvary of marxian
truth. [Marx had a _value theory_ which is QUITE a different item]. The
book fails, sorry.
Mark Jones
http://www.egroups.com/group/CrashList
> -----Original Message-----
> From: pkt-owner@xxxxxxxxxxxxxxxx [mailto:pkt-owner@xxxxxxxxxxxxxxxx]On
> Behalf Of Steve Keen
> Sent: 18 May 2000 03:52
> To: pkt@xxxxxxxxxxxxxxxx
> Subject: Re: Debunking Economics
>
>
> Some good points here Robert; I'll reply in situ.
>
> Robert Vienneau wrote:
>
> > I have read through "Madness in Their Method" and skimmed some of the
> > remaining chapters. I am looking forward to being able to
> direct people to
> > Steve's book. I couldn't get through the chapter on original
> work on "Size
> > Matters" because the graphs took up too much of my memory. I have some
> > questions, though.
> >
>
> Sorry 'bout that! But with the number of illustrations in the
> text, there was
> no way to avoid large files. Maybe the best trick would be to
> download the PDFs
> and work within Adobe, rather than a (memory hugging) browser.
>
> >
> > I don't know that I've ever fully worked through the SMD theory. But I
> > wondered if an assumption of homothetic and identical utility
> functions was
> > SUFFICIENT, but not NECESSARY, for well-behaved aggregate
> demand functions.
> > Might it not be the case that some other configuration of
> utility functions
> > might, by weird happenstance, yield well-behaved downward
> sloping aggregate
> > demand functions? Then saying that theory shows demand curves cannot
be
> > well-behaved would be too strong. It would only be that theory gives
no
> > reason to expect downward-sloping demand curves and suggests that they
> > would rarely appear, at least on utility-maximizing grounds.
> >
>
> Good point. Bill Barnett has recently pointed out to me that
> there are some
> other conditions which allow the Slutsky conditions to hold at
> the aggregate
> level, but not the mainstays of neoclassical welfare SARP, WARP,
> and GARP. I
> will probably footnote this though, because I believe that--as I
> argue in the
> brief chapter on mathematics--the failure to prove aggregation
> under general
> conditions is akin to a "proof by contradiction" that society
> can't be reduced
> to the sum of its parts. That it is still passably possible to do
> so, under
> some conditions, to some limited degree, to me doesn't really
> detract from that
> fundamental failure.
>
> >
> > I think a lot of economists believe that marginal productivity says
> > something about market outcomes being just or rewarding people for
what
> > they contribute. I find that belief silly. Did you find a written text
> > saying that? I think a much more reasonable justification of
capitalism
> > would be based on Hayek and a discussion of the rules of the
> game. This is
> > sort of Blaug's line in his pamphlet on the CCC. Might you want
> to mention
> > something like this? Of course, such a defense of capitalism
> does not say
> > anything about distribution being just, does not support a hard-right
> > neoliberal attack on a mixed economy and policies to mitigate an
unequal
> > distribution, and permits experimentation with laws defining property
> > rights differently.
> >
>
> I actually discuss Austrian economics in moderate detail
> (somewhat more than I
> devote to Post Keynesianism!) in the "Alternatives" chapter. While I
still
> regard the Rothbard-style Austrianism with disdain, reading a book by
the
> Austrian philosopher Chris Sciabarra ("Marx, Hayek and Utopia",
> SUNY Press,
> 1996) has made me less dismissive of Hayek than I once was. It's
> also true that
> the Austrians have a defence of capitalism which is not entirely
> dependent upon
> the welfare concepts of neoclassical economics. But I feel that
> it is still
> heavily dependent on capitalism straying not too far from a neoclassical
> equilibrium, and the conditions of disequilibrium being not too
> different to
> those of equilibrium. Since I dispute both hopes, I dispute some of the
> normative conclusions the Austrians reach about capitalism.
>
> But generally, I agree that Hayek et al give a much better foundation
for
> supporting capitalism than do the neoclassicals.
>
> >
> > I do not see that Bhaduri's argument that the marginal product
> of capital
> > is generally unequal to the interest rate (because of price Wicksell
> > effects) has an analogy for the marginal product of labor and wages. I
> > think Hahn's Cambridge Journal of Economics paper on the
Neo-Ricardians
> > makes the claim for an analogous argument questionable. On the
> other hand,
> > I hadn't thought about the connection of this argument to Sraffa's
1920s
> > papers before. Given the stuff on markup pricing and the theory of the
> > firm, I don't think you have need of some analogous argument
> here, anyways.
> >
>
> I thought the analogy--that what applied at the "micro" level did
> not apply at
> the aggregate--was reasonable. Is that what you are objecting to?
> (in which
> case I'd better read Hahn's paper).
>
> >
> > One aspect of reswitching I like is as follows. If a technique
> is optimal
> > at two or more values of, say, the interest rate, then some wildly
> > different distributions will be compatible with the same
> quantity flows, at
> > least when looking at physical marginal products. Very different VALUE
> > marginal products can be compatible with the same relevant
> (left and right
> > hand) derivatives in physical terms. So much for the vulgar belief in
> > marginal productivity as rewarding factors according to their
> contribution.
> > That's probably not very clear, but do you make some point like that?
> >
>
> I actually took a different tack to explaining Sraffa in this
> book than I've
> taken before--more on the measurement issue, from which you can show
that
> rather than the rate of profit depending on the amount of
> capital, the measured
> "amount" of capital depends on the interest rate. I then
> tangentially refer to
> the possibility of reswitching, in one aside and a couple of
> examples. That's
> one concept which I thought just too difficult for this book--and
> if any reader
> wants to pursue it from there, they have references to follow
> now. I hope that
> my measurement explanation will assist in coping with re-switching.
>
> >
> > I found the transition from the CCC to methodology too abrupt.
> I know this
> > is not your fault. I have never been able to understand how one
> can respond
> > to the logical difficulties highlighted by the CCC by citing
> the F-twist.
> >
>
> Oh well; methodology had to appear at some point! I thought that,
> by the time
> I'd dumped on the preceding issues, it was time to raise the
> question of "how
> can they defend such sloppy theorising?"
>
> >
> > Might you want to include something about Steedman and
> Metcalfe's critique
> > of comparative advantage and the HOS theory of international trade?
> >
>
> Yes! But I ran out of both space and time. In the end, I decided
> to leave that
> for the hoped-for second edition!
>
> >
> > Should there be something about general equilibrium theory here? I
> > understand the claim that Sraffa showed distribution is prior
> to pricing.
> > But, given Hahn, I thought that too strong. I think Sraffa showed that
> > could be the case, and reconstructions of Classical wage theory and
the
> > Kaldor-Kahn-Robinson-Pasinetti PK distribution theory show how
> distribution
> > theory and pricing theory can be combined.
> >
>
> I actually discuss GE in the section on dynamics, because I think
> that side of
> its weaknesses hasn't been properly critiqued. In other words,
> Sraffa et al.
> give a good reason for doubting its logical consistency, but there is a
> question as to just how "general" is a generalisation of Walras
> which omits the
> time issues of which he was so conscious?
>
> >
> > Maybe this raises a question of approach. If some ideas were
> debatable, do
> > you want to take a position that a competent mainstream
> economist could not
> > argue with? Or do you want to adopt a harder position
> consistent with, say,
> > Neo-Ricardianism that might go a little beyond what the theory
> shows. After
> > all, why should neoclassical theory be the default?
> >
>
> I'm trying to land somewhere between those two stools. I'm not trying to
> convert neoclassicals, but I don't want to be easy pickings for
> them either.
> But if my position is less impregnable than it should, but can
> only be defended
> by requiring neoclassicals to "defend the indefensible", as the English
> opponents of fox-hunting say, then I'd be delighted!
>
> >
> > I assume you're aware that some editing has to be done to make figure
> > numbering and footnotes totally consistent with the text.
> Occasionally you
> > use the phrase "saw off" in a way that I assume is Australian slang. I
> > don't think that that works in American English.
> >
>
> Yes; I tried to rely on the program (Ventura Publisher's) auto
> numbering, but
> it was buggy (despite its otherwise superior performance to
> Word). I'm probably
> going the way of TeX after two less than perfect run-ins with
> Word "wanna be"
> DTP programs (Lotus Word Pro and Ventura). The learning curve may
> be a real
> pain, but from what I've seen, TeX works. I can't honestly say
> that for Word
> Pro or Ventura--let alone Word.
>
> And I replaced "saw off" with "transcended".
>
> >
> > I hope you find these comments helpful.
>
> They were indeed--and my list of acknowledgements continues to grow.
Many
> thanks Robert,
>
> Steve
>
>