> And this is the whole point, the point that Justin seems incapable
> of understanding. Measurement, the basis of all science, requires
> an objective unit of measure. For the political economy of
> Capitalism that unit of measure is the quantum of socially necessary
> labor time, what Marx called "value." Without such measurability
> "economics" has descended steadily to its present pitiful state.
>
> Shane Mage
> ---------------------------
> Measures are conventions, especially with regards to social relations;
> they too are the product of struggles and *choices*. Is an inch or a
> meter *objectively* an inch or meter independently of us? I don't
> think so.......
>
> Auto --------------------------
> And now we come full circle at last. This whole thread was sparked by
> Brad Delong's abstinence theory of the origin of profit. One wonders why
> Bradford did not choose to explain the origin of profit via reference to a
> well-specified (through a set of highly restrictive assumptions) aggregate
> production function Y = F(L,K) in which the wage rate and the profit rate
> are equal to and determined by their marginal product rather than his
> just-so farmers which are even more remote from a capitalist economy then
> a well specified aggregate production function. Indeed, it would seem for
> someone of his ilk that he would want to use something off-the-shelf from
> contemporary mainstream theory. Surely this would be a better strategy
> because he could kill to birds with one stone. For it would provide him
> with the grounds to refute any theory of exploitation regardless of
> whether it was Marx's theory or any view that say casts Walmart workers as
> exploited in the everyday sense (poorly treated with respect to present
> norms in the retail sector).
>
> But we, and here I am referring to my learned Neo-Ricardian friends
> (Justin and Auto), know very well why Bradford did not take this route.
> He could not take it precisely because this is where the Neo-Ricardians
> cut their teeth and planted their flag. The capital controversy was about
> the notion that capital along with labour could be used to explain the
> distribution of income in a capitalist economy. We know what the result
> of the Neo-Ricardian intervention in the capital controversy was. In order
> for the neoclassical aggregate production function to yield the results
> they wanted (labour and capital each receiving their marginal product)
> they ended up having a simple labour theory of value at the core of their
> model, or more accurately, they ended up with the same set of restrictive
> assumptions they had contended made the Marxist LTOV unscientific. A
> beautiful irony if ever there was one in the history of economic thought
> given the whole marginal productivity theory of distribution was designed
> from the get-go to counter the distributive claims at the heart of the
> LTOV.
>
> But let us return to our Neo-Ricardian friends, learned as they are, they
> are not being very fourth write about the lacuna which sits TDC in the
> Neo-Ricardian research project -- the origin of profit. Following
> Sraffra, the Neo-Ricardian project has been about the study of the
> quantitative relations between wages, the rate of profit and relative
> prices. In this sense Justin is quite correct, there is absolutely no
> need to transform values into prices; prices can be taken at face with the
> question as to their value dimensions thereby rendered superfluous. After
> all, why convert values into prices when the prices are what you are
> after. But this is not the thrust of the LTOV, as Medio pointed out way
> back in 1972 "the derivation of prices from values, the solution of the
> 'transformation problem' is only subsidiary and a formal proof of
> consistency of Marx's theory of value. Even when this is worked out it
> remains to be explained how it is that profit exists at all.In this
> respect, Marx's theory of surplus value is significant and still
> constitutes the only valid alternative to the neoclassical explanation of
> the origin and nature of capitalists' gains"(italics added). This
> characterizes the state of affairs to this today.
> A simple market place of ideas theory tells us why despite a hundred years
> war on the LTOV it will not go away: there is a demand for an explanation
> as to the origin of profits and the determinants of distrobution. And
> neo-Ricardians have nothing to sell in this market. This is why Justin is
> willing to entertain Bradford's parable about the poor starving farmer
> whose profits arise from abstinence which is really a rehash of Nassau
> Senior's abstinence theory that was so wholly discredited a long time ago.
> No wonder it is then that they fall for Bradford's carrot - like
> sophomores to an intellectual smack-down. In their neo-Ricardian induced
> haze they realize they are actually back in a pre-Marxian stage of
> analysis albeit armed with better algebra.
>
> You shamefully list Nitzan as innovator in this respect simply because he
> is selling a theory of the origin of profits. And while Nitzan's theory is
> an improvement on Bradford's just-so farmers it hardly ranks as a theory
> of the origin of profit. To see why consider Nitzan's theory of profit
> reduced to its notational form B = f(P), where B is a firms profit and P
> is commodified power (that is power that can be bought and sold in
> chunks). Or stated informally, the mass and rate of profit of enterprise
> is a function of the quantity of power that an enterprise has relative to
> other capitals. But in what does this power consist? Well this power
> allows firms to grow via M&A and via manipulations in relative prices
> (inflation). But wait! Talk about tautologies, I thought profit was a
> function of power but now it seems that power is a function of profit.
> There is something quaint in the way Nitzan marries his pre-modern
> political economy to a post-modern theory of power. But quaintness does
> not a theory of the origin of profit make.
>
> Moreover, if you think through the implications of Nitzan's theory of
> profit you quickly realize its implications for the neo-Ricardian project.
> In his world prices are mere artefacts of power without any anchor in any
> knowable process: price formation is political formation which is price
> formation. Can you feel the ground slipping away from your feet boys this
> is a topsy-turvy world indeed. Stay away, because in this world even the
> rather timid achievement of the neo-Ricardians (a coherent account of the
> quantitative relationship between wages, rates of profit and relative
> prices) must be jettisoned. At best Nitzan's theory is trivially true
> i.e., prices are anywhere and everywhere a political phenomena, at worst
> it is patently false.
>
> But hey have your cake and eat it to. No one ever claimed there was a
> rational core to the neo-Ricardian project, just a series of just so
> models with a hodgepodge of eclectic assumptions tailored to the minor
> object of inquiry depending upon the interests of the researcher. Don't
> like this model grab another one. Need a theory of the vertically
> integrated firm; grab Coase's ad hoc theory. Need a theory of profit;
> practice abstinence or latch on to Nitzan's. Does it matter if taken
> together none of it sums to an internally consistent whole? No! The only
> ones who have to meet these rigid standards of internal consistency are
> apparently the least scientific amongst us - the Marxists. And when we
> demonstrate time and again a coherent transformation of values into prices
> via a number of well specified protocols you dismiss it out-of-hand as
> unconvincing and tautological. Displaying the exact same arrogance of the
> neoclassicals that fuelled the fury of the neo-Ricardians in the first
> place. What a pitty you have become the attack dogs you once sought to
> heel.
>
> Now let me ask why is it you boys are so concerned with the technicalities
> of the transformation of values into prices? Is it because if you were to
> admit that the transformation of values into prices has been well worked
> out you would also have to admit that another research project has a
> consistent theory of the quantitative relationship between wages, rates
> and profits, and relative prices? I appreciate why you jealously guard
> this terrain, as it is the only internally consistent contribution
> neo-Ricardians have made to the general body of scientific economics. But
> surely there is room for two consistent theories, which, as you have
> pointed out, are not at all in contradiction? Maybe your hostility stems
> from the shortage of radical graduate students so the competition is
> fierce for inductees and this is just the way your party wages war for
> bodies. The only other reason I can think of for your shrill attitude and
> dogmatic reiteration of well-worn but off-the-mark or trumped- up
> critiques of the LTOV is that it is a kind of ritualistic bonding practice
> with institutionally entrenched mainstream paradigm workers like Bradford.
> Whatever the case may be, to borrow a phrase from Lebowitz, "to engage in
> such deeply embedded dogmatism it is to weep".
>
> This is my last post on this subject. I have already sat through Nitzan's
> graduate seminar where he hammered away every week on the LTOV to which I
> am eternally grateful to him for helping clarify the issues and the stakes
> involved.
>
>
>
> In solidarity,
>
>
>
> Travis