Value Theory (2): TSS Paradigm (Corrected)

S Chatterjee schatterjee2001 at SPAMyahoo.com
Tue Mar 6 14:33:52 MST 2001



Rakesh Bhandari wrote:
>
> since you have assumed that v=0, how can one
> determine whether a  rising s/v, as well as ever
>larger valorization base (i.e, absorption
> of more labor in each period), would counteract the
> falling profit  rate which you have derived on TSS
>assumptions?
>
> Moreover, the fall in the rate of the profit could
> be so slow and  more than compensated for by the
>increase in the mass of profit extorted that the
>throttling of the capitalist mechanism would only
> obtain some time before the sun burnt out, as Rosa
> Luxemburg once put  it.

Rakesh,

Sorry for the late answer. All of the points you raise
are correct which will counteract the tendency of the
rate of profit to fall in a real market economy. The
example (taken from Freeman) was indeed 'absurd'. The
point of the example was only to show that depending
on the concept of value used, i.e., whether
simultaneous or TSS, the ROP (in value terms) can
behave differently. Thus, the prediction and validity
of any theory ultimately depends on the soundness of
the concepts used as the foundation.

Freeman has a point that the simultaneous
interpretation of value established by von Bortkiewicz
is an equilibrium paradigm which has created immense
confusion in Marxian economy for the last 100 years.
Using a simple example,  it can be shown that the TSS
calculations converge to the simulataneous
calculations for an unchanging (static) economy.

Ladislaw von Bortkiewicz, who was an admirer of
Walrus, established a tradition (equilibrium marxism)
which has foisted an alien body of thought (general
equilibrium) on Marx, and has thus basically distorted
him. Such has been the influence of this equilibrium
paradigm, that even highly intelligent scholars like
Anwar Shaikh and Paul Sweezy have fallen for it.

The market economy is almost never in equilibrium.
This is the law of the market - constant turbulence.
Thus any economic theory which is based on the
assumption of equilibrium (markets clear, input prices
equal output prices, etc) will be unable to describe
the real movement. It is probable that the economists
wanted to model the economy as is done in the physical
sciences. So they may have borrowed the concept of
equilibrium from the physical sciences and
engineering. But in these fields, where processes are
carried out (in laboratory or in industry) under
controlled conditions, it is possible to approach
equilibrium. So we have sciences which deal explicitly
with equilibrium, e.g. statics, chemical equilibria,
thermodynamics, etc. But to extrapolate the concept of
'equilibrium' to the market economy is a great error
and leap of faith.

By doing this, equilibrium marxian economy (if it can
be called that) has also distorted the nature and
meaning of the transformation problem. It seems now
that Marx was right after all and all the criticism of
Marx for "having failed to transform the inputs" is
widely off the mark. Tne TSS viewpoint(which Freeman
claims was Marx's original meaning), which I am still
learning about, is thus a break with this old
tradition, whose further development will challenge
the basic foundations of neoclassical economics  and
ultimately replace it. Like the Ptolmaeic system was
overthrown by the Copernicun system inspite of the
Church. Which will surely be a great victory of
science over ideology. "A spectre is still haunting
the economics profession  -- the spectre of Karl
Marx".

Sid


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