Re: marginalism continued

["Barkley Rosser" <rosserjb@xxxxxxx>]

     Actually equilibrium is a very empirical concept.
One does need to have utility, have existing or
well established demand or supply curves, or any
of the rest.  One need only look at shortages or
surpluses.  These are easily observable from
changes in inventories, although there can be a
complication for desired changes in inventories.
But in general, if inventories are rising (either in
a single market or in the aggregate) there are
surpluses and if vice versa there are shortages,
and in neither case is there equilibrium. If inventories
are reasonably constant, there is equilibrium or
something approaching it.
     Of course this is all contingent on the time horizon
over which one wishes to look.  The shorter the time
horizon, the harder it is to observe the situation.
     BTW, even in the imperfect competition case,
supply conditions still matter.  As noted by someone,
the profit max condition is still MR = MC.  The latter
reflects supply conditions.  A more serious problem
in any market form is the behavioral bounded rationality
problem, decisionmakers may simply not know their
own marginal costs, and a lot of evidence suggests
that they don't.  That is why reasonable and practical
PK micro a la Fred Lee emphasizes the Kaleckian
point that most real world pricing is of the markup
from average cost variety in markets where individual
firms have any control over pricing.
Barkley Rosser
----- Original Message -----
From: "William B. Ryan" <william_b_ryan@xxxxxxxxx>
To: <socialcredit@xxxxxxxxxx>; <pkt@xxxxxxxxxxxxxxxx>
Sent: Saturday, November 01, 2003 1:29 PM
Subject: marginalism continued


> > All it says is that "equilibrium" is at the point where the
> > supply and demand functions *intersect.* It says nothing
> > about actual price at any actual point in time.
> From that the proper price is given as the equilibrium price, with
deviation
> from such resulting in shortages and surpluses. Now this is circular logic
> for the proper price is needed to determine utility for how else do you
> determine marginal cost?
> --
>
> Keep in mind that I am not a defender of marginalism.
> My criticism of you is that you do not properly
> characterize it, therefore your criticism is
> irrelevant in that it merely reflects your personal
> misunderstanding.  It becomes particularly egregious
> because you start your own analysis from the very
> same premises as do the marginalists -- limited
> resources, unlimited wants, etc.  Starting from those
> same premises the marginalist argument is quite
> logical and consistent.  Yours is a contradictory
> hodge-podge.
>
> The marginalist argument is from the perspective of
> the profit-maximizing firm, not the economy as a
> whole.  The vertical axis of their graph is
> demarcated in utils received and expended per
> accounting period, not dollars - though sometimes
> they will substitute the dollar symbol for the util
> in their expositions.  The horizontal axis is
> demarcated in quantity produced per accounting
> period, not time.  The accounting period is therefore
> undefined.  It could be very short or very long, or
> something in between.
>
> They assume, in terms of the graph from left to right
> along the horizontal axis, the supply cost curve is
> sloping upward with increasing quantity produced per
> accounting period due to the assumed marginally
> diminishing productivity of labor and capital.
>
> The utility received curve is sloping downward due to
> assumed marginally falling demand from their
> customers with increasing quantity supplied per
> accounting period.
>
> The point where the two curves intersect is the point
> of realized profit maximization for the firm in terms
> of net utils received per undefined accounting
> period.
>
> The theory does not explain how utils are translated
> into dollar prices in actual markets.
> ------------------------------------
>
>
> > The hypothetical primitive economy is characterized by atomized
> > producer/consumers who trade between themselves. The modern
> > economy is characterized by multistage production where the
> > means of production are differentiated from consumption. In
> > such a system money is more in the nature of a ticket or
> > claim check against a portion of that production rather than
> > it is a medium of exchange.
> Money is money. It is not a claim slip, for claim slips have claim on
> something to which money doesn't. Everybody could one day decide to not
use
> your currency, and you are out of luck.  It is merely an overvalued
> commodity.
> --
>
> Saying that money is money is a truism that does not
> define money.  You arbitrarily say that it is not a
> claim slip, then define claim slips but arbitrarily
> assume that money does not fit that definition.
>
> Modern money is what modern money is, not what you
> say it is.  Most people think of money as being the
> form of credit they receive in their pay vouchers.
> But that credit enables the final resolution of the
> process of production that is conducted
> contractually, not through medium of exchange.  And
> the credit you receive in your voucher is itself a
> generalized contract or ticket.  It is something
> quite different than the paper it is written on.
>
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