tag:blogger.com,1999:blog-267065642024-03-18T08:28:54.804-04:00Thoughts On EconomicsRobert Vienneauhttp://www.blogger.com/profile/14748118392842775431noreply@blogger.comBlogger1499125tag:blogger.com,1999:blog-26706564.post-1151835560707333482025-01-01T03:00:00.000-05:002020-01-02T09:23:52.736-05:00WelcomeI study economics as a hobby. My interests lie in Post Keynesianism, (Old) Institutionalism, and related paradigms. These seem to me to be approaches for understanding actually existing economies.<br /><br />The emphasis on this blog, however, is mainly critical of neoclassical and mainstream economics. I have been alternating numerical counter-examples with less mathematical posts. In any case, I have been documenting demonstrations of errors in mainstream economics. My chief inspiration here is the Cambridge-Italian economist Piero Sraffa.<br /><br />In general, this blog is abstract, and I think I steer clear of commenting on practical politics of the day.<br /><br />I've also started posting recipes for my own purposes. When I just follow a recipe in a cookbook, I'll only post a reminder that I like the recipe.<br /><br /><B>Comments Policy:</B> I'm quite lax on enforcing any comments policy. I prefer those who post as anonymous (that is, without logging in) to sign their posts at least with a pseudonym. This will make conversations easier to conduct.Robert Vienneauhttp://www.blogger.com/profile/14748118392842775431noreply@blogger.com65tag:blogger.com,1999:blog-26706564.post-51933351163377758942024-03-16T08:00:00.001-04:002024-03-16T08:00:00.130-04:00Elsewhere<UL>
<LI>Matt McManus on <A HREF="https://jacobin.com/2024/03/sowell-cynical-social-domination-conservatism">Thomas Sowell</A>.</LI>
<LI>A <A HREF="https://jacobin.com/2024/03/frantz-fanon-rebels-clinic-review">review</A> of Adam Shatz's biography of Frantz Fanon.</LI>
<LI>Nathan Robinson <A HREF="https://www.currentaffairs.org/2024/03/why-we-need-degrowth">interviews</A> Kohei Saito on degrowth.</LI>
<LI>I have not read Bob Rowthorn on <A HREF="https://newleftreview.org/issues/i86/articles/bob-rowthorn-neo-classicism-neo-ricardianism-and-marxism.pdf">neo-ricardianism</A> in decades. I wish NLR made PDFs of old articles freely available.</LI>
</UL>Robert Vienneauhttp://www.blogger.com/profile/00872510108133281526noreply@blogger.com0tag:blogger.com,1999:blog-26706564.post-7138180285914507602024-03-11T08:16:00.000-04:002024-03-11T08:16:04.440-04:00To Do: Perverse Switch Points And The Economic Life Of A Machine<TABLE CELLSPACING="1" CELLPADDING="1" BORDER="1" ALIGN="center"><CAPTION><B>Table 1: Lower Rate of Profits Around A Switch Point</B></CAPTION>
<TR><TD ALIGN="center"><B></B></TD><TD ALIGN="center"><B>Traditional Marginalist Story</B></TD><TD ALIGN="center"><B>'Perverse' Marginalist Story</B></TD></TR>
<TR><TD ALIGN="center" ROWSPAN="2"><B>Traditional Austrian Story</B></TD><TD ALIGN="center">Negative real Wicksell effect, greater net output per worker</TD><TD ALIGN="center">Positive real Wicksell effect, smaller net output per worker</TD></TR>
<TR><TD ALIGN="center">Longer economic life of machine</TD><TD ALIGN="center">Longer economic life of machine</TD></TR>
<TR><TD ALIGN="center" ROWSPAN="2"><B>'Perverse' Austrian Story</B></TD><TD ALIGN="center">Negative real Wicksell effect, greater net output per worker</TD><TD ALIGN="center">Positive real Wicksell effect, smaller net output per worker</TD></TR>
<TR><TD ALIGN="center">Shorter economic life of machine</TD><TD ALIGN="center">Shorter economic life of machine</TD></TR>
</TABLE>
<P>
I have been thinking about perturbations of coefficients in a <A HREF="http://robertvienneau.blogspot.com/2023/11/variations-in-economic-life-of-machines.html">model</A>
of fixed capital. This research can be redirected to find examples to fill in the above two-by-two table.
Under obsolete marginalist teaching, a lower rate of profits encourages firms to addopt more capital-intensive techniques.
At least two measures of capital intensity are available. Burmeister champions a measure of real Wicksel effects.
Böhm-Bawerk championed a measure of the period of production which I am identifying, in this context,
with the economic life of a machine.
</P>
<P>
The upper-left entry is the only one that conforms to the traditional story with both measures. I want to
show that all four entries are possible. By perturbing an <A HREF="https://robertvienneau.blogspot.com/2023/07/the-emergence-of-non-monotonic.html">example</A>
from Salvadore Badone, I can fill in three of the entries, all but the bottom right.
By perturbing an <A HREF="http://robertvienneau.blogspot.com/2019/08/structural-economic-dynamics-and.html">example</A> of a 'one good' model,
I can fill in that square and repeat two others.
I also have an <A HREF="https://robertvienneau.blogspot.com/2024/02/variation-on-example-from-schefold.html">example</A>
from Bertram Schefold.
I'd like to find a single example with perturbations that can fill in all four squares.
</P>
<P>
I want to recall that this work complements the <A HREF="https://onlinelibrary.wiley.com/doi/abs/10.1111/meca.12267">corn-tractor model</A> from
Ian Steedman. Around each switch point, a different type of tractor is produced in Steedman's model, unlike in these examples.
Each tractor works at constant efficiency, while I allow efficiency to vary. We both look at variations of the economic lives of machines.
And this analysis is examining an issue independent of capital-intensity, as usually argued about in the Cambridge Capital Controvery.
Demonstrating this independence is rather the point of filling in the above table.
</P>
<P>
I need a survey of analyses of fixed capital that does not end with a pure fixed capital model. Or, at least, I need to
summarize a paper from <A HREF="https://link.springer.com/article/10.1007/s40888-019-00147-7">Biao Huang</A>.
Perhaps I can avoid such a survey by just citing a model of pure fixed capital for existence but otherwise de-emphasize it.
My goal is to be as terse as possible, with illustrations.
</P>
<P>
I also need to say something about why economists of the Austrian school should care. It seems to me that
such economists often <A HREF="http://robertvienneau.blogspot.com/2023/10/ludwig-von-mises-wrong-on-capital-theory.html">say</A>
that they have long ago developed their theory where it no longer relies on aggregate measures or physical measures of
capital-intensity. I want to assert that they have not succeeded and still implicitly rely on the intuition from previous
theory.
Saverio Fratini <A HREF="https://link.springer.com/article/10.1007/s11138-019-0432-0">makes</A> a similiar case.
It seems to me that I just need to note the existence of these claims and argue that the economic life of
machines is one aspect of the Austrian theory of capital.
</P>
<P>
A difficulty arises of where to publish this. My previous version was rejected from <A HREF="https://onlinelibrary.wiley.com/journal/1467999x"><I>Metroeconomica</I></A>.
Their editors, reviewers, and readers are unlikely to be astonished by these claims.
On the other hand, some editors and authors of mainstream journals would claim they have long ago moved to and then transcended
abstract models which this sort of work does not address. Yet they continually have a non-articulated background intuition
inconsistent with the theory of prices of production.
<A HREF="https://www.tandfonline.com/doi/pdf/10.1080/09672567.2022.2074447">Fabio</A> <A HREF="https://www.jstor.org/stable/23722913">Petri</A> has long argued along these lines.
</P>Robert Vienneauhttp://www.blogger.com/profile/00872510108133281526noreply@blogger.com0tag:blogger.com,1999:blog-26706564.post-53993950210825354932024-03-06T07:01:00.000-05:002024-03-06T07:01:23.013-05:00New Interpretations Of Marx<P>
This post is basically complaining that I cannot keep up.
</P>
<P>
I think I am fairly informed on Karl Marx. I do not read German, and I have not even read some early works.
My area of concentration is reading <I>Capital</I> as a work of mathematical economics, which cuts against the
subtitle and, maybe,
<A HREF="http://robertvienneau.blogspot.com/2023/07/a-letter-from-marx-to-engels-in-1868-on.html">de-emphasizes</A> <A HREF="https://robertvienneau.blogspot.com/2018/02/marx-versus-classical-economics.html">a</A> <A HREF="https://robertvienneau.blogspot.com/2013/05/marx-on-ricardo.html">break</A>
with classical, especially, Ricardian political economy.
</P>
<P>
More generally, I thought Marx generally praises the tremendous increase of productivity brought about by the bourgeoisie.
He downplays the accompanying environmental degradation. Imperialism extends capitalism into non-European colonies.
Marx deplores the violence, but thinks rationalization of such societies is progress.
</P>
<P>
As I understand it, some of the literature below challenges these ideas. This is partly because of the current
context. But it is also because of new texts brought into circulation by the second attempt at a
<A HREF="https://mega.bbaw.de/de">Marx-Engels-Gesamtausgabe</A> (MEGA2).
<A HREF="https://jacobin.com/2024/02/david-ryazanov-revolutionary-marxism-scholar">David Ryazanov</A> led the first attempt at MEGA. Stalin first dismissed
him to internal exile, then killed him in one of his purges. I have not read him, but I gather Musto draws on Marx's reflections
from visiting Algiers on a doctor's recommendation. Anderson, I guess, draws on journalistic writings. These two offers re-evaluate what Marx has
to say about colonialism. I am currently reading Soren Mau. The instruments and violence and intellectual hegemony of those presently the interests
of capitalists as universal interests help maintain the reproduction of capitalism. Mau looks at a third means for such reproduction.
</P>
<P>
And we also now have available a new translation of the first volume of <I>Capital</I>.
From Heinrich, I learned that the structure of the first chapter was quite different in the first edition.
Some turns of phrase, such as, "Moneybags must be so lucky", come from the Moore and Aveling's english translation.
</P>
<P>
Anyways, here are some recent works on Marx:
</P>
<UL>
<LI>William Clare Roberts, 2016, <A HREF="https://press.princeton.edu/books/paperback/9780691180816/marxs-inferno"><I>Marx's Inferno: The Political Theory of Capital</I></A>, Princeton University Press.</LI>
<LI>Kevin B. Anderson, 2016, <A HREF="https://press.uchicago.edu/ucp/books/book/chicago/M/bo22776846.html"><I>Marx at the Margins: On Nationalism, Ethnicity, and Non-Western Socities</I></A>, University of Chicago Press.</LI>
<LI>Marcello Musto, 2020, <A HREF="https://www.sup.org/books/title/?id=30542">The Last Years of Karl Marx: An Intellectual Biography</A>, Stanford University Press.</LI>
<LI>Michael Heinrich, 2021, <A HREF=""><I>How to Read Marx's</I> Capital<I>: Commentary and Explanations on the Beginning Chapters</I></A>, Monthly Review Press.</LI>
<LI>Soren Mau, 2023, <A HREF=""><I>Mute Compulsion: A Marxist Theory of the Economic Power of Capital</I></A>, Verso.</LI>
<LI>Kohei Saito, 2023, <A HREF="https://www.cambridge.org/core/books/marx-in-the-anthropocene/D58765916F0CB624FCCBB61F50879376"><I>Marx in the Anthrocene: Towards the Idea of Degrowth Communism</I></A>, Cambridge University Press.</LI>
<LI>Adrian Johnston, 2024, <A HREF="https://cup.columbia.edu/book/infinite-greed/9780231214735"><I>Infinite Greed: Inhuman Selfishness of Capital</I></A>, Columbia University Press.</LI>
<LI>Karl Marx, 2024, <A HREF="https://press.princeton.edu/books/hardcover/9780691190075/capital?fbclid=IwAR04p-gNeqIUpS9PjAiBPP6IJk3ubYCVvV3ZLCqmnSI6iUVC5JrPZ4Ms9vE"><I>Capital: Critique of Political Economy: Volume 1</I></A>, Edited and translated by Paul Reitter, Edited by Paul North, Preface by Wendy Brown, Afterword by William Clare Roberts, Princeton University Press.</LI>
</UL>
<P>
I think a tendency exists to treat capital as something like an emergent, over-arching subject. One can see this in <A HREF="https://ianwrightsite.wordpress.com/">writing</A>
from Ian P. Wright. Philip Mirowski argues markets are computing automata, and computers are often taken as models of the mind these days. Another book
I want to consider reading is Benjamin Labatut, 2023, <A HREF="https://www.penguinrandomhouse.com/books/725022/the-maniac-by-benjamin-labatut/"><I>The Maniac</I></A>, Penguin Random House. This is a novelization of the life of Johnny Von Neumann.
</P>Robert Vienneauhttp://www.blogger.com/profile/00872510108133281526noreply@blogger.com4tag:blogger.com,1999:blog-26706564.post-85454078503961817432024-03-02T08:54:00.002-05:002024-03-04T07:39:30.963-05:00Labor Values And Invariants<B>1.0 Introduction</B>
<P>
This post is an attempt to work through some linear algebra that some have used to understand
Karl Marx's <I>Capital</I>. I have recently <A HREF="http://robertvienneau.blogspot.com/2024/02/two-special-cases-for-labor-theory-of.html">explained</A> how, in a
simple model, prices of production are equal to labor values if the organic composition of capital does not
vary among industries. That special case is the setting of volume 1.
</P>
<P>
In capitalism, workers rent themselves out to their employers. They work longer, under the dominion of capital,
than needed to produce the commodities which they purchase with their wages. Marx explains the returns
to ownership (profits, interest, rent, etc.) by the distinction between the use value and the exchange value
of labor power.
</P>
<P>
This post removes the special case assumption. It considers certain relationships between the system of labor values
and the system of prices of production. These relationships are highlighted towards the start of <A HREF="http://robertvienneau.blogspot.com/2023/07/a-letter-from-marx-to-engels-in-1868-on.html">volume 3</A>.
I ignore Hegel, on his head or otherwise.
</P>
<B>2.0 Quantity Flows</B>
<P>
Suppose a capitalist economy is observed at a given point in time. <I>n</I> commodities are being produced, each by a separate industry.
Suppose the technique in use can be characterized by a row vector <B>a</B><SUB>0</SUB> and a <I>n</I> x <I>n</I> square matrix <B>A</B>.
</P>
<P>
The <I>j</I>th element of <B>a</B><SUB>0</SUB> is the amount of labor directly employed in the <I>j</I>th industry in producing one unit of a
commodity output from that industry. "We suppose labour to be uniform in quality or, what amounts to the same thing, we assume
any differences in quality to have previously been reduced to equivalent differences in quantity
so that each unit of labour receives the same wage…" - Piero Sraffa (1960).
</P>
<P>
The <I>j</I>th column of <B>A</B> is the goods used up in producing one unit of a commodity output.
For example, suppose iron is produced by the first industry and steel is produced by the second industry. <I>a</I><SUB>1,2</SUB> is then
the kilotons of iron needed to produce a kiloton of steel. Assume that every good enters directly or indirectly into
the production of each commodity. Iron enters indirectly into the production of tractors if steel enters directly into the tractor
industry. Assume a surplus product, also known as a net output, exists.
</P><P>
Let <B>y</B> be the column vector of net outputs and <B>q</B> the column vector of gross outputs, both in physical terms.
In Leontief's work, <B>y</B> is taken as given. Gross outputs and net outputs are related as:
</P>
<BLOCKQUOTE>
<B>y</B> = <B>q</B> - <B>A</B> <B>q</B>
</BLOCKQUOTE>
<P>
Or:
</P>
<BLOCKQUOTE>
<B>q</B> = (<B>I</B> - <B>A</B>)<SUP>-1</SUP> <B>y</B>
</BLOCKQUOTE>
<P>
The labor force needed to produce this net product is:
</P>
<BLOCKQUOTE>
<B>a</B><SUB>0</SUB> <B>q</B> = <B>a</B><SUB>0</SUB> (<B>I</B> - <B>A</B>)<SUP>-1</SUP> <B>y</B> = 1
</BLOCKQUOTE>
<P>
I have taken units in which labor is measured to be such that this labor force is unity. Employment is such that the net output is produced, the capital goods in producing the net output are reproduced, the capital goods used in producing those capital goods are reproduced, and so on.
</P>
<B>3.0 Labor Values</B>
<P>
Let <B>e</B><SUB><I>j</I></SUB> be the <I>j</I>th column of the identity matrix. The labor force needed to produce this net output is:
</P>
<BLOCKQUOTE>
<I>v</I><SUB><I>j</I></SUB> = <B>a</B><SUB>0</SUB> (<B>I</B> - <B>A</B>)<SUP>-1</SUP> <B>e</B><SUB><I>j</I></SUB>
</BLOCKQUOTE>
<P>
That is, the (direct and indirect) labor needed to produce a net output of one unit of the <I>j</I>th commodity is <I>v</I><SUB><I>j</I></SUB>.
The row vector of labor values is:
</P>
<BLOCKQUOTE>
<B>v</B> = <B>a</B><SUB>0</SUB> (<B>I</B> - <B>A</B>)<SUP>-1</SUP>
</BLOCKQUOTE>
<P>
</P>
<B>4.0 Prices of Production</B>
<P>
At any time, market prices are such that different industries are making different rates of profits.
Under competitive conditions, without barriers to entry in the various industries, a kind of leveling process is going on.
</P>
<P>
One can imagine a vector of prices such that this leveling process is already completed with the observed technique and wage. Let <B>p</B> be
that row vector of prices of production, with all industries obtaining the same rate of profits.
</P>
<P>
I need an assumption about the composition of commodities purchased from the wage, <I>w</I>,
since I want to explore the labor value embodied in the wage. Accordingly, assume that the
wage is a proportion of the final product. The wage ranges from zero to unity, inclusive. The
physical composition of the wage is <I>w</I> <B>y</B>. Wages are advanced. Define:
</P>
<BLOCKQUOTE>
<B>A<SUP>*</SUP></B>(<I>w</I>) = <B>A</B> + <I>w</I> <B>y</B> <B>a</B><SUB>0</SUB>
</BLOCKQUOTE>
<P>
I gather the vector operation at the end of the above expression is the outer product.
Prices of production satisfy the equation in the following display:
</P>
<BLOCKQUOTE>
<B>p</B> <B>A<SUP>*</SUP></B>(<I>w</I>) (1 + <I>r</I>) = <B>p</B>
</BLOCKQUOTE>
<P>
where <I>r</I> is the rate of profits.
That is, <B>p</B> is a price vector consistent with the observed technique and wage.
</P>
<P>
By the Perron-Frobenius theorem, the eigenvalue of <B>A<SUP>*</SUP></B>(<I>w</I>)
with the maximum modulus is real, positive, and does not exceed unity. The corresponding rate
of profits is non-negative. The eigenvector consists of all positive entries.
Thus a solution exists for the above equation. Furthermore,
the wage and the rate of profits are related by a decreasing function. The maximum wage
occurs at a rate of profits of zero. The maximum rate of profits is finite and occurs at
a wage of zero.
</P>
<P>
Prices of production have been found up to a scaling factor.
They are generally <B>not</B> proportional to labor values,
as Ricardo and <A HREF="http://robertvienneau.blogspot.com/2023/10/marx-against-simple-labor-theory-of.html">Marx</A> knew.
</P>
<B>5.0 Invariants</B>
<P>
The scale for prices of production can be fixed by specifying a numeraire.
Consider, instead, the imposition of an identity between the system of labor values and the
system of prices of production.
</P>
<B>5.1 Case 1: Total Gross Output</B>
<P>
The labor value of gross output is equal to the price of gross output if and only if:
</P>
<BLOCKQUOTE>
<B>v</B> <B>q</B> = <B>p</B> <B>q</B>
</BLOCKQUOTE>
<P>
Imposing the above condition fixes the scale for prices.
</P>
<B>5.2 Case 2: Total Net Output</B>
<P>
Alternatively, the labor value of net output is equal to the price of net output if and only if:
</P>
<BLOCKQUOTE>
<B>v</B> <B>y</B> = <B>p</B> <B>y</B> = 1
</BLOCKQUOTE>
<P>
I have taken advantage above of the scaling of units of labor time. This invariant is my favorite of the three
invariants considered here.
</P>
<B>5.3 Case 3: The Rate of Profits</B>
<P>
The labor value of advanced capital is <B>v</B> <B>A<SUP>*</SUP></B>(<I>w</I>) <B>q</B>,
while its price is <B>p</B> <B>A<SUP>*</SUP></B>(<I>w</I>) <B>q</B>.
The labor value of profits is:
</P>
<BLOCKQUOTE>
(1 - <I>w</I>) <B>v</B> <B>y</B> = (1 - <I>w</I>)
</BLOCKQUOTE>
<P>
The rate of profits does not differ between the system of labor values and the system of prices
if and only if:
</P>
<BLOCKQUOTE>
(1 - <I>w</I>)/[<B>v</B> <B>A<SUP>*</SUP></B>(<I>w</I>) <B>q</B>] = (1 - <I>w</I>) <B>p</B> <B>y</B>/[<B>p</B> <B>A<SUP>*</SUP></B>(<I>w</I>) <B>q</B>]
</BLOCKQUOTE>
<P>
</P>
<B>6.0 Concluding Observation</B>
<P>
The above post has defined three invariants, each equating a sum or ratio of labor values to
the corresponding sum or ratio in the system of prices of production. Only one invariant
can generally hold, though, in the given model. This has led to quite a bit of literature
arguing that one of these or other invariants is central to Marx's argument.
</P>
<P>
Some have another approach. They adopt another <A HREF="https://robertvienneau.blogspot.com/2011/07/against-tssi-some-literature.html">model</A> in which all three invariants
hold. In fact, more than one such
model <A HREF="https://www.ppesydney.net/reconstructing-the-labor-theory-of-value-an-interview-with-duncan-foley-part-1-the-commodity-law-of-exchange/">has</A> <A HREF="https://www.ppesydney.net/reconstructing-the-labour-theory-of-value-an-interview-with-duncan-foley-part-2-the-capitalist-law-of-exchange/">been</A>
<A HREF="https://brill.com/display/title/21463?language=en">developed</A>.
</P>
<P>
An approach I find of interest looks at a
<A HREF="https://robertvienneau.blogspot.com/2009/05/capital-is-dead-labor-that-vampire-like.html">special composition</A> of final output.
Whatever the composition of the final output, one can iterate by looking at the composition of the capital goods used in producing that
final output. A number of iterations leads to a composite commodity of close to the output of something like Marx's industry
of average organic composition of capital.
</P>
<P>
Or one can retain an interest in how labor is allocated among industries, while exploring prices of production with an arbitrary numeraire.
The <A HREF="https://robertvienneau.blogspot.com/2008/02/profits-resulting-from-exploitation-of.html">fundamental theorem of Marxism</A>
holds in this setting. Must one draw quantitative relationships between the system of labor values and the system of prices of production?
</P>
<P>
Others might want to explore the historical and empirical evolution of the parameters of the model in the post and related
models.
</P>
<B>Reference</B>
<UL>
<LI>Francis Seton. 1957. <A HREF="https://academic.oup.com/restud/article-abstract/24/3/149/1530628">The 'Transformation Problem'</A>. <I>Review of Economic Studies</I> 24 (3): 149-160.</LI>
</UL>Robert Vienneauhttp://www.blogger.com/profile/00872510108133281526noreply@blogger.com0tag:blogger.com,1999:blog-26706564.post-17841224087895100692024-02-24T08:34:00.000-05:002024-02-24T08:34:19.014-05:00Utility Maximization A Tautology?<P>
Economists proved over half a century ago that certain stories are unfounded in the theory.
For example, one might think that if some workers are involuntarily unemployed,
a drop in real wages would lead to a tendency for the labor market to clear.
The Cambridge Capital Controversy revealed some difficulties. In response,
some economists turned to the Arrow-Debrue-McKenzie model of intertemporal
equilibria in which it is not clear that one could even talk about such concepts. The Mantel-Sonnenschein-Debreu theorem shows that this model lacks
empirical content. Utility theory provides a closure for some
models. Formally, one can demonstrate the existence of equilibria under
certain assumptions. But existence does not get one very far.
</P>
<P>
My purpose of this post is to note that some saw
utility theory as a useless tautology at the time of the marginal
revolution:
</P>
<BLOCKQUOTE>
<P>
"It is interesting, in this connection, that the earliest critics saw in the theory of marginal utility
what we have called a behaviourist theory of choice ... and used exactly the same arguments against it
which will be used below against this latter version.
Thus [John] Cairnes wrote about Jevon's theory: 'What does it really amount to?
In my apprehension to this, and no more - that value depends upon utility, and that utility is
whatever affects value. In other words, the name "utility" is given to the aggregate of
unknown conditions which determine the phenomenon, and then the phenomenon is stated to depend
upon what this name stands for.' Jevon's theory was believed to say no more than this: 'that value
was determined by the conditions which determine it - an announcement, the importance of which,
even though presented under the form of abstruse mathematical symbols, I must own myself
unable to discern'. <I>Some Leading Principles of Political Economy</I>, 1874, p. 15.
</P>
<P>
[John] Ingram took the same view in <I>A History of Political Economy</I>, 1888, ed. by Ely, 1915, p. 228 and <I>passim</I>.
Cairnes, Ingram, and other early critics of marginal utility had, however, directed their criticism also
against the mathematical method generally, and the discussion went soon into other channels. The marginalists met the
criticism by claiming to be proponents of logical and mathematical method and their tautological psychology thus
escaped its well-deserved criticism." -- Gunnar Myrdal (1953) <I>The Political Element in the Development of Economic Theory</I> (trans. by Paul Streeten, Routledge & Kegan Paul, p. 231.
</P>
</BLOCKQUOTE>
<P>
Obviously, Cairnes and Ingram could not have known about results demonstrated a century later.
Utility theory manages simultaneously to not say anything about market phenomena, to
not be good <A HREF="http://robertvienneau.blogspot.com/2008/12/how-individuals-can-choose-even-though.html">armchair</A> <A HREF="http://robertvienneau.blogspot.com/2009/03/greek-to-me.html">theorizing</A>,
and to be empirically false at the level of the individual.
</P>Robert Vienneauhttp://www.blogger.com/profile/00872510108133281526noreply@blogger.com2tag:blogger.com,1999:blog-26706564.post-70719605268979872422024-02-23T07:06:00.005-05:002024-02-23T07:06:43.906-05:00Elsewhere<UL>
<LI><A HREF="http://solfed.org.uk/">Solidarity</A> <A HREF="https://libcom.org/tags/solidarity-federation">Federation</A></LI>
<LI>Francisco Nunes-Pereira and Mário Graça Moura. <A HREF="https://academic.oup.com/cje/advance-article-abstract/doi/10.1093/cje/bead056/7513029">On the survival of a flawed theory of capital: mainstream economics and the Cambridge capital controversies</A>, <I>Cambridge Journal of Economics</I>. Concludes mainstream economists continue to use flawed aggregate production functions because of an instrumentalist methodology and conformism.</LI>
<LI>. Colin Rogers. <A HREF="https://academic.oup.com/cje/advance-article/doi/10.1093/cje/bead050/7492210">Whitehead’s fallacy of misplaced concreteness and the unfortunate uselessness of all monetary-macro theory micro-founded on Walrasian-Pareto general equilibrium theory</A>, <I>Cambridge Journal of Economics</I>. Argues that neo-Walrasian general equilibrium theory cannot support monetary theory, despite the practices of mainstream economists.</LI>
<LI>Theo Santini and Ricardo Azevedo Araujo. <A HREF="https://academic.oup.com/cje/advance-article-abstract/doi/10.1093/cje/bead052/7512499?redirectedFrom=fulltext">Vertical integration, technical progress and structural change</A>,<I>Cambridge Journal of Economics</I>. Builds on the theory of vertical integration to develop measures of technical progress.</LI>
<LI>The <A HREF="https://thelevypodcast.podbean.com/">Levy Institute podcast</A>. John Harvey talks to James Galbraith in the first episode.</LI>
<LI><A HREF="https://www.liberationschool.org/reading-capital-with-comrades-podcast/">Reading <I>Capital</I> with comrades</A>, a podcast. I'm not sure lectures work in this format.</LI>
<LI><A HREF="https://pitchforkeconomics.com/">Pitchfork Economics</A>, a podcast.</LI>
<LI>An interview with <A HREF="https://www.currentaffairs.org/2024/02/nick-hanauer-on-how-corporate-propaganda-makes-us-fear-sensible-social-policy">Nick Hanauer</A> and his new co-written book.</LI>
</UL>Robert Vienneauhttp://www.blogger.com/profile/00872510108133281526noreply@blogger.com0tag:blogger.com,1999:blog-26706564.post-3633551382101121372024-02-19T08:49:00.001-05:002024-02-19T08:49:18.778-05:00Two Special Cases For The Labor Theory Of Value<B>1.0 Introduction</B>
<P>
A simple labor theory of value holds in two special cases.
</P>
<OL>
<LI>The rate of profits in the system of prices of production is zero.</LI>
<LI>The vector of direct labor coefficients is an eigenvector of the Leontief input-output matrix corresponding to the maximum eigenvalue.</LI>
</OL>
<P>
I do not know if I've worked through this alone before. A more rigorous approach would prove the uniqueness of the solution.
</P>
<B>2.0 The Setting</B>
<P>
Suppose a capitalist economy is observed at a given point in time. <I>n</I> commodities are being produced, each by a separate industry.
Suppose the technique in use can be characterized by a row vector <B>a</B><SUB>0</SUB> and a <I>n</I> x <I>n</I> square matrix <B>A</B>.
</P>
<P>
The <I>j</I>th element of <B>a</B><SUB>0</SUB> is the amount of labor directly employed in the <I>j</I>th industry in producing one unit of a
commodity output from that industry. "We suppose labour to be uniform in quality or, what amounts to the same thing, we assume
any differences in quality to have previously been reduced to equivalent differences in quantity
so that each unit of labour receives the same wage…" - Piero Sraffa (1960).
I guess the idea is that relative wages are more or less stable.
</P>
<P>
The <I>j</I>th column of <B>A</B> is the goods used up in producing one unit of a commodity output.
For example, suppose iron is produced by the first industry and steel is produced by the second industry. <I>a</I><SUB>1,2</SUB> is then
the kilotons of iron needed to produce a kiloton of steel. Assume that every good enters directly or indirectly into
the production of each commodity. Iron enters indirectly into the production of tractors if steel enters directly into the tractor
industry. Assume a surplus product, also known as a net output, exists.
</P>
<B>2.1 Quantity Flows</B>
<P>
Let <B>y</B> be the column vector of net outputs and <B>q</B> the column vector of gross outputs, both in physical terms.
In Leontief's work, <B>y</B> is taken as given. Gross outputs and net outputs are related as:
</P>
<BLOCKQUOTE>
<B>y</B> = <B>q</B> - <B>A</B> <B>q</B>
</BLOCKQUOTE>
<P>
Or:
</P>
<BLOCKQUOTE>
<B>q</B> = (<B>I</B> - <B>A</B>)<SUP>-1</SUP> <B>y</B>
</BLOCKQUOTE>
<P>
The labor force needed to produce this net product is:
</P>
<BLOCKQUOTE>
<I>L</I> = <B>a</B><SUB>0</SUB> <B>q</B> = <B>a</B><SUB>0</SUB> (<B>I</B> - <B>A</B>)<SUP>-1</SUP> <B>y</B>
</BLOCKQUOTE>
<P>
One might as well take units in which labor is measured to be such that this labor force is unity. Employment is such that the net output is produced, the capital goods in producing the net output are reproduced, the capital goods used in producing those capital goods are reproduced, and so on.
</P>
<B>2.2 Labor Values</B>
<P>
Let <B>e</B><SUB><I>j</I></SUB> be the <I>j</I>th column of the identity matrix. The labor force needed to produce this net output is:
</P>
<BLOCKQUOTE>
<I>v</I><SUB><I>j</I></SUB> = <B>a</B><SUB>0</SUB> (<B>I</B> - <B>A</B>)<SUP>-1</SUP> <B>e</B><SUB><I>j</I></SUB>
</BLOCKQUOTE>
<P>
That is, the (direct and indirect) labor needed to produce a net output of one unit of the <I>j</I>th commodity is <I>v</I><SUB><I>j</I></SUB>.
The row vector of labor values is:
</P>
<BLOCKQUOTE>
<B>v</B> = <B>a</B><SUB>0</SUB> (<B>I</B> - <B>A</B>)<SUP>-1</SUP>
</BLOCKQUOTE>
<P>
(I could put an aside here about geometric series and an infinite sum of labor time, assuming the current
technology was used forever in the past.)
</P>
<P>
The employment needed to produce a given net output is the sum of the labor values of the individual commodities
in net output, <B>v</B> <B>y</B>. One can think of this post as showing one way of decomposing the observed net
output and employed workers. With this way of thinking, no assumptions have been made about returns to scale.
</P>
<P>
Labor values support one way of doing accounting in models like this. One could ask about how much employment
would have decreased or increased if final demand had been decreased or increased by some specified quantities of specified commodities.
</P>
<B>2.3 Prices of Production</B>
<P>
Take <B>y</B> as numeraire. At any time, market prices are such that different industries are making different rates of profits.
Under competitive conditions, without barriers to entry in the various industries, a kind of leveling process is going on.
</P>
<P>
One can imagine a vector of prices such that this leveling process is already completed with the observed technique and wage. Let <B>p</B> be
that row vector of prices of production, with all industries obtaining the same rate of profits:
</P>
<BLOCKQUOTE>
<B>p</B> <B>A</B> (1 + <I>r</I>) + <I>w</I> <B>a</B><SUB>0</SUB> = <B>p</B>
</BLOCKQUOTE>
<P>
where <I>r</I> is the rate of profits and <I>w</I> the wage.
That is, <B>p</B> is a price vector consistent with the observed technique and wage. Since <B>y</B> is numeraire, one has:
</P>
<BLOCKQUOTE>
<B>p</B> <B>y</B> = 1
</BLOCKQUOTE>
<P>
The point is to show that prices of production are labor values in special cases.
</P>
<B>3.0 The First Special Case: No Profits</B>
<P>
Assume that the rate of profits is zero. The claim is that prices of production are labor values.
</P>
<P>
First, consider the equation for the numeraire:
</P>
<BLOCKQUOTE>
<B>v</B> <B>y</B> = <B>a</B><SUB>0</SUB> (<B>I</B> - <B>A</B>)<SUP>-1</SUP> <B>y</B> = <B>a</B><SUB>0</SUB> <B>q</B>
</BLOCKQUOTE>
<P>
By assumption, the amount of labor employed is one unit. So using labor values for prices satisfies the equation for
the numeraire. Furthermore, if the rate of profits is zero, the wage is unity. (One might do a bit of algebra here.)
</P>
<P>
I want to show:
</P>
<BLOCKQUOTE>
<B>v</B> <B>A</B> + <B>a</B><SUB>0</SUB> = <B>v</B>
</BLOCKQUOTE>
<P>
But this is true if and only if:
</P>
<BLOCKQUOTE>
<B>a</B><SUB>0</SUB> = <B>v</B> (<B>I</B> - <B>A</B>)
</BLOCKQUOTE>
<P>
Or:
</P>
<BLOCKQUOTE>
<B>a</B><SUB>0</SUB> (<B>I</B> - <B>A</B>)<SUP>-1</SUP> = <B>v</B>
</BLOCKQUOTE>
<P>
But this is the definition of labor values. So if the rate of profits is zero, prices of production are labor values.
</P>
<B>4.0 The Second Special Case: Equal Organic Compositions Of Capital</B>
<P>
Suppose that:
</P>
<BLOCKQUOTE>
<B>a</B><SUB>0</SUB> <B>A</B> = λ <B>a</B><SUB>0</SUB>
</BLOCKQUOTE>
<P>
where λ is the eigenvalue with the maximum modulus. By the Perron-Frobenius theorem,
this eigenvalue is positive and less than unity. All of the elements of the vector of direct
labor coefficients are positive.
</P>
<P>
Under this special case, the solution to the price equations is:
</P>
<BLOCKQUOTE>
<B>p</B> = <B>v</B>
</BLOCKQUOTE>
<P>
and:
</P>
<BLOCKQUOTE>
<I>r</I> = <I>R</I> (1 - <I>w</I>)
</BLOCKQUOTE>
<P>
where:
</P>
<BLOCKQUOTE>
<I>R</I> = (1 - λ)/λ
</BLOCKQUOTE>
<P>
Suppose:
</P>
<BLOCKQUOTE>
<B>v</B> = (1/(1 - λ)) <B>a</B><SUB>0</SUB>
</BLOCKQUOTE>
<P>
By the definition of labor values:
</P>
<BLOCKQUOTE>
<B>v</B> (<B>I</B> - <B>A</B>) = <B>a</B><SUB>0</SUB>
</BLOCKQUOTE>
<P>
Or:
</P>
<BLOCKQUOTE>
(1/(1 - λ)) (<B>a</B><SUB>0</SUB> - <B>a</B><SUB>0</SUB> <B>A</B>) = <B>a</B><SUB>0</SUB>
</BLOCKQUOTE>
<P>
Using the special case assumptions, one has:
</P>
<BLOCKQUOTE>
(1/(1 - λ)) (<B>a</B><SUB>0</SUB> - λ <B>a</B><SUB>0</SUB>) = <B>a</B><SUB>0</SUB>
</BLOCKQUOTE>
<P>
Thus, in this special case, labor values are directly proportional to direct labor coefficients.
</P>
<P>
I want to show:
</P>
<BLOCKQUOTE>
<B>v</B> <B>A</B>(1 + ((1 - λ)/λ)(1 - <I>w</I>)) + <I>w</I> <B>a</B><SUB>0</SUB> = <B>v</B>
</BLOCKQUOTE>
<P>
Or:
</P>
<BLOCKQUOTE>
(1/(1 - λ)) <B>a</B><SUB>0</SUB> <B>A</B>((1/λ) - ((1 - λ)/λ)<I>w</I>) + <I>w</I> <B>a</B><SUB>0</SUB> = (1/(1 - λ)) <B>a</B><SUB>0</SUB>
</BLOCKQUOTE>
<P>
Or:
</P>
<BLOCKQUOTE>
(λ/(1 - λ)) <B>a</B><SUB>0</SUB>((1/λ) - ((1 - λ)/λ)<I>w</I>) + <I>w</I> <B>a</B><SUB>0</SUB> = (1/(1 - λ)) <B>a</B><SUB>0</SUB>
</BLOCKQUOTE>
<P>
But the left-hand side is simply (1/(1 - λ)) <B>a</B>. So labor values are prices of production
in the special case. Furthermore, prices of production do not vary with distribution in this case.
</P>
<B>5.0 Conclusion</B>
<P>
Suppose the organic composition of capital does not vary among industries. That is, the vector
of direct labor coefficients is the specified eigenvector of the Leontief input-output matrix.
So prices of production associated with the observed technique and net output are labor values.
How does capital obtain profits in this special case? This is Marx's question in the first volume
of <I>Capital</I>.
</P>
<P>
Objections to the lack of realism of this special case and to the conditions needed to define prices
of production are not on point. If you have a theory explaining returns to capital, it should
apply in this special case. The question, I gather, is more salient if you think there is something
fair about commodities being priced at labor values.
</P>
<P>
The answer cannot be entrepreneurship, since the returns to entrepreneurship are a non-equilibrium
phenomenon. For half a century, economists have known that the answer cannot be supply and
demand of capital. For that answer, one must have a unit in which capital can be measured
independently of prices. I suppose one can create a self-consistent model with intertemporal
utility maximization by households, including households whose income is entirely from returns
to ownership. But the mechanics of how such a model works disagree with traditional
notions of substitution and scarcity.
</P>
<P>
A valid answer, it seems to me, must invoke some concept of power. This answer
need not be exactly Marx's. The Post Keynesian theory of growth, in which large
corporations set the rate of growth, might be part of an answer applicable in some
times and places.
</P>Robert Vienneauhttp://www.blogger.com/profile/00872510108133281526noreply@blogger.com3tag:blogger.com,1999:blog-26706564.post-58926202374565730712024-02-16T07:18:00.000-05:002024-02-16T07:18:00.748-05:00Orwell Remembers Revolution<table align="center" border="0" cellpadding="1" cellspacing="1">
<tbody>
<TR><TD><div class="separator" style="clear: both;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEimRgKjOgdEtAjVFL40e6LL8eII7Q9o1kAxsfFvrTp5-adGc7AOW0MPZHnsMV6gAclimLUlHbHkeW22U5U9McipdnvZY7pY_miQeuxr0HENJPQmpNFdVj1daa79kOo0NtTF4MU15xcbeXru_R4MmII-0-G2Dw7PI6RZSOAOzgrBDHQNFdk6uhj7/s464/PicassoGuernica.jpg" style="display: block; padding: 1em 0; text-align: center; "><img alt="" border="0" width="320" data-original-height="211" data-original-width="464" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEimRgKjOgdEtAjVFL40e6LL8eII7Q9o1kAxsfFvrTp5-adGc7AOW0MPZHnsMV6gAclimLUlHbHkeW22U5U9McipdnvZY7pY_miQeuxr0HENJPQmpNFdVj1daa79kOo0NtTF4MU15xcbeXru_R4MmII-0-G2Dw7PI6RZSOAOzgrBDHQNFdk6uhj7/s320/PicassoGuernica.jpg"/></a></div>
</TD></TR>
<TR><TD ALIGN="center"><B>Pablo Picasso's <I>Guernica</I></B></TD></TR>
</tbody></table>
<P>
This post has long quotations, as is typical of a commonplace book.
</P>
<P>
Where did socialism work? In Barcelona, Spain, and, more generally Aragon and Catalonia, from August 1936
to April 1937. This was the anarchist version, and was resisted by all governments, including the Soviet Union.
</P>
<P>
The right staged their coup against the Republic in July 1936. Orwell went to Spain in December,
and he wanted to kill fascists. He describes it as almost happenstance that he ended up in
the militia under the Party Of Marxist Unity (POUM). This party contained, among others, followers
of Trotsky and did not follow Stalin's line. Orwell describes how he found Barcelona:
</P>
<BLOCKQUOTE>
<P>
"This was in late December 1936, less than seven months ago as I write, and yet it is a period
that has already receded into enormous distance. Later events have obliterated it much more
completely than they have obliterated 1935, or 1905, for that matter. I had come to Spain
with some notion of writing newspaper articles, but I had joined the militia almost
immediately, because at that time and in that atmosphere it seemed the only conceivable
thing to do. The Anarchists were still in virtual control of Catalonia and the revolution was
still in full swing. To anyone who had been there since the beginning it probably seemed
even in December or January that the revolutionary period was ending; but when one came
straight from England the aspect of Barcelona was something startling and overwhelming. It
was the first time that I had ever been in a town where the working class was in the saddle.
Practically every building of any size had been seized by the workers and was draped with
red flags or with the red and black flag of the Anarchists; every wall was scrawled with the
hammer and sickle and with the initials of the revolutionary parties; almost every church had
been gutted and its images burnt. Churches here and there were being systematically
demolished by gangs of workmen. Every shop and café had an inscription saying that it had
been collectivized; even the bootblacks had been collectivized and their boxes painted red
and black. Waiters and shop-walkers looked you in the face and treated you as an equal.
Servile and even ceremonial forms of speech had temporarily disappeared. Nobody said
'Senior' or 'Don' or even 'Usted'; everyone called everyone else 'Comrade' and 'Thou', and
said 'Salud!' instead of 'Buenos dias'. Tipping was forbidden by law; almost my first
experience was receiving a lecture from a hotel manager for trying to tip a lift-boy.
There
were no private motor-cars, they had all been commandeered, and all the trams and taxis and
much of the other transport were painted red and black. The revolutionary posters were
everywhere, flaming from the walls in clean reds and blues that made the few remaining
advertisements look like daubs of mud. Down the Ramblas, the wide central artery of the
town where crowds of people streamed constantly to and fro, the loudspeakers were
bellowing revolutionary songs all day and far into the night. And it was the aspect of the
crowds that was the queerest thing of all. In outward appearance it was a town in which the
wealthy classes had practically ceased to exist. Except for a small number of women and
foreigners there were no 'well-dressed' people at all. Practically everyone wore rough
working-class clothes, or blue overalls, or some variant of the militia uniform. All this was
queer and moving. There was much in it that I did not understand, in some ways I did not
even like it, but I recognized it immediately as a state of affairs worth fighting for. Also I
believed that things were as they appeared, that this was really a workers' State and that the
entire bourgeoisie had either fled, been killed, or voluntarily come over to the workers' side; I
did not realize that great numbers of well-to-do bourgeois were simply lying low and
disguising themselves as proletarians for the time being." (Chapter I)
</P>
</BLOCKQUOTE>
<P>
Orwell finds equality within the militia, despite ranks and orders:
</P>
<BLOCKQUOTE>
<P>
"At this time and until much later the Catalan militias were still on the same basis as they had
been at the beginning of the war. In the early days of Franco's revolt the militias had been
hurriedly raised by the various trade unions and political parties; each was essentially a
political organization, owing allegiance to its party as much as to the central Government.
When the Popular Army, which was a 'non-political' army organized on more or less
ordinary lines, was raised at the beginning of 1937, the party militias were theoretically
incorporated in it. But for a long time the only changes that occurred were on paper; the new
Popular Army troops did not reach the Aragon front in any numbers till June, and until that
time the militia-system remained unchanged. The essential point of the system was social
equality between officers and men. Everyone from general to private drew the same pay, ate
the same food, wore the same clothes, and mingled on terms of complete equality. If you
wanted to slap the general commanding the division on the back and ask him for a cigarette,
you could do so, and no one thought it curious. In theory at any rate each militia was a
democracy and not a hierarchy. It was understood that orders had to be obeyed, but it was
also understood that when you gave an order you gave it as comrade to comrade and not as
superior to inferior. There were officers and N.C.O.S. but there was no military rank in the
ordinary sense; no titles, no badges, no heel-clicking and saluting. They had attempted to
produce within the militias a sort of temporary working model of the classless society. Of
course there was no perfect equality, but there was a nearer approach to it than I had ever
seen or than I would have thought conceivable in time of war.
</P>
<P>
But I admit that at first sight the state of affairs at the front horrified me. How on earth could
the war be won by an army of this type? It was what everyone was saying at the time, and
though it was true it was also unreasonable. For in the circumstances the militias could not
have been much better than they were. A modern mechanized army does not spring up out of
the ground, and if the Government had waited until it had trained troops at its disposal,
Franco would never have been resisted. Later it became the fashion to decry the militias, and
therefore to pretend that the faults which were due to lack of training and weapons were the
result of the equalitarian system. Actually, a newly raised draft of militia was an
undisciplined mob not because the officers called the private 'Comrade' but because raw
troops are always an undisciplined mob. In practice the democratic 'revolutionary' type of
discipline is more reliable than might be expected. In a workers’ army discipline is
theoretically voluntary. It is based on class-loyalty, whereas the discipline of a bourgeois
conscript army is based ultimately on fear. (The Popular Army that replaced the militias was
midway between the two types.) In the militias the bullying and abuse that go on in an
ordinary army would never have been tolerated for a moment. The normal military
punishments existed, but they were only invoked for very serious offences. When a man
refused to obey an order you did not immediately get him punished; you first appealed to him
in the name of comradeship. Cynical people with no experience of handling men will say
instantly that this would never 'work', but as a matter of fact it does 'work' in the long run.
The discipline of even the worst drafts of militia visibly improved as time went on. In
January the job of keeping a dozen raw recruits up to the mark almost turned my hair grey.
In
January the job of keeping a dozen raw recruits up to the mark almost turned my hair grey. In
May for a short while I was acting-lieutenant in command of about thirty men, English and
Spanish. We had all been under fire for months, and I never had the slightest difficulty in
getting an order obeyed or in getting men to volunteer for a dangerous job. 'Revolutionary'
discipline depends on political consciousness — on an understanding of why orders must be
obeyed; it takes time to diffuse this, but it also takes time to drill a man into an automaton on
the barrack-square. The journalists who sneered at the militia-system seldom remembered
that the militias had to hold the line while the Popular Army was training in the rear. And it is
a tribute to the strength of 'revolutionary' discipline that the militias stayed in the field-at all.
For until about June 1937 there was nothing to keep them there, except class loyalty.
Individual deserters could be shot - were shot, occasionally - but if a thousand men had
decided to walk out of the line together there was no force to stop them. A conscript army in
the same circumstances - with its battle-police removed - would have melted away. Yet
the militias held the line, though God knows they won very few victories, and even individual
desertions were not common. In four or five months in the P.O.U.M. militia I only heard of
four men deserting, and two of those were fairly certainly spies who had enlisted to obtain
information. At the beginning the apparent chaos, the general lack of training, the fact that
you often had to argue for five minutes before you could get an order obeyed, appalled and
infuriated me. I had British Army ideas, and certainly the Spanish militias were very unlike
the British Army. But considering the circumstances they were better troops than one had any
right to expect." (Chapter III)
</P>
</BLOCKQUOTE>
<P>
When Orwell gets leave in April 1937, he finds Barcelona is back to normal, but with some
omnious overturns. He reflects on his time in the POUM militia:
</P>
<BLOCKQUOTE>
<P>
"The essential point is that all this time I had been isolated - for at the front one was almost
completely isolated from the outside world: even of what was happening in Barcelona one
had only a dim conception - among people who could roughly but not too inaccurately be
described as revolutionaries. This was the result of the militia-system, which on the Aragon
front was not radically altered till about June 1937. The workers' militias, based on the trade
unions and each composed of people of approximately the same political opinions, had the
effect of canalizing into one place all the most revolutionary sentiment in the country.
I had dropped more or less by chance into the only community of any size in Western
Europe where political consciousness and disbelief in capitalism were more normal
than their opposites. Up here in Aragon one was among tens of thousands of people,
mainly though not entirely of working-class origin, all living at the same level and
mingling on terms of equality. In theory it was perfect equality, and even in practice
it was not far from it. There is a sense in which it would be true to say that one was
experiencing a foretaste of Socialism, by which I mean that the prevailing mental
atmosphere was that of Socialism. Many of the normal motives of civilized life -
snobbishness, money-grubbing, fear of the boss, etc. - had simply ceased to exist.
The ordinary class-division of society had disappeared to an extent that is almost
unthinkable in the money-tainted air of England; there was no one there except
the peasants and ourselves, and no one owned anyone else as his master. Of course
such a state of affairs could not last. It was simply a temporary and local phase in
an enormous game that is being played over the whole surface of the earth. But
it lasted long enough to have its effect upon anyone who experienced it. However
much one cursed at the time, one realized afterwards that one had been in contact
with something strange and valuable. One had been in a community where hope
was more normal than apathy or cynicism, where the word 'comrade' stood for
comradeship and not, as in most countries, for humbug. One had breathed the air of
equality.
I am well aware that it is now the fashion to
deny that Socialism has anything to do with equality. In every country in the world a huge
tribe of party-hacks and sleek little professors are busy 'proving' that Socialism means no
more than a planned state-capitalism with the grab-motive left intact. But fortunately there
also exists a vision of Socialism quite different from this. The thing that attracts ordinary men
to Socialism and makes them willing to risk their skins for it, the 'mystique' of Socialism, is
the idea of equality; to the vast majority of people Socialism means a classless society, or it
means nothing at all. And it was here that those few months in the militia were valuable to
me. For the Spanish militias, while they lasted, were a sort of microcosm of a classless
society. In that community where no one was on the make, where there was a shortage of
everything but no privilege and no boot-licking, one got, perhaps, a crude forecast of what the
opening stages of Socialism might be like. And, after all, instead of disillusioning me it
deeply attracted me. The effect was to make my desire to see Socialism established much
more actual than it had been before. Partly, perhaps, this was due to the good luck of being
among Spaniards, who, with their innate decency and their ever-present Anarchist tinge,
would make even the opening stages of Socialism tolerable if they had the chance." (Chapter VIII)
</P>
</BLOCKQUOTE>
<P>
Here is something about the atomsphere:
</P>
<BLOCKQUOTE>
<P>
"But besides all this there was the startling change in the social atmosphere - a thing difficult
to conceive unless you have actually experienced it. When I first reached Barcelona I had
thought it a town where class distinctions and great differences of wealth hardly existed.
Certainly that was what it looked like. 'Smart' clothes were an abnormality, nobody cringed
or took tips, waiters and flower-women and bootblacks looked you in the eye and called you
'comrade'. I had not grasped that this was mainly a mixture of hope and camouflage. The
working class believed in a revolution that had been begun but never consolidated, and the
bourgeoisie were scared and temporarily disguising themselves as workers. In the first
months of revolution there must have been many thousands of people who deliberately put on
overalls and shouted revolutionary slogans as a way of saving their skins. Now things were
returning to normal." (Chapter IX)
</P>
</BLOCKQUOTE>
<P>
And then on 3 May 1937, the Assault and Civil Guards attacked the anarchists in Barcelona, starting at the Telephone Exchange
which the Anarchists ran. The militia for the POUM was, more or less, on the side of the anarchists.
The communists were on the side of suppressing the workers' revolution.
The May days changed Orwell's plans and how you got along with others:
</P>
<BLOCKQUOTE>
<P>
"In the hotel the horrible atmosphere of suspicion and hostility had grown worse now that the
fighting was over. In the face of the accusations that were being flung about it was impossible
to remain neutral. The posts were working again, the foreign Communist papers were
beginning to arrive, and their accounts of the fighting were not only violently partisan but, of
course, wildly inaccurate as to facts. I think some of the Communists on the spot, who had
seen what was actually happening, were dismayed by the interpretation that was being put
upon events, but naturally they had to stick to their own side. Our Communist friend
approached me once again and asked me whether I would not transfer into the International
Column.
</P>
<P>
I was rather surprised. 'Your papers are saying I'm a Fascist,' I said. 'Surely I should be
politically suspect, coming from the P.O.U.M.'
</P>
<P>
'Oh, that doesn't matter. After all, you were only acting under orders.'
</P>
<P>
I had to tell him that after this affair I could not join any Communist-controlled unit. Sooner
or later it might mean being used against the Spanish working class. One could not tell when
this kind of thing would break out again, and if I had to use my rifle at all in such an affair I
would use it on the side of the working class and not against them. He was very decent about
it. But from now on the whole atmosphere was changed. You could not, as before, 'agree to
differ' and have drinks with a man who was supposedly your political opponent. There were
some ugly wrangles in the hotel lounge. Meanwhile the jails were already full and
overflowing. After the fighting was over the Anarchists had, of course, released their
prisoners, but the Civil Guards had not released theirs, and most of them were thrown into
prison and kept there without trial, in many cases for months on end. As usual, completely
innocent people were being arrested owing to police bungling." (Chapter X)
</P>
</BLOCKQUOTE>
<P>
Orwell goes back to the front, is shot, and goes to the hospital in Barcelona. He is lucky
to get out of Spain without, at least, being arrested by the Republican government.
</P>
<P>
I want to recall that chapters V and X1 are Orwell's attempt to give a historical overview,
that is, they are about politics, no longer a memoirist's eyewitness testimony.
</P>Robert Vienneauhttp://www.blogger.com/profile/00872510108133281526noreply@blogger.com0tag:blogger.com,1999:blog-26706564.post-7792639787737114922024-02-06T08:07:00.000-05:002024-02-06T08:07:55.378-05:00Variation On An Example From Schefold<table align="center" border="0" cellpadding="1" cellspacing="1">
<tbody>
<TR><TD><div class="separator" style="clear: both;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEildcEzAQJ-7S_e3ex7GyRZbOAM80-LzEjekSOgF7uH77m7HCSxheBIJ-Y49nfoa_ZDin3xDeuId7DJqmKOCBn9UyhYYC6ZjqUBWYHcVajORsH1uEuQiJQlKJ4PhIYHvyRH6qWHZWVY8AfcdCejbxsU_VHit7HGJq6RsMa_3iPdyWam9oe12Xsx/s1440/SchefoldExample.gif" style="display: block; padding: 1em 0; text-align: center; "><img alt="" border="0" width="320" data-original-height="810" data-original-width="1440" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEildcEzAQJ-7S_e3ex7GyRZbOAM80-LzEjekSOgF7uH77m7HCSxheBIJ-Y49nfoa_ZDin3xDeuId7DJqmKOCBn9UyhYYC6ZjqUBWYHcVajORsH1uEuQiJQlKJ4PhIYHvyRH6qWHZWVY8AfcdCejbxsU_VHit7HGJq6RsMa_3iPdyWam9oe12Xsx/s320/SchefoldExample.gif"/></a></div>
</TD></TR>
<TR><TD ALIGN="center"><B>Figure 1: Variation in the Economic Life of a Machine with Technical Progress</B></TD></TR>
</tbody></table>
<P>
This post varies the coefficients of production in an example from Bertram Schefold.
I wanted to have 'nice' fractions at a time of zero. Qualitatively, this
looks like a previous <A HREF="https://robertvienneau.blogspot.com/2020/05/more-on-fixed-capital-example.html">post</A>.
</P>
<P>
Reviewers for a recent rejection of an article with another fixed capital example objected to this type of model.
I need to relate technical progress to a well-known type (Harrod-neutral, Marx-biased, or whatever) or produce some evidence
that this sort of modeling is reasonable.
</P>
<P>
Table 1 presents the technology for this example. Machines and corn are produced in this economy. Corn is the only consumption good. New
machines are produced from inputs of labor and corn. Corn is produced from inputs of labor, corn, and machines. A machine can be worked for
two years. After the end of the first year of its working life, it is known as an old machine. I assume each process requires a year to complete
and exhibits constant returns to scale.
</P>
<TABLE CELLSPACING="1" CELLPADDING="1" BORDER="1" ALIGN="center"><CAPTION><B>Table 1: Coefficients of Production for The Technology</B></CAPTION>
<TR><TD ALIGN="center" ROWSPAN="2"><B>Input</B></TD><TD ALIGN="center" COLSPAN="3"><B>Process</B></TD></TR>
<TR><TD><B>(I)</B></TD><TD><B>(II)</B></TD><TD><B>(III)</B></TD></TR>
<TR><TD ALIGN="center">Labor</TD><TD ALIGN="center">(7/25) e<SUP>- σ <I>t</I></SUP></TD><TD ALIGN="center">3 e<SUP>- φ <I>t</I></SUP></TD><TD ALIGN="center">(14/5) e<SUP>- φ <I>t</I></SUP></TD></TR>
<TR><TD ALIGN="center">Corn</TD><TD ALIGN="center">(4/25) e<SUP>- σ <I>t</I></SUP></TD><TD ALIGN="center">(4/25) e<SUP>- φ <I>t</I></SUP></TD><TD ALIGN="center">(2/3) e<SUP>- φ <I>t</I></SUP></TD></TR>
<TR><TD ALIGN="center">New Machines</TD><TD ALIGN="center">0</TD><TD ALIGN="center">1</TD><TD ALIGN="center">0</TD></TR>
<TR><TD ALIGN="center">Old Machines</TD><TD ALIGN="center">0</TD><TD ALIGN="center">0</TD><TD ALIGN="center">1</TD></TR>
<TR><TD ALIGN="center"><B>Outputs</B></TD><TD ALIGN="center" COLSPAN="3"></TD></TR>
<TR><TD ALIGN="center">Corn</TD><TD ALIGN="center">0</TD><TD ALIGN="center">1</TD><TD ALIGN="center">1</TD></TR>
<TR><TD ALIGN="center">New Machines</TD><TD ALIGN="center">1</TD><TD ALIGN="center">0</TD><TD ALIGN="center">0</TD></TR>
<TR><TD ALIGN="center">Old Machines</TD><TD ALIGN="center">0</TD><TD ALIGN="center">1</TD><TD ALIGN="center">0</TD></TR>
</TABLE>
<P>
The managers of firms need not run the machine for two years. They could discard the machine after only one year.
(I assume free disposal.) I call Alpha the technique in which the machine is run for one year, and Beta
the technique in which the machine is run for its full physical year of two years.
The managers will be cost-minimizing if they run the machine for only one year if the price of an old machine
is negative. Prices are found as prices of production, with an external specification of the wage or the rate of profits.
</P>
<P>
Figure 1 above and Table 2 below illustrate the analysis of the choice of technique. Until time reaches the
pattern over the axis for the rate of profits, it is
cost-minimizing to operate the machine for only one year. In Region 2, the machine is operated for two years when wages
are low, and for one year when wages are higher. Region 3 is an example of reswitching. Eventually, it is
cost-minimizing to operate the machine for two years, for all feasible wages.
</P>
<P>
</P>
<TABLE CELLSPACING="1" CELLPADDING="1" BORDER="1" ALIGN="center"><CAPTION><B>Table 2: The Wage Frontier in Selected Regions in Parameter Space</B></CAPTION>
<TR><TD ALIGN="center"><B>Region</B></TD><TD ALIGN="center"><B>Switch Points</B></TD><TD ALIGN="center"><B>Cost-Minimizing Techniques</B></TD></TR>
<TR><TD ALIGN="center">1</TD><TD ALIGN="center">None</TD><TD ALIGN="center">Alpha</TD></TR>
<TR><TD ALIGN="center">2</TD><TD ALIGN="center">One</TD><TD ALIGN="center">Beta, Alpha</TD></TR>
<TR><TD ALIGN="center">3</TD><TD ALIGN="center">Two</TD><TD ALIGN="center">Beta, Alpha, Beta</TD></TR>
<TR><TD ALIGN="center">4</TD><TD ALIGN="center">None</TD><TD ALIGN="center">Beta</TD></TR>
<TR><TD ALIGN="center">5</TD><TD ALIGN="center">One</TD><TD ALIGN="center">Alpha, Beta</TD></TR>
</TABLE>
<P>
Figure 2 partitions the parameter space such that the characteristics of the variations in the choice of technique technique do not vary
within each region. Each region is bounded by thick (non-dotted) lines.
Suppose that technical progress in producing and using machines is steady. That is, σ and φ have some fixed values.
The dotted line in Figure 2 illustrates a path in logical time for such a thought experiment.
The 45 degree line corresponds to the case in which σ and φ are equal, as in Figure 1.
The numbering of the regions in Figures 1 and 2 and in Table 2 correspond.
</P>
<table align="center" border="0" cellpadding="1" cellspacing="1">
<tbody>
<TR><TD><div class="separator" style="clear: both;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgfkLhIlGbUoBANB912WQeRsh80Ue76ONdTtMmOWaVzBFKg6onBoSI31AXIXnpPNyOkWTW1CxZDz38EdTuTf6rVputI9ttikYGQs17_O8BzYUryyTWYI9wVR6vBnaiAgxshrkEeucPprKb158yLWyH30rSTD3AbEWsHfUtEjFk1XW1RO0zVSLpP/s1440/SchefoldExample2.gif" style="display: block; padding: 1em 0; text-align: center; "><img alt="" border="0" width="320" data-original-height="810" data-original-width="1440" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgfkLhIlGbUoBANB912WQeRsh80Ue76ONdTtMmOWaVzBFKg6onBoSI31AXIXnpPNyOkWTW1CxZDz38EdTuTf6rVputI9ttikYGQs17_O8BzYUryyTWYI9wVR6vBnaiAgxshrkEeucPprKb158yLWyH30rSTD3AbEWsHfUtEjFk1XW1RO0zVSLpP/s320/SchefoldExample2.gif"/></a></div>
</TD></TR>
<TR><TD ALIGN="center"><B>Figure 2: A Parameter Space</B></TD></TR>
</tbody></table>
<P>
Stepping through this example does not provide any qualitative differences from previous posts.
Reswitching in models of fixed capital can be manifested as the return of a period of truncation.
Around a switch point, a lower wage need not be associated with greater employment for a given net
output. And so on.
</P>Robert Vienneauhttp://www.blogger.com/profile/00872510108133281526noreply@blogger.com0tag:blogger.com,1999:blog-26706564.post-60402372063220545432024-02-01T07:51:00.000-05:002024-02-01T07:51:24.263-05:00Bertrand Russell On Bolshevism In 1920<P>
Many to the left of liberals, that is, socialists, communists, and anarchists of various stripes, were opposed
to the Soviet Union since its founding. Another example is Bertrand Russell.
This is from the preface to his <I>The Practice and Theory of Bolshevism</I>, first printed in November 1920:
</P>
<BLOCKQUOTE>
<P>
"The Russian Revolution is one of the great heroic events of the world's history.
It is natural to compare it to the French Revolution, but it is in fact something of even more importance.
It does more to change daily life and the structure of society: it also does more to change men's beliefs. The difference is
exemplified by the difference between Marx and Rousseau: the latter sentimental and soft, appealing to emotion, obliterating sharp outlines;
the former systematic like Hegel, full of hard intellectual content, appealing to historic necessity and the technical development of industry,
suggesting a view of human beings as puppets in the grip of omnipotent material forces.
Bolshevism combines the characteristics of the French Revolution with those of the rise of Islam; and the result is
something radically new, which can only be understood by a patient and passionate effort of imagination.
</P>
<P>
Before entering upon any detail, I wish to state, as clearly and unambiguously as I can, my own attitude towards this new thing.
</P>
<P>
By far the most important aspect of the Russian Revolution is as an attempt to realize Communism. I believe that Communism is
necessary to the world, and I believe that the heroism of Russia has fired men's hopes in a way which was essential to the realization of
Communism in the future. Regarded as a splendid attempt, without which ultimate success would have been very improbable, Bolshevism
deserves the gratitude and admiration of all the progressive part of mankind.
</P>
<P>
But the method by which Moscow aims at establishing Communism is a pioneer method, rough and dangerous, too heroic to count
the cost of the opposition it arouses. I do not believe that by this method a stable or desirable form of Communism can be established.
Three issues seem to me possible from the present situation. The first is the ultimate defeat of Bolshevism by the forces of capitalism.
The second is the victory of the Bolshevists accompanied by a complete loss of their ideals and a régime of Napoleonic imperialism.
The third is a prolonged world-war, in which civilization will go under, and all its manifestations (including Communism) will be forgotten.
</P>
<P>
It is because I do not believe that the methods of the Third International can lead to the desired goal that I have thought it worth
while to point out what seem to me undesirable features in the present state of Russia. I think there are lessons to be learnt which
must be learnt if the world is ever to achieve what is desired by those in the West who have sympathy with the original aims of the Bolsheviks.
I do not think these lessons can be learnt except by facing frankly and fully whatever elements of failure there are in Russia. I think
these elements of failure are less attributable to faults of detail than to an impatient philosophy, which aims at creating a new world
without sufficient preparation in the opinions and feelings of ordinary men and women.
</P>
<P>
But although I do not believe that Communism can be realized immediately by the spread of Bolshevism, I do believe that, if Bolshevism falls,
it will have contributed a legend and a heroic attempt without which ultimate success might never have come. A fundamental economic
reconstruction, bringing with it very far-reaching changes in ways of thinking and feeling, in philosophy and art and private relations,
seems absolutely necessary if industrialism is to become the servant of man instead of his master. In all this, I am at one with the
Bolsheviks; politically, I criticize them only when their methods seem to involve a departure from their own ideals." -- Bertrand Russell
</P>
</BLOCKQUOTE>
<P>
I have not got very far into this short book itself. Some of the above sounds to me a bit like Richard Wolff. The Soviet
Union was an experiment, conducted at great human cost. We should learn from its successes and failures. We can and will do better.
</P>Robert Vienneauhttp://www.blogger.com/profile/00872510108133281526noreply@blogger.com3tag:blogger.com,1999:blog-26706564.post-84121815597113364662024-01-26T06:08:00.002-05:002024-01-26T06:08:31.810-05:00Examples Of One-Parameter Pattern Diagrams<table align="center" border="0" cellpadding="1" cellspacing="1">
<tbody>
<TR><TD>
<div class="separator" style="clear: both;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjZPcpJUUB0gtsjV3I_FymAYRv5o8vOPeP74sKGaMGa0On8A20L8KMfo_S09tXUneAGPSZa3EblLddanaykw6cxdQO59gBRlkGMTcLiWKIVJFLlCXnxzyk-LpN2LcPPb2FzMyac/s1600/SchefoldTimePath2.gif" imageanchor="1" ><img border="0" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjZPcpJUUB0gtsjV3I_FymAYRv5o8vOPeP74sKGaMGa0On8A20L8KMfo_S09tXUneAGPSZa3EblLddanaykw6cxdQO59gBRlkGMTcLiWKIVJFLlCXnxzyk-LpN2LcPPb2FzMyac/s320/SchefoldTimePath2.gif" width="320" height="180" data-original-width="1440" data-original-height="810" /></a></div></TD></TR>
<TR><TD ALIGN="center"><B>Figure 1: Variation in the Economic Life of a Machine with Technical Progress</B></TD></TR>
</tbody></table>
<P>
I have invented graphs for visualizing how the analysis of the choice of technique varies
with perturbations of parameters in models of prices of production. This post presents some examples
of one type of diagram. One must click on a link with each graph, I guess, to fully understand
what is being depicted.
</P>
<P>
Figure 1 is an <A HREF="https://robertvienneau.blogspot.com/2020/05/more-on-fixed-capital-example.html">extension</A> of an
example from Betram Schefold (21 May 2020). This example concerns technological progress and the economic life of a machine
in an example of pure fixed capital.
</P>
<P>
Figure 2 is from an <A HREF="https://robertvienneau.blogspot.com/2020/09/visualizing-effects-of-markups-numeric.html">example</A>
of two produced commodities with stable relative markups in the two industries (19 September 2020).
</P>
<table align="center" border="0" cellpadding="1" cellspacing="1">
<tbody>
<TR><TD>
<div class="separator" style="clear: both;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhe-yIt-YgNDzz6rR7kBkEwp51SCo_Owh12FCFkrjvFDnPWnzfbwxJswVuV5qgc1ex1A_HsBYjh-RYQRuA5uc0g4gjFPXHEsA3agUxITOBYFmM54RLuJtQFTAPshmM6knylL8Ep/s1440/PatternDiagram.gif" style="display: block; padding: 1em 0; text-align: center; "><img alt="" border="0" width="320" data-original-height="810" data-original-width="1440" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhe-yIt-YgNDzz6rR7kBkEwp51SCo_Owh12FCFkrjvFDnPWnzfbwxJswVuV5qgc1ex1A_HsBYjh-RYQRuA5uc0g4gjFPXHEsA3agUxITOBYFmM54RLuJtQFTAPshmM6knylL8Ep/s320/PatternDiagram.gif"/></a></div></TD></TR>
<TR><TD ALIGN="center"><B>Figure 2: The Effects of Variations in Relative Markups</B></TD></TR>
</tbody></table>
<P>
Figure 3 is from another <A HREF="https://robertvienneau.blogspot.com/2020/11/recurrence-of-truncation-in.html">example</A> of fixed capital (3 November 2020). This
is a two-commodity model in which machines are used in both sectors
</P>
<table align="center" border="0" cellpadding="1" cellspacing="1">
<tbody>
<TR><TD>
<div class="separator" style="clear: both;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEg88EuqrWOF5w9nsnyFyVvV6I8wEjewvUDebw84RGj-wQEqIjDHU-OWUIYxgI045CkzQmU2Ie8OLPcMpi1p3g5o1WOOeqwAs1Kz6w0Mhmmg2-V7fn3PkZNDhu1DZwa0dYg26GDK/s1440/1DPatternDiagram.gif" style="display: block; padding: 1em 0; text-align: center; "><img alt="" border="0" width="320" data-original-height="810" data-original-width="1440" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEg88EuqrWOF5w9nsnyFyVvV6I8wEjewvUDebw84RGj-wQEqIjDHU-OWUIYxgI045CkzQmU2Ie8OLPcMpi1p3g5o1WOOeqwAs1Kz6w0Mhmmg2-V7fn3PkZNDhu1DZwa0dYg26GDK/s320/1DPatternDiagram.gif"/></a></div></TD></TR>
<TR><TD ALIGN="center"><B>Figure 3: Recurrence of Truncation without Reswitching</B></TD></TR>
</tbody></table>
<P>
Figure 4 is from an <A HREF="https://robertvienneau.blogspot.com/2020/12/triple-switching-and-fluke-switch-points.html">example</A>
in which the consumption good can be produced with only circulating capital or with a machine with a physical life of two years (1 December 2020).
</P>
<table align="center" border="0" cellpadding="1" cellspacing="1">
<tbody>
<TR><TD>
<div class="separator" style="clear: both;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEje3VuTybcsLU_v1f0UfXgoTFRp95_8q9atVt4kUPsaApfsa0pYfneuyEnxOrNgL94QmlBIyxGPdbt3qXlKo-m-NZ9Oqs-yfe2BaPhVIy_Ih7ySFnp01AMtJuD-ZNye6sArhbYZ/s1440/TripleSwitchingPatternDiagram.gif" style="display: block; padding: 1em 0; text-align: center; "><img alt="" border="0" width="320" data-original-height="810" data-original-width="1440" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEje3VuTybcsLU_v1f0UfXgoTFRp95_8q9atVt4kUPsaApfsa0pYfneuyEnxOrNgL94QmlBIyxGPdbt3qXlKo-m-NZ9Oqs-yfe2BaPhVIy_Ih7ySFnp01AMtJuD-ZNye6sArhbYZ/s320/TripleSwitchingPatternDiagram.gif"/></a></div></TD></TR>
<TR><TD ALIGN="center"><B>Figure 4: Triple Switching with Fixed Capital</B></TD></TR>
</tbody></table>
<P>
Figure 5 is from an <A HREF="https://robertvienneau.blogspot.com/2020/12/an-extension-of-example-from-salvatore.html">example</A>
in which a machine can last three years (12 December 2020).
</P>
<table align="center" border="0" cellpadding="1" cellspacing="1">
<tbody>
<TR><TD>
<div class="separator" style="clear: both;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgfnknKYfZdq8426mfGNWeMCalFGMpsLeHE-QhFPHQTUQaZLiYG-qCKay8szGGg6C8QPc5SZjRPHljuuzx_vZFGU1bdAOVINSzKBH56LpmrsGRexTJjUwitl0dP5I-QFyo8g4Yi/s1440/BaldonePatternEnlarged.gif" style="display: block; padding: 1em 0; text-align: center; "><img alt="" border="0" width="320" data-original-height="810" data-original-width="1440" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgfnknKYfZdq8426mfGNWeMCalFGMpsLeHE-QhFPHQTUQaZLiYG-qCKay8szGGg6C8QPc5SZjRPHljuuzx_vZFGU1bdAOVINSzKBH56LpmrsGRexTJjUwitl0dP5I-QFyo8g4Yi/s320/BaldonePatternEnlarged.gif"/></a></div></TD></TR>
<TR><TD ALIGN="center"><B>Figure 5: An Extension of an Example of Fixed Capital from Salvatore Barone</B></TD></TR>
</tbody></table>
<P>
Figure 6 is from a three-commodity <A HREF="https://robertvienneau.blogspot.com/2021/05/variation-in-switch-points-with-markups.html">example</A>
of non-competitive markets with variations in markups in one industry (11 May 2021).
</P>
<table align="center" border="0" cellpadding="1" cellspacing="1">
<tbody>
<TR><TD>
<div class="separator" style="clear: both;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiKiJ6bfQjL9BAWX0RsBt32BQYDmptiR8vGoAgVzWlQHcukXJ_uS-MRbrxoCAfMM23pkBMP1BQxW8wcBIfMdbW7hlyt77JyjJblSmcgw38Bh3d9TBBNvAyYKBrTCZ4nmyojg9Co/s1440/1DDiagramS2.gif" style="display: block; padding: 1em 0; text-align: center; "><img alt="" border="0" width="320" data-original-height="810" data-original-width="1440" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiKiJ6bfQjL9BAWX0RsBt32BQYDmptiR8vGoAgVzWlQHcukXJ_uS-MRbrxoCAfMM23pkBMP1BQxW8wcBIfMdbW7hlyt77JyjJblSmcgw38Bh3d9TBBNvAyYKBrTCZ4nmyojg9Co/s320/1DDiagramS2.gif"/></a></div></TD></TR>
<TR><TD ALIGN="center"><B>Figure 6: Variation of Switch Points with the Markup in the Steel Industry</B></TD></TR>
</tbody></table>
<P>
Figure 7 is from the same three-commodity <A HREF="https://robertvienneau.blogspot.com/2021/05/perturbations-of-markups-in-iron.html">example</A>,
but with variations in the markup in another industry (18 May 2021).
</P>
<table align="center" border="0" cellpadding="1" cellspacing="1">
<tbody>
<TR><TD><div class="separator" style="clear: both;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhkzl-OS9oowUJs6Lmwaucii11TcK9bPxF0T0-j2va0yevz7BHNZbpiCw9g4Hjd5BUswKCl4ndOduR7kkaPVagOF6Ii9-6O9z3xWG2r68XGQTeA0OPl2n_0dTy04MVfwwVnLUgG/s1440/1DDiagramS1.gif" style="display: block; padding: 1em 0; text-align: center; "><img alt="" border="0" width="320" data-original-height="810" data-original-width="1440" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhkzl-OS9oowUJs6Lmwaucii11TcK9bPxF0T0-j2va0yevz7BHNZbpiCw9g4Hjd5BUswKCl4ndOduR7kkaPVagOF6Ii9-6O9z3xWG2r68XGQTeA0OPl2n_0dTy04MVfwwVnLUgG/s320/1DDiagramS1.gif"/></a></div></TD></TR>
<TR><TD ALIGN="center"><B>Figure 7: Variation of Swith Points with the Markup in the Iron Industry</B></TD></TR>
</tbody></table>
<P>
Figure 8 is an <A HREF="https://robertvienneau.blogspot.com/2021/07/structural-dynamics-with-extensive-rent.html">example</A>
with extensive rent and technological progress (3 July 2021). This example concerns which type of land is marginal and thus rent-free.
</P>
<table align="center" border="0" cellpadding="1" cellspacing="1">
<tbody>
<TR><TD><div class="separator" style="clear: both;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEg4dgLywAaXV8U3FG6XbAELs_m6bBJGuNOcz4AzbjDq3wEerkJdLIGpHTXxzKILtzoYUlUWiNjxV8h3igTzyJc_UO7eDW_7Q7_LrnITyUwwD8WyYmHC4y3SLXWEIRCEkpLFLvWu/s1440/WoodsExample1D0.gif" style="display: block; padding: 1em 0; text-align: center; "><img alt="" border="0" width="320" data-original-height="810" data-original-width="1440" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEg4dgLywAaXV8U3FG6XbAELs_m6bBJGuNOcz4AzbjDq3wEerkJdLIGpHTXxzKILtzoYUlUWiNjxV8h3igTzyJc_UO7eDW_7Q7_LrnITyUwwD8WyYmHC4y3SLXWEIRCEkpLFLvWu/s320/WoodsExample1D0.gif"/></a></div></TD></TR>
<TR><TD ALIGN="center"><B>Figure 8: Structural Dynamics with Extensive Rent</B></TD></TR>
</tbody></table>
<P>
Figure 9 is from an <A HREF="https://robertvienneau.blogspot.com/2021/08/how-to-find-fluke-switch-points.html">illustration</A>
of an example to find fluke switch points (28 August 2021).
</P>
<table align="center" border="0" cellpadding="1" cellspacing="1">
<tbody>
<TR><TD><div class="separator" style="clear: both;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjG8cw9yZRHSyQlWgHFfFJsLbp8ydwyjTvGiq4NGjoEOsKd3e6CvHX0f_bAzQkO1rhieo8XCvwJJxZSQcGK-I4WZoa-PZaWmqqzkCmRSA8gxcdieBaxOD0RzgLO0FG2wh_Qcfed/s1440/BlogPostFigure2.gif" style="display: block; padding: 1em 0; text-align: center; "><img alt="" border="0" width="320" data-original-height="810" data-original-width="1440" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjG8cw9yZRHSyQlWgHFfFJsLbp8ydwyjTvGiq4NGjoEOsKd3e6CvHX0f_bAzQkO1rhieo8XCvwJJxZSQcGK-I4WZoa-PZaWmqqzkCmRSA8gxcdieBaxOD0RzgLO0FG2wh_Qcfed/s320/BlogPostFigure2.gif"/></a></div></TD></TR>
<TR><TD ALIGN="center"><B>Figure 9: Technical Progress in An Illustration of an Algorithm to Find Fluke Switch Points</B></TD></TR>
</tbody></table>
<P>
Figure 10 extends an extension of an <A HREF="https://robertvienneau.blogspot.com/2021/12/variation-of-prices-of-production-with.html">example</A>
from Antonio D'Agata (30 December 2021).
</P>
<table align="center" border="0" cellpadding="1" cellspacing="1">
<tbody>
<TR><TD><div class="separator" style="clear: both;"><a href="https://blogger.googleusercontent.com/img/a/AVvXsEjDGXcXcIsO6OH502PkxNMHVDwsejBjapYSUIZ9A_xOTMI_YcfO2Nx5641ZfP1Kl0TyvkhrxKU9y6UoYo2C8rGrNosHtklmnf29Tnxr_JeZ2rPpptuY0dPWi7H6UGis24_8FzaG6sY5_QGpGwBerqUjotfTwZ5SNyr5G4HH2y0qBGsJHid0Yw=s1440" style="display: block; padding: 1em 0; text-align: center; "><img alt="" border="0" width="320" data-original-height="810" data-original-width="1440" src="https://blogger.googleusercontent.com/img/a/AVvXsEjDGXcXcIsO6OH502PkxNMHVDwsejBjapYSUIZ9A_xOTMI_YcfO2Nx5641ZfP1Kl0TyvkhrxKU9y6UoYo2C8rGrNosHtklmnf29Tnxr_JeZ2rPpptuY0dPWi7H6UGis24_8FzaG6sY5_QGpGwBerqUjotfTwZ5SNyr5G4HH2y0qBGsJHid0Yw=s320"/></a></div></TD></TR>
<TR><TD ALIGN="center"><B>Figure 10: Structural Dynamics in an Example with Intensive Rent</B></TD></TR>
</tbody></table>
<P>
Figure 11 is from an <A HREF="https://robertvienneau.blogspot.com/2023/09/extensive-rent-absolute-rent-and-markup.html">example</A>
with extensive rent and markup pricing
(29 September 2023).
</P>
<table align="center" border="0" cellpadding="1" cellspacing="1">
<tbody>
<TR><TD><div class="separator" style="clear: both;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjZMA6FuQE7mSD5pYDQbi9zBbt43ulvlPEcsQEEK3wgK9W2hrIoQxul_zMWu56w6icCNqCqCex3ZVlFROMVuU4yutr2CkA7iKTkEteHBGgbQQdbZ9hm7hWnWC-R8f1BkYYIZ9WAYZhUUOuo9-yoh-mYcmxWl9cDES-P_fVayJ6DOjRG_9UI226G/s1440/1Diagram1.gif" style="display: block; padding: 1em 0; text-align: center; "><img alt="" border="0" width="320" data-original-height="810" data-original-width="1440" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjZMA6FuQE7mSD5pYDQbi9zBbt43ulvlPEcsQEEK3wgK9W2hrIoQxul_zMWu56w6icCNqCqCex3ZVlFROMVuU4yutr2CkA7iKTkEteHBGgbQQdbZ9hm7hWnWC-R8f1BkYYIZ9WAYZhUUOuo9-yoh-mYcmxWl9cDES-P_fVayJ6DOjRG_9UI226G/s320/1Diagram1.gif"/></a></div></TD></TR>
<TR><TD ALIGN="center"><B>Figure 11: Variation with Ratio of Markups in Industry to Agriculture</B></TD></TR>
</tbody></table>
<P>
These diagrams were generated out of a
<A HREF="https://robertvienneau.blogspot.com/2023/08/on-my-research-program-with-fluke.html">research program</A>
that I have stumbled upon.
</P>Robert Vienneauhttp://www.blogger.com/profile/00872510108133281526noreply@blogger.com0tag:blogger.com,1999:blog-26706564.post-19171472925520695982024-01-23T07:57:00.000-05:002024-01-23T07:57:10.920-05:00Austrian Economists Rediscovering Sraffa<P>
Some recent papers by economists of the Austrian school
rediscover some aspects of post-Sraffian price theory. Others would benefit from more knowledge of post-Sraffian
price theory. But the authors do not know this.
</P>
<P>
Fillieule (2007) is a rediscovery of Sraffa's standard commodity. He sets out a special case of
Hayekian triangles in which an infinite series of datad labor inputs are used to produce current net output.
"Only circulating capital is taken into account", and "the
proportion between capital goods and originary factors is the same in all
stages." Fillieule, unlike Sraffa, has wages advanced instead of being paid out of net output.
He gestures at Sraffian subsystems. Production at any year can be viewed as decomposed into
producing the net output, producing the capital goods needed to produce net output one year hence,
producing capital goods needed for the production of the capital goods that go into producing net
output two years hence, and so on.
</P>
<P>
Consider the analysis of the choice of technique. Different techniques have different standard commodities.
One must pick one numeraire in the analyis. The numeraire cannot simultaneously be two different standard
commodities. I do not know if these observations undermine Fillieule's conclusions.
</P>
<P>
Mateusz Machaj (2015) responds to the Fillieule (2007) and Hülsmann (2011).
He emphasizes intertemporal labor intensity and considers
variations in the amount of labor (originary factors more generally) hired at each stage of production.
It is unclear to me how such variations can be independent of one another. Those working in
the direct production of corn are presumably producing for immediate consumption and seed corn
for the production of seed corn for use in production next year. In other words, some ratio
of their labor is simultaneously going into production at every stage of production illustrated
in a Hayekian triangle. I doubt Machaj's 2017 book resolves this question.
</P>
<P>
Howden (2016) is a response to Machaj (2015). Howden rejects that one can analyze a change
in the rate of profits without considering individual savings and investment decisions.
He adopts an outdated supply (savings) and demand (investment) approach to explaining
interest rates and fails to see that an open model can be considered. Howden correctly notes
that Machaj's description of changes in the amount of labor applied at specified stages
is unmotivated. But he sticks to obsolete physical notions of roundaboutness.
His article is full of quotations for ideas that some, including Austrian-school economists,
would say have been transcended:
</P>
<BLOCKQUOTE>
"the assertion that artificial reductions to the interest rate cause an unsustainable lengthening
in the structure of production is the central tenet of the Austrian
theory of the business cycle."
</BLOCKQUOTE>
<P>
Machaj (2017a) is a reply to Howden (2016).
</P>
<P>
Manish (2018) is a response to Machaj (2017b) and defends the Pure Time Preference Theory (PTPT) theory
of the rate of interest. I am not sure that it makes sense for a general preference for present
goods over future goods outside a steady state, when relative quantities are changing. Nor am
I sure that the Austrian approach of imputing values to higher order goods can explain interest
rates without presuming interest rates.
</P>
<P>
Granot (2019) is a rediscovery of price Wicksell effects. He finds that for a given technique,
the average period of production varies non-monotically with the interest rate.
This result was <A HREF="https://robertvienneau.blogspot.com/2010/12/impossibility-of-single-magnitude.html">explained</A>
by Sraffa in Section 48, pages 44-45, of his book.
</P>
<P>
Harwick (2022) and Iborra (2021) reference me.
A previous version of Milana (2023) did reference me. He still references Osborne.
Even though Harwick sticks unknowingly to considering one-way models from originary factors - no consideration
of production of commodities by means of commodities for him, I can find something to agree with.
He thinks simple models are a good way to approach capital theory. One should not start with the most general
model. For me, the most general model would be one of general joint production, multiple types of labor,
no simplifications of simple fixed capital, multiple types of land on each of which many types of
agricultural commodities can be grown, and so on.
</P>
<B>References</B>
<UL>
<LI>Renaud Fillieule. 2007. A formal model in Hayekian macroeconomics: the proportional goods-in-process structure of production. <I>Quarterly Journal of Austrian Economics</I>. 10: 193-208.</LI>
<LI>Er'el Granot. 2019. An overlooked scenario of "reswitching" in the Austrian structure of production. <I>Quarterly Journal of Austrian Economics</I>. 22 (4): 509-532.</LI>
<LI>Cameron Harwick. 2022. Unmixing the metaphors of Austrian capital theory. <I>The Review of Austrian Economics</I> 35 (2): 163 - 176.</LI>
<LI>David Howden. 2016. The interest rate and the length of production: a comment. <I>Quarterly Journal of Austrian Economics</I>. 19 (4): 345-358</LI>
<LI>Jörg Guido Hülsmann. 2011. The structure of production reconsidered. Working paper.</LI>
<LI>Rafael Garcia Iborra. 2021. A financial analysis of reswitching. <I>Revista Procesos de Mercado</I> 18 (1): 220 - 244.</LI>
<LI>Mateusz Machaj. 2015. The interest rate and the length of production: an attempt at refomulation. <I>Quarterly Journal of Austrian Economics</I>. 18 (3): 272-293.</LI>
<LI>Mateusz Machaj. 2017a. Interest and the length of production: a reply. <I>Quarterly Journal of Austrian Economics</I>. 20 (2): 164-170.</LI>
<LI>Mateusz Machaj. 2017b. <A HREF="https://www.amazon.com/Money-Interest-Structure-Production-Capitalist-ebook/dp/B0789NB26X/"><I>Money, Interest, and the Structure of Production: Resolving Some Puzzles in the Theory of Capital</I></A>. Lexington.</LI>
<LI>G. P. Manish. 2018. A brief defense of Mises's conception of time preference and his pure time preference theory of interest. <I>Quarterly Journal of Austrian Economics</I>. 21 (2): 95-109.</LI>
<LI>Carlo Milana. 2023. Refuting Samuelson's capitulation on the re-switching of techniques in the Cambridge capital controversy. <I>The Review of Austrian Economics</I>. Not yet assigned to an issue.</LI>
</UL>Robert Vienneauhttp://www.blogger.com/profile/00872510108133281526noreply@blogger.com0tag:blogger.com,1999:blog-26706564.post-85740051503158840002024-01-17T06:19:00.001-05:002024-01-17T06:19:15.999-05:00A Parameter Space for an Example of Harrod-Neutral Technical Progress<table align="center" border="0" cellpadding="1" cellspacing="1">
<tbody>
<TR><TD><div class="separator" style="clear: both;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjIMhNQqmH-HAY-XlJRvVOf0NKb8T7gRQiJkxm5fDSM1VRA6XA22feK21C8ggjTfzY5IcBAWR78cIOV4zVlj20D9jWUksBs_L5-c9U3e5_4BLS3e-aTBdCebynQKgk_GG12vBVmo3ESpdnYay1SUBYEpJEbzH655QdpI5wf95ERlkeFpzhBhTMY/s1440/HarrodNeutralExample1_2d.gif" style="display: block; padding: 1em 0; text-align: center; "><img alt="" border="0" width="320" data-original-height="810" data-original-width="1440" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjIMhNQqmH-HAY-XlJRvVOf0NKb8T7gRQiJkxm5fDSM1VRA6XA22feK21C8ggjTfzY5IcBAWR78cIOV4zVlj20D9jWUksBs_L5-c9U3e5_4BLS3e-aTBdCebynQKgk_GG12vBVmo3ESpdnYay1SUBYEpJEbzH655QdpI5wf95ERlkeFpzhBhTMY/s320/HarrodNeutralExample1_2d.gif"/></a></div></TD></TR>
<TR><TD ALIGN="center"><B>Figure 1: A Two-Dimensional Parameter Space</B></TD></TR>
</tbody></table>
<P>
The above is for this <A HREF="http://robertvienneau.blogspot.com/2024/01/harrod-neutral-technical-change-and.html">example</A>.
I wish somebody would be inspired by this to write it up with mathematical proofs. What
I see here is found by numerical methods.
</P>
<P>
Figure 1 shows a partition of the parameter space based on fluke switch points.
The dashed line shows the temporal path in the previous <A HREF="http://robertvienneau.blogspot.com/2024/01/harrod-neutral-technical-change-and.html">post</A>.
Each of the solid lines are parallel affine functions, with a slope of unity.
A proof that these slopes are unity should be able to handle a model with any number of produced commodities.
</P>Robert Vienneauhttp://www.blogger.com/profile/00872510108133281526noreply@blogger.com0tag:blogger.com,1999:blog-26706564.post-19027116799478399512024-01-15T08:03:00.001-05:002024-01-15T08:03:31.404-05:00Milovan Djilas On The Soviet Union As State Capitalism<P>
What to make of the Soviet Union? Apparently, the description of it as state capitalism goes back to Lenin.
Djilas description of it as such is central to his best-known book:
</P>
<BLOCKQUOTE>
<P>
"Abstract logic would iпdicate tћat tће Communist reyolution,
when it achieves, under different conditions and Ьу state
compulsioп, the same things achieved Ьу industrial revolutions
and capitalism in the West, is nothing but а form of state-capitalist
revolution. The relationships which are created Ьу its
victory are state-capitalist. This appears to Ье even шоrе true
because the new regime also regulates all political, labor, and
other relationships and, what is more important, distributes the
national income and benefits and distributes material goods
which actually have been transformed iпto state property.
</P>
<P>
Discussion on whether or not the relationships in tће U.S.S.R.
апd in other Communist countries are state-capitalist, socialist,
or perhaps something else, is dogmatic to а coпsideraЬle degree.
However, such discussion is of fundamental importance.
</P>
<P>
Even if it is presumed that state capitalism is nothing other
than the 'antechamber of socialism,' as Lenin emphasized, or
that it is the first phase of socialism, it is still поt опе iota easier
for the people who live uпder Communist despotism to endure.
lf the character of property апd social relationships brought
about Ьу thе Communist revolution is streпgthened and defined,
tће prospects for liЬeration of the people from such relationships
become more realistic. If the people are поt conscious of
the nature of the social relationships iп which they live, or if
tћеу do not see а way in which they сан alter them, their
struggle cannot ћаvе any prospect of success.
</P>
<P>
If the Communist revolution, despite its promises апd illusions,
is state-capitalist iп its undertakings witћ state-capitalist
relationships, tће only lawful and positive actioпs its fuпctionaries
сап take are the опеs tћat improve their work апd reduce
the pressure апd irrespoпsiЬility of state admiпistratioп. Тће
Coшmunists do not admit iп theory tћat they are workiпg in
а system оf state capitalism, but their leaders behave tћis way.
Тћеу coпtшually boast about improviпg tће work of tће admiпistration
апd about leadiпg tће struggle 'agaiпst bureaucratism.'
</P>
<P>
Moreover, actual relationships are not those of state capitalism;
these relationships do поt provide а method of improving
the system of state admiпistration basically.
</P>
<P>
Iп order to establish the пature of relatioпships which arise
iп thе course of thе Communist revolution and ultimately become
estaЬlished iп the process of industrialization and collectivizatioп,
it is пecessary to peer further iпto the role and manner
of ореrаtiоп of tће state under Communism. At present, it will
be sufficient to point out that in Communisш the state macћineтy
is not tће instrument wћiсћ really determines social
and property relatioпships; it is only tће instrument Ьу which
these relatioпsћips are protected. In truth, everythiпg is accomplished
in thе nаше of thе state and througћ its regulations.
Тће Communist Party, iпcluding tће professional party bureaucracy,
stands above the regulations and behind every siпgle one
of thе state's acts.
</P>
<P>
It is the bureaucracy whiсћ formally uses, adшinisters, and
controls Ьоtћ пationalized анd socialized property as well as
the entiтe lifе of society. Тће role of tће bureaucracy in society,
i.e., monopolistic administration and control of national income
and пational goods, consigпs it to а special privileged
positioп. Social relatioпs resemЬle state capitalism. Тће more
so, because tће carryiпg out of industrialization is effected not
with tће ћеlр of capitalists but with the ћеlр of tће state machine.
In fact, this pгivileged class perfoтms tћat functioп, using
tће state machiпe as а cover апd as ап iпstrurneпt.
</P>
<P>
Ownership is пothing other tћan tће right of profit and control.
If оnе defines class benefits Ьу this right, thе Communist
states have seen, in the final analysis, thе origin of а пеw form
of ownership or of а new ruling and exploiting class.
</P>
<P>
In reality, the Communists wете uпаЬlе to act differently
from аnу ruling class that preceded them. Believiпg that
they were building а new and ideal society, tћеу built it for
themselves in tће only way they could. Their revolution and
their society do not appear eitћer accidental or unпatural, but
appear as а matter of course for а particular country and for
pгescriЬed peгiods of its developmeпt. Because of this, no matter
ћоw extensive and inhuman Communist tyranny ћаs been,
society, in the course of а certain period - as long as industrialization
lasts - has to and is аЬlе to endure this tуrаппу. Furthermore,
this tyranny no longer appears as something inevitaЬie,
but exclusively as ан assurance of the depredations and privileges
of а new class.
</P>
<P>
In contrast to earlier revolutions, the Commuпist revolution,
conducted in the nаше of doiпg away with classes, has resulted
in the most complete authority of any siпgle пеw class. Everything
else is sham and an illusion." -- Djilas (1957)
</P>
</BLOCKQUOTE>
<P>
As I understand it, party functionaries were assigned to state offices. In this way,
the party formed a parallel
to the official government. Furthermore, these party members became the owners of
collectivized property, that is, they controlled it. This is the new class.
</P>
<P>
Djilas says that communist revolutions differed from previous revolutions in that they were not a matter of an
already hegemonic class coming to power. The post-revolution institutions had not already grown up in old society,
but had to be created and imposed by force, by the communist party. The leaders believed they were creating a classless society.
But, after the revolution, they created a class to bring about a needed industrialization, at great cost.
</P>
<B>References</B>
<UL>
<LI>Milovan Djilas. 1957. <I>The New Class: An Analysis of the Communist System</I>.</LI>
<LI>Vladimir Lenin. 1918. The chief task of our day. 'Left-wing' childishness and the petty-bourgeois mentality. <I>Collected Works</I>Vol. 27: 323-354.</LI>
<LI>Vladimir Lenin. 21 April 1921. The tax in kind (the significance of the new policy and its conditions). <I>Collected Works</I>Vol. 32: 329-365.</LI>
</UL>Robert Vienneauhttp://www.blogger.com/profile/00872510108133281526noreply@blogger.com0tag:blogger.com,1999:blog-26706564.post-42779125927827277712024-01-12T06:36:00.002-05:002024-01-12T06:36:28.079-05:00Elsewhere: Data On Capitalism And Other Systems<P>
The first is a distateful counting of the victims of capitalism in the twentieth century.
The second concludes that no-longer-actually-existing socialism was about as efficient
as western countries. The last argues that general prosperity first declined with
the introduction of capitalism.
</P>
<UL>
<LI>Salvatore Engel-DiMauro. 2021. <A HREF="https://www.tandfonline.com/doi/full/10.1080/10455752.2021.1875603">Anti-communism and the hundres of millions of victims of capitalism</A>. <I>Capitalism Nature Socialism</I> 32(1): 1-17.</LI>
<LI>Peter Murrell. 1991. <A HREF="https://pubs.aeaweb.org/doi/pdfplus/10.1257/jep.5.4.59">Can neoclassical economics underpin the reform of centrally planned economies?</A>. <I>Journal of Economic Perspectives</I> 5(4): 59-76. This issue has a symposium on transition economies, with other interesting articles.</LI>
<LI>Dylan Sullivan and Jason Hickel. 2023. <A HREF="https://www.sciencedirect.com/science/article/pii/S0305750X22002169?ref=pdf_download&fr=RR-2&rr=8435041a3cb23018">Capitalism and extreme poverty: a global analysis of real wages, human height, and mortality since the long 16th century</A>. <I>World Development</I> 161: 1-18.</LI>
</UL>
<P>
Here are a couple of other links:
</P>
<UL>
<LI>Louis-Philippe Rochon <A HREF="https://medium.com/@monetarypolicyinstitute/should-we-be-teaching-neoclassical-economics-to-undergraduates-77b15fd298c5">argues</A> that we should not teach neoclassical ewconomics to undergraduates.</LI>
<LI>The <A HREF="https://p2pfoundation.net/">P2P Foundation</A> seems like an interesting approach.</LI>
</UL>Robert Vienneauhttp://www.blogger.com/profile/00872510108133281526noreply@blogger.com0tag:blogger.com,1999:blog-26706564.post-25401734285159884142024-01-09T07:36:00.001-05:002024-01-09T07:36:35.626-05:00Another Example of Harrod-Neutral Technical Progress And The Choice Of Technique<table align="center" border="0" cellpadding="1" cellspacing="1">
<tbody>
<TR><TD><div class="separator" style="clear: both;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEigOX6cMtvVxcm5BRHqOoLjq7IaYDNL7im1fn5fQLhLiPwW2_K1LV4ADggf0W9lAALppkOcIDm_l9-sGH8_M3LTlBeSJFak68N8ABBZkAPOQyjRssGIr6SKbjbHevppnZN5DoEENJV0EFe_NazOoXhXFDaT4QI99LsHjiIgypoy24H78smPDd0m/s1440/HarrodNeutralExample2_2.gif" style="display: block; padding: 1em 0; text-align: center; "><img alt="" border="0" width="320" data-original-height="810" data-original-width="1440" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEigOX6cMtvVxcm5BRHqOoLjq7IaYDNL7im1fn5fQLhLiPwW2_K1LV4ADggf0W9lAALppkOcIDm_l9-sGH8_M3LTlBeSJFak68N8ABBZkAPOQyjRssGIr6SKbjbHevppnZN5DoEENJV0EFe_NazOoXhXFDaT4QI99LsHjiIgypoy24H78smPDd0m/s320/HarrodNeutralExample2_2.gif"/></a></div></TD></TR>
<TR><TD ALIGN="center"><B>Figure 1: Variation in the Maximum Wage and the Cost-Minimizing Technique with Time</B></TD></TR>
</tbody></table>
<P>
This post presents an example in which some coefficients of production vary from
those in <A HREF="http://robertvienneau.blogspot.com/2024/01/harrod-neutral-technical-change-and.html">example</A>.
Reswitching, capital reversing, and the reverse substitution of labor do not arise in this example.
</P>
<P>
Table 1 shows the coefficients of production for this example. The labor coefficients vary identically with the
the labor coefficients in the previous example. <I>a</I><SUB>2,1</SUB>(a), <I>a</I><SUB>3,1</SUB>(a),
<I>a</I><SUB>2,1</SUB>(b), <I>a</I><SUB>3,1</SUB>(b), <I>a</I><SUB>1,2</SUB>(c), <I>a</I><SUB>3,2</SUB>(c),
and <I>a</I><SUB>1,2</SUB>(d) are all larger in this example.
</P>
<TABLE CELLSPACING="1" CELLPADDING="1" BORDER="1" ALIGN="center"><CAPTION><B>Table 1: The Technology</B></CAPTION>
<TR><TD ALIGN="center" ROWSPAN="2"><B>Input</B></TD><TD ALIGN="center" COLSPAN="2"><B>Iron<BR>Industry</B></TD><TD ALIGN="center" COLSPAN="2"><B>Steel<BR>Industry</B></TD><TD ALIGN="center" COLSPAN="2"><B>Corn<BR>Industry</B></TD></TR>
<TR><TD ALIGN="center">a</TD><TD ALIGN="center">b</TD><TD ALIGN="center">c</TD><TD ALIGN="center">d</TD><TD ALIGN="center">e</TD><TD ALIGN="center">f</TD></TR>
<TR><TD ALIGN="center">Labor</TD><TD ALIGN="center">(15/2) e<SUP>-φ<I>t</I></SUP></TD><TD ALIGN="center">32 e<SUP>-σ<I>t</I></SUP></TD><TD ALIGN="center">(13/2) e<SUP>-φ<I>t</I></SUP></TD><TD ALIGN="center">60 e<SUP>-σ<I>t</I></SUP></TD><TD ALIGN="center">(15/2) e<SUP>-φ<I>t</I></SUP></TD><TD ALIGN="center">55 e<SUP>-σ<I>t</I></SUP></TD></TR>
<TR><TD ALIGN="center">Iron</TD><TD ALIGN="center">1/6</TD><TD ALIGN="center">2/5</TD><TD ALIGN="center">1/20</TD><TD ALIGN="center">1/10</TD><TD ALIGN="center">1</TD><TD ALIGN="center">0</TD></TR>
<TR><TD ALIGN="center">Steel</TD><TD ALIGN="center">1/20</TD><TD ALIGN="center">1/20</TD><TD ALIGN="center">1/4</TD><TD ALIGN="center">3/10</TD><TD ALIGN="center">0</TD><TD ALIGN="center">1/4</TD></TR>
<TR><TD ALIGN="center">Corn</TD><TD ALIGN="center">1/15</TD><TD ALIGN="center">1/15</TD><TD ALIGN="center">1/15</TD><TD ALIGN="center">0</TD><TD ALIGN="center">0</TD><TD ALIGN="center">0</TD></TR>
</TABLE>
<P>
Table 2 repeats the definition of the techniques of production.
As in the previous example,
the Alpha and Theta techniques each undergo Harrod-neutral technical progress.
</P>
<TABLE ALIGN="center" BORDER="1" CELLPADDING="1" CELLSPACING="1">
<CAPTION><B>Table 2: Techniques</B></CAPTION>
<TR><TD ALIGN="center"><B>Technique</B></TD><TD ALIGN="center"><B>Processes</B></TD></TR>
<TR><TD ALIGN="center">Alpha</TD><TD ALIGN="center">a, c, e</TD></TR>
<TR><TD ALIGN="center">Beta</TD><TD ALIGN="center">a, c, f</TD></TR>
<TR><TD ALIGN="center">Gamma</TD><TD ALIGN="center">a, d, e</TD></TR>
<TR><TD ALIGN="center">Delta</TD><TD ALIGN="center">a, d, f</TD></TR>
<TR><TD ALIGN="center">Epsilon</TD><TD ALIGN="center">b, c, e</TD></TR>
<TR><TD ALIGN="center">Zeta</TD><TD ALIGN="center">b, c, f</TD></TR>
<TR><TD ALIGN="center">Eta</TD><TD ALIGN="center">b, d, e</TD></TR>
<TR><TD ALIGN="center">Theta</TD><TD ALIGN="center">b, d, f</TD></TR>
</TABLE>
<P>
As usual, prices of production are defined for each moment in time. Given the wage or the rate of profits,
one can find the cost-minimizing technique. Figure 1, at the top of this post, and Figure 2 depict how the
dependence of the cost-minimizing technique on distribution varies with time. These graphs are drawn
for the specified rate of technical progress. The variation of the cost-minimizing technique with
distribution is invariant in each numbered region, although the specific rate of profits, for example, at
which a switch point occurs does vary.
</P>
<table align="center" border="0" cellpadding="1" cellspacing="1">
<tbody>
<TR><TD><div class="separator" style="clear: both;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEg6EM94H-lqzcqbOj6bkCeuiR62JdSXSCj9_8VOwbS4xLvCC6aH84mBd7n8qpDaxUauwRy6vsBkZkIJK7wbu96dfqk4co3QnvZ1AWDb3w7-htPAhvp3Z1-IFvlLwYJV5NWEmoVjPNfRfDTwmrkTyBkMRcFD0yhVR0_PFkr4PbIyN5WpvjSDkVH9/s1440/HarrodNeutralExample2_1.gif" style="display: block; padding: 1em 0; text-align: center; "><img alt="" border="0" width="320" data-original-height="810" data-original-width="1440" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEg6EM94H-lqzcqbOj6bkCeuiR62JdSXSCj9_8VOwbS4xLvCC6aH84mBd7n8qpDaxUauwRy6vsBkZkIJK7wbu96dfqk4co3QnvZ1AWDb3w7-htPAhvp3Z1-IFvlLwYJV5NWEmoVjPNfRfDTwmrkTyBkMRcFD0yhVR0_PFkr4PbIyN5WpvjSDkVH9/s320/HarrodNeutralExample2_1.gif"/></a></div></TD></TR>
<TR><TD ALIGN="center"><B>Figure 2: Variation in the Maximum Rate of Profits and the Cost-Minimizing Technique with Time</B></TD></TR>
</tbody></table>
<P>
At the maximum rate of profits, the wage is zero. Variations in labor coefficients do not matter. In this case, the
Beta technique remains cost-minimizing for all time at a wage of zero. The cost-minimizing technique at the
maximum wage varies from Alpha to Theta, as the pure technique with the faster growth in technical progress
becomes dominant. Beta and Theta vary in the iron-producing and steel-producing processes. Ultimately, at
the extreme right of the graphs,
two switch points exist as distribution varies.
</P>
<P>
I guess these two examples illustrate general properties of Harrod-neutral technical progress in the case
where all techniques require the production of the same commodities and all of these commodities are
basic in the sense of Sraffa. Fluke cases will arise over time. So-called 'perverse' switch points
need not arise, but can.
</P>Robert Vienneauhttp://www.blogger.com/profile/00872510108133281526noreply@blogger.com0tag:blogger.com,1999:blog-26706564.post-6099497219867898822024-01-05T06:57:00.002-05:002024-01-05T06:57:26.195-05:00A Characterization Of Neoliberalism From Wendy Brown<P>
I have been reading Brown (2015). She acknowledges <A HREF="">neoliberalism</A>
is difficult to define:
</P>
<BLOCKQUOTE>
<P>
"Three decades out, rich accounts by geographers, economists, political theorists, anthropologists, sociologists, philosophers, and
historians grappling with these questions have established that neoliberalism is neither singular nor constant in its discursive
formulations and material practices. This recognition exceeds the idea that a clumsy or inapt name is draped over a busy multiplicity;
rather neoliberalism as economic policy, modality of governance, and order of reason is at once a global phenomenon, yet
inconstant, morphing, differentiated, unsystematic, contradictory, and impure, what Stuart Hall calls a 'field of oscillations' or
Jamie Peck calls 'unruly historical geographies of an evolving interconnected project.' Neoliberalism is a specific and normative mode of
reason, of the production of the subject, 'conduct of conduct,' and scheme of valuation, yet in its differential instantiations and
encounters with extant cultures and political traditions, it takes diverse shapes and spawns diverse content and normative details, even different idioms.
</P>
<P>
Thus the paradox of neoliberalism as a global phenomenon, ubiquitous and omnipresent, yet disunified and nonidentical with itself.
This dappled, striated, and flickering complexion is also the face of an order replete with contradiction and disavowal, structuring markers it
claims to liberate from structure, intensely governing subjects it claims to free from government, strengthening and retasking states it
claims to abjure. In the economic realm, neoliberalism aims simultaneously at deregulation and control. It carries purpose and has
its own futurology (and futures markets), while eschewing planning. It seeks to privatize every public enterprise, yet valorizes
public-private partnerships that imbue the market with ethical potential and social responsibility and the public realm with market
metrics. With its ambition for unregulated and untaxed capital flows, it undermines national sovereignty while intensifying preoccupation with
national GNP, GDP, and other growth indicators in national and postnational constellations."
</P>
</BLOCKQUOTE>
<P>
Brown's emphasis is on how neoliberalism remakes the self.
Under neoliberalism, people are all regarded as independent entrepreneurs, each trying to increase their human capital.
This conception extends to areas that do not necessarily have anything to do with money. How much time should invest in relationships?
What best practices should parents adopt in raising their children?
</P>
<P>
This way of thinking about people contrasts with an older notion of the utility-maximizing consumer. Our preferences form a field
that we move around in through exchange. I think John Stuart Mill is important for <A HREF="https://robertvienneau.blogspot.com/2008/04/j-s-mill-on-method.html">articulating</A>
a pre-marginalist view of economic man.
Homo economicus has a history and has varied over the development of political
economy.
</P>
<P>
Brown and Marcuse both share a concept about how capitalism corrupts our non-working time. In <I>One Dimensional Man</I>,
Marcuse deplores the prevalence of instrumental reason.
For Brown, the neoliberal concept of the self is not a member of a social class. In the neoliberal view, we no longer
have workers and capitalists.
We are longer examples of homo politicus. I think of Hannah Arendt as an idealized picture of political man,
what we could be reasoning together in the public square, in the agora. Brown also mentions homo legalis,
the subject of right and an emphasis of Foucault and his concept of governability.
</P>
<B>Reference</B>
<UL>
<LI>Wendy Brown. 2015. <I>Undoing the Demos: Neoliberalism's Stealth Revolution</I>. Zone Books.</LI>
</UL>Robert Vienneauhttp://www.blogger.com/profile/00872510108133281526noreply@blogger.com0tag:blogger.com,1999:blog-26706564.post-34324345019241603622024-01-03T08:58:00.002-05:002024-02-01T07:53:57.925-05:00Harrod-Neutral Technical Change And The Choice Of Technique<table align="center" border="0" cellpadding="1" cellspacing="1">
<tbody>
<TR><TD><div class="separator" style="clear: both;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEh4RoDjgFaM-33XqgQStgA8BgfWuLr88P8F2Hd6NZiHdPiBZtenAaPIOs69ukKvbSqeR4upUVJ7ZxAnjUp6hJnQkqaZbRPBoIp-8y1s0M75xFdqvepK3Sv9qpCfWfb_xhYUl1bUyGKPSzZ9WitZEZ-9wrmCRo5QwFn6xwgxGzWplcG-P8Ev8gNr/s1440/HarrodNeutralExample2.gif" style="display: block; padding: 1em 0; text-align: center; "><img alt="" border="0" width="320" data-original-height="810" data-original-width="1440" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEh4RoDjgFaM-33XqgQStgA8BgfWuLr88P8F2Hd6NZiHdPiBZtenAaPIOs69ukKvbSqeR4upUVJ7ZxAnjUp6hJnQkqaZbRPBoIp-8y1s0M75xFdqvepK3Sv9qpCfWfb_xhYUl1bUyGKPSzZ9WitZEZ-9wrmCRo5QwFn6xwgxGzWplcG-P8Ev8gNr/s320/HarrodNeutralExample2.gif"/></a></div></TD></TR>
<TR><TD ALIGN="center"><B>Figure 1: Variation in the Maximum Wage and the Cost-Minimizing Technique with Time</B></TD></TR>
</tbody></table>
<B>1.0 Introduction</B>
<P>
I thought I would revisit the application of my analysis of fluke switch points to an example of Harrod-neutral
technical change. Two techniques are assumed to experience Harrod-neutral technical change. The same commodities
are produced with both techniques. No capital goods are produced for one technique that
are unproduced in the other. Consequently, the techniques have no processes in common. At least two processes
must be available in each industry. So more than two techniques must exist.
</P>
<P>
I think these ideas could be worked up into something. I will probably spend some time toying with the
example.
</P>
<B>2.0 Technology</B>
<P>
This economy produces a single consumption good, called corn. Corn is also a capital good, that is, a produced commodity used in
the production of other commodities. In fact, iron, steel, and corn are capital goods in this example. So three industries exist. One
produces iron, another produces steel, and the last produces corn. Two processes exist in each industry for producing the output of
that industry. Each process exhibits Constant Returns to Scale (CRS) and is characterized by coefficients of production.
Coefficients of production (Table 1) specify the physical quantities of inputs required to produce a unit output in the
specified industry. All processes require a year to complete, and the inputs of iron, steel, and corn are all consumed over the
year in providing their services so as to yield output at the end of the year. The technology is specified for a specific
moment in time, and improves over time.
</P>
<TABLE CELLSPACING="1" CELLPADDING="1" BORDER="1" ALIGN="center"><CAPTION><B>Table 1: The Technology</B></CAPTION>
<TR><TD ALIGN="center" ROWSPAN="2"><B>Input</B></TD><TD ALIGN="center" COLSPAN="2"><B>Iron<BR>Industry</B></TD><TD ALIGN="center" COLSPAN="2"><B>Steel<BR>Industry</B></TD><TD ALIGN="center" COLSPAN="2"><B>Corn<BR>Industry</B></TD></TR>
<TR><TD ALIGN="center">a</TD><TD ALIGN="center">b</TD><TD ALIGN="center">c</TD><TD ALIGN="center">d</TD><TD ALIGN="center">e</TD><TD ALIGN="center">f</TD></TR>
<TR><TD ALIGN="center">Labor</TD><TD ALIGN="center">(15/2) e<SUP>-φ<I>t</I></SUP></TD><TD ALIGN="center">32 e<SUP>-σ<I>t</I></SUP></TD><TD ALIGN="center">(13/2) e<SUP>-φ<I>t</I></SUP></TD><TD ALIGN="center">60 e<SUP>-σ<I>t</I></SUP></TD><TD ALIGN="center">(15/2) e<SUP>-φ<I>t</I></SUP></TD><TD ALIGN="center">55 e<SUP>-σ<I>t</I></SUP></TD></TR>
<TR><TD ALIGN="center">Iron</TD><TD ALIGN="center">1/6</TD><TD ALIGN="center">2/5</TD><TD ALIGN="center">1/200</TD><TD ALIGN="center">1/100</TD><TD ALIGN="center">1</TD><TD ALIGN="center">0</TD></TR>
<TR><TD ALIGN="center">Steel</TD><TD ALIGN="center">1/200</TD><TD ALIGN="center">1/400</TD><TD ALIGN="center">1/4</TD><TD ALIGN="center">3/10</TD><TD ALIGN="center">0</TD><TD ALIGN="center">1/4</TD></TR>
<TR><TD ALIGN="center">Corn</TD><TD ALIGN="center">1/300</TD><TD ALIGN="center">1/300</TD><TD ALIGN="center">1/300</TD><TD ALIGN="center">0</TD><TD ALIGN="center">0</TD><TD ALIGN="center">0</TD></TR>
</TABLE>
<P>
A technique consists of a process in each industry. Table 2 specifies the eight techniques that can be formed from the processes specified by the technology. If you work through this example, you will find that to produce a net output of one bushel corn, inputs of iron, steel, and corn all need to be produced to reproduce the capital goods used up in producing that bushel.
</P>
<TABLE ALIGN="center" BORDER="1" CELLPADDING="1" CELLSPACING="1">
<CAPTION><B>Table 2: Techniques</B></CAPTION>
<TR><TD ALIGN="center"><B>Technique</B></TD><TD ALIGN="center"><B>Processes</B></TD></TR>
<TR><TD ALIGN="center">Alpha</TD><TD ALIGN="center">a, c, e</TD></TR>
<TR><TD ALIGN="center">Beta</TD><TD ALIGN="center">a, c, f</TD></TR>
<TR><TD ALIGN="center">Gamma</TD><TD ALIGN="center">a, d, e</TD></TR>
<TR><TD ALIGN="center">Delta</TD><TD ALIGN="center">a, d, f</TD></TR>
<TR><TD ALIGN="center">Epsilon</TD><TD ALIGN="center">b, c, e</TD></TR>
<TR><TD ALIGN="center">Zeta</TD><TD ALIGN="center">b, c, f</TD></TR>
<TR><TD ALIGN="center">Eta</TD><TD ALIGN="center">b, d, e</TD></TR>
<TR><TD ALIGN="center">Theta</TD><TD ALIGN="center">b, d, f</TD></TR>
</TABLE>
<P>
The Alpha and Theta techniques each undergo Harrod-neutral technical progress. The labor
coefficients for the Alpha technique decrease at the the rate φ and those for the
Theta technique decrease at the rate σ. The other techniques consist of a mixture
of processes from these two techniques.
</P>
<B>3.0 Prices of Production</B>
<P>
A system of equations can be set out for prices of production, for each technique,at any moment of time.
I assume that net output consists of a bushel corn, and that this net output is
the numeraire. Wages are paid out of the surplus product after the harvest.
Given competitive conditions, the same rate of profits are obtained in each industry.
</P>
<P>
These assumptions are sufficient to determine the wage and the prices of produced commodities,
for each technique, at the given moment in time, as a function of the rate of profits.
</P>
<B>4.0 The Choice of Technique</B>
<P>
The cost-minimizing technique at a moment of time can be found by constructing the wage frontier
as the outer envelope of the wage curves for the eight techniques. Given the rate of profits,
the cost-minimizing technique maximizes the wage. Given the wage, it maximizes the rate of profits.
</P>
<P>
Figure 1, at the top of this post, and Figure 2 depict how the dependence of the cost-minimizing
technique on distribution varies with time. These graphs are drawn for the indicated rates of neutral technical progress
in the Alpha and Theta techniques.
Figure 1 graphs the maximum wage and the wage at each
switch point on the frontier. Figure 2 graphs the rate of profits, both the maximum and at each
switch point on the frontier. Figure 2 also shows the rate of profits at switch points between -100
percent and zero. The thin vertical lines partition time into numbered regions. Each partition
corresponds to a fluke switch point.
</P>
<table align="center" border="0" cellpadding="1" cellspacing="1">
<tbody>
<TR><TD><div class="separator" style="clear: both;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhqTtN4hRRoLSofpv40dno2WdlegD336GJg5NClxE-NA4vU6HWlP8GKnWQj97Bg6jrPU6D1do04TVD3vkZUaRP4y3NktpjoO3c1O9_uiQQGyM14AUH2MyWtbHX3WwONJ2ToC0-GX-_JwoZpnvcml_AkhBG5h3B-mgBdE8uaHv7mtJABz08fn7oh/s1440/HarrodNeutralExample.gif" style="display: block; padding: 1em 0; text-align: center; "><img alt="" border="0" width="320" data-original-height="810" data-original-width="1440" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhqTtN4hRRoLSofpv40dno2WdlegD336GJg5NClxE-NA4vU6HWlP8GKnWQj97Bg6jrPU6D1do04TVD3vkZUaRP4y3NktpjoO3c1O9_uiQQGyM14AUH2MyWtbHX3WwONJ2ToC0-GX-_JwoZpnvcml_AkhBG5h3B-mgBdE8uaHv7mtJABz08fn7oh/s320/HarrodNeutralExample.gif"/></a></div></TD></TR>
<TR><TD ALIGN="center"><B>Figure 2: Variation in the Maximum Rate of Profits and the Cost-Minimizing Technique with Time</B></TD></TR>
</tbody></table>
<P>
The ranking of techniques by the maximum rate of profits does not vary with time.
At the maximum rate of profits, the wage is zero. Variations in labor coefficients do not matter.
In this case, the Alpha technique
remains cost-minimizing for all time at a wage of zero.
It is not necessary, in general, that the cost-minimizing technique at a zero wage, be one of those experiencing
Harrod-neutral technical change. For other coefficients of production, the Beta technique, for example, could be cost-minimizing
at a zero wage.
</P>
<P>
In general, the cost-minimizing technique at the maximum wage starts with the technique with the slowest rate
of neutral technical progress. Over time, the cost-minimizing technique becomes the technique with the largest rate
of technical progress.
</P>
<P>
In the example,
the Alpha technique is cost-minimizing at the start of time, whatever the distribution of income. Region 1 illustrates
this lack of dependence of the cost-minimizing technique on distribution.
the Alpha technique
remains cost-minimizing for all time at a wage of zero. Since the rate of Harrod-neutral technical progress is assumed to
be greater for the Theta technique, eventually Theta is cost-minimizing at the maximum wage. One can see the effects
of technical progress with the exponential growth of the maximum wage in Figure 2.
</P>
<P>
Consider Region 7 in the Figures. At a non-fluke switch point, only one process changes in the cost-minimizing technique.
As the wage increases, the corn-producing process changes at the switch point between Alpha and Beta. At the second switch-point
with increasing wages, the cost-minimizing process in steel production changes. Finally, at the switch point between Delta
and Theta, the cost-minimizing process in in iron production changes.
</P>
<P>
In Region 6, which process changes first, with increasing wages, in iron and steel production varies. The iron
process varies at the switch point between Beta and Zeta. At a higher wage, the steel process in the cost-minimizing
technique varies at the switch point between Zeta and Theta. The partition between Region 6 and Region 7 has a
fluke switch point in which the iron and steel-producing processes change simultaneously.
</P>
<P>
Region 2 exhibits reswitching between the Alpha and Beta techniques. The switch point at the lower wage is an
example of capital-reversing, also known as a positive real Wicksell effect. Around this switch point, a higher
wage is associated with the employment of more labor per unit of net output. It also exhibits the reverse
substitution of labor. In Regions 2, 3, and 4, the labor coefficient in Process f exceeds the labor
coefficient in Process e. A higher wage at this switch point between Alpha and Beta is associated
with greater employment per unit of gross corn output.
</P>
<B>5.0 Conclusion</B>
<P>
The introduction of switch points and the variation in the cost-minimizing technique at the maximum
wage is, in some sense, a general property of technology formed out of techniques experiencing Harrod-neutral
technical progress.
With time, switch points are introduced as fluke cases. These fluke cases need not create examples of
<A HREF="https://robertvienneau.blogspot.com/2023/01/ccc-does-not-depend-on-reswitching.html">reswitching, capital-reversing, reverse labor substitution, or process recurrence.</A>
But they do in the example.
</P>Robert Vienneauhttp://www.blogger.com/profile/00872510108133281526noreply@blogger.com0tag:blogger.com,1999:blog-26706564.post-21697423125513370882023-12-28T08:55:00.000-05:002023-12-28T08:55:53.823-05:00Problems With The Economic Calculation Problem<TABLE CELLSPACING="1" CELLPADDING="1" BORDER="0" ALIGN="center"><TR><TD ALIGN="center">
<iframe title="YouTube video player" width="320" height="260" src="https://www.youtube.com/embed/G5dqYvmc2FU" frameborder="0" allowfullscreen></iframe
></TD></TR><TR><TD ALIGN="center"><B>Hakim on the Economic Calculation Problem</B></TD></TR></TABLE>
<P>
Reactionaries often bring up the <A HREF="https://en.m.wikipedia.org/wiki/Economic_calculation_problem">Economic Calculation Problem (ECP)</A> as a fatal objection
to socialism, considered as entailing central planning. Ludwig Von Mises put this forth in 1920 as an argument in principle
that central planning is guaranteed to be highly inefficient. He postulates that the planning authority knows
the prices of consumer goods and all technical possibilities, including the endowments of originary factors of production.
But without prices of intermediate goods, the planning authority cannot make rational decisions about how to produce
commodities. Like <A HREF="https://robertvienneau.blogspot.com/2009/10/enrico-barone-originator-of-socialist.html">Enrico Barone</A>,
Von Mises insists the planning authority must re-introduce prices for intermediate goods and a market for 'capital'.
</P>
<P>
Friedrich Hayek changed the question. He argued that efficient central planning was impractical, not impossible in principle.
For Hayek, prices bring about a coordination among entrepreneurs of their plans and expectations. Hayek raised the question
on how the planning authority could gather the data they need for their equations. He emphasized dispersed tacit knowledge
of time and space.
</P>
<P>
I emphasize that what the ECP is is <A HREF="https://academic.oup.com/cje/article-abstract/45/4/787/6252768">disputable</A>.
Also, it is inapplicable to the ideas of anarcho-syndicalism, council communists, and so on. Anyways, this post
poses some
problems with using the ECP as an objection to socialist central planning.
</P>
<P>
<B>Magnitude of costs of failures of coordination.</B> Neither Von Mises nor Hayek attempt to estimate the costs
of a failure of coordination. Since they say a capitalist economy will always be in a disequilibrium state,
capitalism will also suffer costs of discoordination at any point of time. How much more are the costs in a
centrally planned society, as opposed to a capitalist society? What is the empirical evidence that the ECP
was a major problem for the U.S.S.R?
</P>
<P>
<B>Externalities.</B> For economists of the Austrian school, the extent of the coordination of plans and expectations
of diverse agents is a criterion for welfare economics. This approach
<A HREF="https://www.tandfonline.com/doi/full/10.1080/0953825042000313816">contrasts</A>
with the maintream marginalist criteria of Pareto and Hicks-Kaldor efficiency. The approach of the
Austrian school does not seem to me to adequately account for externalities, such as global warming.
To Von Mises' credit, he does bring up the destruction of the unpriced natural beauty of a waterfall in discussing
its use for power generation.
</P>
<P>
<B>How do prices bring about coordination?</B> To me, when Hayek describes economic coordination,
he is describing something like Hicks' model of temporary equibrium, as in <A HREF="https://www.amazon.com/Value-Capital-Fundamental-Principles-Economic/dp/0198282699"><I>Value and Capital</I></A>,
or the Arrow-Debreu model of intertemporal equilibria, as in Debreu's <A HREF="http://digamo.free.fr/debreu59.pdf"><I>Theory of Value</I></A>.
Much research suggests such a coordinated state cannt be expected to be brought about by disequilibrium market processes.
(Issues exist in how my favorite model can <A HREF="https://robertvienneau.blogspot.com/2020/04/a-market-algorithm.html">describe</A>
<A HREF="http://www.centrosraffa.org/cswp_details.aspx?id=28">trends</A> in capitalist economies, particularly in accounting for
if joint production.)
</P>
<P>
<B>Mises is mathematically mistaken.</B> Suppose prices of commodities provided as components of final
demand, technical possibilies, and endowments of originary factors of production are given to the Ministry of Planning.
The level at which to operate each production process is found as the result of the solution to
an <A HREF="https://robertvienneau.blogspot.com/2023/09/an-answer-to-ludwig-von-mises.html">optimization problem</A>.
One does not need prices of factors of production to solve the primal problem. Such prices emerge as the solution of
the dual problem. Von Mises' mistakes and dogmatism may have been useful in that they encouraged others to explore
one approach to price theory.
</P>
<P>
<B>Mises and Hayek misunderstand capitalism.</B> Anyways, most prices in a capitalist economy do not
communicate knowledge like Hayek describes. They do not continuously fluctuate under the influence of supply
and demand. Rather, prices of manufactured commodities are usually
<A HREF="https://robertvienneau.blogspot.com/2013/01/selected-principles-of-microeconomics.html">full cost prices</A> or
<A HREF="https://robertvienneau.blogspot.com/2013/06/corporations-and-theory-of-firm.html">administrated prices</A>,
set by firms. Variations in the level of output, inventories, and queues of orders are of some importance.
</P>
<P>
Above, I have not said anything about improvements in computer networks or computer speed. I do
not see how <A HREF="https://www.science.org/doi/full/10.1126/science.adh1174">IBM'a North Pole</A> computer
(<A HREF="https://modha.org/2023/10/northpole-neural-inference-at-the-frontier-of-energy-space-and-time/">Modha's blog</A>)
would be helpful in linear programming. Hakim recomments
<A HREF="https://users.wfu.edu/cottrell/socialism_book/calculation_debate.pdf">Cottrell and Cockshott (1993)</A>
for those who want to know more about the ECP. I have not read <A HREF="https://www.versobooks.com/products/636-the-people-s-republic-of-walmart"><I>The People's Republic of Walmart</I></A>,
which some recommend.
</P>Robert Vienneauhttp://www.blogger.com/profile/00872510108133281526noreply@blogger.com0tag:blogger.com,1999:blog-26706564.post-26121074486872668312023-12-26T11:01:00.000-05:002023-12-26T11:01:23.209-05:00Toni Negri, Bob Solow, Tony Thirwall<P>
I feel each of these three needs more than I am able to say. I find intriguing radicals attacking
communist parties from the left, as Negri and others (Autonomia) did in Italy in the 1960s and 1970s.
I draw on those who have all sorts of arguments with Solow. I find him witty.
Thirwall I associate with Nicholas Kaldor and development economics.
</P>
<UL>
<LI>Antonio Negri (1933 - 2023). <A HREF="https://www.democracynow.org/2023/12/22/italian_marxist_philosopher_antonio_negri_1933">Repost of 2015 interview from <I>Democracy Now</I></A>. <A HREF="https://libcom.org/tags/antonio-negri">Libcom page of works related to Negri</A>.</LI>
<LI>Robert Solow (1924 - 2023): <A HREF="https://news.mit.edu/2023/institute-professor-emeritus-robert-solow-dies-1222">MIT obituary</A>. <A HREF="https://www.russellsage.org/news/memoriam-robert-m-solow-1924-2023">Russell Sage Foundation obituary</A>. <A HREF="https://www.nobelprize.org/prizes/economic-sciences/1987/solow/facts/">1987 Nobel announcement</A>.</LI>
<LI>Tony Thirwall (1941 - 2023). <A HREF="http://nakedkeynesianism.blogspot.com/2023/12/tony-thirlwall-1941-2023.html">Repost of an obituary from John McCombie</A>.</LI>
</UL>Robert Vienneauhttp://www.blogger.com/profile/00872510108133281526noreply@blogger.com0tag:blogger.com,1999:blog-26706564.post-24711523537826441122023-12-21T08:08:00.001-05:002023-12-21T08:08:32.341-05:00Misrepresentations Of Keynes' Work<P>
I claim that what mainstream economists teach about what Keynes wrote is often false and nonsenical.
Unfortunately, this is quite impressionistic in that I do not give <A HREF="https://robertvienneau.blogspot.com/2011/11/mixin-up-truth-with-something-funny-i.html">examples</A>
of these misrepresentations.
I am writing here only about the <I>General Theory</I>.
I suppose some mainstream economists might respond that they do not teach about Keynes at all.
</P>
<P>
Some say Keynes work was about policy, not theory. Keynes specifically says otherwise in the first sentences
of the preface to his major work:
</P>
<BLOCKQUOTE>
"This book is chiefly addressed to my fellow economists. I hope that it will be intelligible to others.
But its main purpose is to deal with difficult questions of theory, and only in the second place with
the applications of this theory to practice. For if orthodox economics is at fault, the error is to be
found not in the superstructure, which has been erected with great care for logical consistency, but
in a lack of clearness and of generality in the premises."
</BLOCKQUOTE>
<P>
Some say Keynes claimed that persistent unemployment was caused by sticky wages or prices.
<A HREF="https://www.jstor.org/stable/1905567">Franco Modigliani (1944)</A> is the locus classicus for this view.
But Keynes starts Chapter 19 by stating exactly the opposite:
</P>
<BLOCKQUOTE>
<P>
"...the classical theory has been accustomed to rest the supposedly
self-adjusting character of the economic system on an assumed fluidity of money-wages; and, when
there is rigidity, to lay on this rigidity the blame of maladjustment.
</P>
<P>
It was not possible, however, to discuss this matter fully until our own theory had been developed.
For the consequences of a change in money-wages are complicated. A reduction in money-wages is
quite capable in certain circumstances of affording a stimulus to output, as the classical theory
supposes. My difference from this theory is primarily a difference of analysis; so that it could not be
set forth clearly until the reader was acquainted with my own method."
</P>
</BLOCKQUOTE>
<P>
Keynes thinks institutions that make money wages sticky downward are stabilizing, not an explanation
of persistent unemployment. He notes that workers and employers may have no means of negotiating over
real wages, instead of money wages. And he argues that it is rational for workers to be concerned with
relative wages.
</P>
<P>
Some say Keynes confined his theory to the short run. At least one model in the General Theory is
set in Marshall's short run. Investment is ongoing, but the stock of capital equipment
is taken as given. This short run equilibrium is suppose to point of attraction
in a very short run dynamics. Keynes, however, introduces a notion of long run
equilibrium in chapter 5:
</P>
<BLOCKQUOTE>
"If we suppose a state of expectation to continue for a sufficient length of time for the effect on
employment to have worked itself out so completely that there is, broadly speaking, no piece of
employment going on which would not have taken place if the new state of expectation had always
existed, the steady level of employment thus attained may be called the long-period employment
corresponding to that state of expectation. It follows that, although expectation may change so
frequently that the actual level of employment has never had time to reach the long-period
employment corresponding to the existing state of expectation, nevertheless every state of
expectation has its definite corresponding level of long-period employment."
</BLOCKQUOTE>
<P>
Some say that Keynes' major policy position was to recommended counter-cyclical fical and monetary policy.
It is surprisingly hard to find any such argument in the <I>General Theory</I>.
I think, as far as policy goes, Keynes recommended institutional changes,
especially in Chapter 24, the final chapter of the <I>General Theory</I>.
Keynes wants a less unequal distribution of income. He thinks there is some justification
for some inequality:
<BLOCKQUOTE>
"For my own part, I believe that there is social and psychological justification for significant
inequalities of incomes and wealth, but not for such large disparities as exist to-day. There are
valuable human activities which require the motive of money-making and the environment of
private wealth-ownership for their full fruition. Moreover, dangerous human proclivities can be
canalised into comparatively harmless channels by the existence of opportunities for money-making
and private wealth, which, if they cannot be satisfied in this way, may find their outlet in cruelty,
the reckless pursuit of personal power and authority, and other forms of self-aggrandisement. It is
better that a man should tyrannise over his bank balance than over his fellow-citizens; and whilst
the former is sometimes denounced as being but a means to the latter, sometimes at least it is an
alternative. But it is not necessary for the stimulation of these activities and the satisfaction of these
proclivities that the game should be played for such high stakes as at present."
</BLOCKQUOTE>
<P>
Keynes looks forward to permanently low interest rates, "the euthanasia of the rentier",
progressive taxes, and "communal saving through the agency of the State".
These changes will lead to the disappearance of rentier aspect of capitalism, which is a transitional stage.
The goal is to deprive "capital of its scarcity-value within one or two generations".
Keynes thinks these changes are consistent with entrepreneurship:
</P>
<BLOCKQUOTE>
"Thus we might aim in practice (there being nothing in this which is unattainable) at an increase in
the volume of capital until it ceases to be scarce, so that the functionless investor will no longer
receive a bonus; and at a scheme of direct taxation which allows the intelligence and determination
and executive skill of the financier, the entrepreneur <I>et hoc genus omne</I> (who are certainly so fond
of their craft that their labour could be obtained much cheaper than at present), to be harnessed to
the service of the community on reasonable terms of reward."
</BLOCKQUOTE>
<P>
Probably the most famous policy pronouncement in the <I>General Theory</I>
is a phrase in the following:
</P>
<BLOCKQUOTE>
"I conceive, therefore, that a
somewhat comprehensive socialisation of investment will prove the only means of securing an
approximation to full employment; though this need not exclude all manner of compromises and of
devices by which public authority will co-operate with private initiative."
</BLOCKQUOTE>
<P>
It might be helpful to think of the General Theory
as containing several models, not all worked out, in a broader setting.
The IS-LM <A HREF="https://robertvienneau.blogspot.com/2009/04/michal-kalecki-economics-is-science-of.html">model</A>
is only one of these models. Keynes theory
is set in historical time, with business cycles occurring.
A major point is to abolish a seperation between a microeconomic analyis in terms of real values
and a monetary theory of nominal values.
</P>
<P>
I suppose one motivation for this post is
<A HREF="http://nakedkeynesianism.blogspot.com/2023/11/was-keynes-liberal-or-socialist.html">Matias Vernengo's</A>
recent response to James Crotty.
It seems every decade or so some Post Keynesian writes a book putting forth something like the unoriginal
claims in this blog post.
</P>
<B>References</B>
<UL>
<LI>A. Asimakopulos. 1991. <I>Keynes's General Theory and Accumulation</I>. Cambridge University Press.</LI>
<LI>Victoria Chick. 1983. <I>Macroeconomics after Keynes: A Reconsieration of the General Theory</I>. MIT Press.</LI>
<LI>James Crotty. 2019. <I>Keynes Against Capitalism: His Economic Case for Liberal Socialism</I>. Routledge.</LI>
<LI>Paul Davidson. 2007. <I>John Maynard Keynes</I>. Palgrave Macmillan.</LI>
<LI>Stephen A. Marglin. 2021. <I>Raising Keynes: A Twenty-First-Century General Theory</I>. Harvard University Press</LI>
<LI>Hyman Minsky. 1975. <I>John Maynard Keynes</I>. McGraw-Hill.</LI>
<LI>Robert Skidelsky. 1983 - 2001. <I>John Maynard Keynes</I> (Three volumes). Viking.</LI>
</UL>
Robert Vienneauhttp://www.blogger.com/profile/00872510108133281526noreply@blogger.com0tag:blogger.com,1999:blog-26706564.post-65971535272288135132023-12-13T08:18:00.000-05:002023-12-13T08:18:31.691-05:00Aims And Tasks Of Democratic Socialism<P>
Socialist and coomunist parties have formed various internationals over the course of centuries.
I consider a
<I>declaration of the Socialist International, adopted at its First Congress held in Frankfort-on-Main on 30 June-3 July 1951</I>
an authoritative statement of <A HREF="https://www.socialistinternational.org/congresses/i-frankfurt/">"The Aims and Tasks of Democratic Socialism"</A>.
This declaration was <A HREF="https://www.socialistinternational.org/councils/oslo-1962/">re-affirmed</A> in 1962.
The declaration starts as follows:
</P>
<BLOCKQUOTE>
<P>
1. From the nineteenth century onwards, capitalism has developed immense productive forces. It has done
so at the cost of excluding the great majority of citizens from influence over production. It put the rights
of ownership before the rights of man. It created a new class of wage-earners without property or social rights. It sharpened the struggle between the classes.
</P>
<P>
Although the world contains resources which could be made to provide a decent life for everyone, capitalism has been
incapable of satisfying the elementary needs of the world’s population. It proved unable to function without devastating
crises and mass unemployment. It produced social insecurity and glaring contrasts between rich and poor. It resorted to
imperialist expansion and colonial exploitation, thus making conflicts between nations and races more bitter. In some
countries powerful capitalist groups helped the barbarism of the past to raise its head again in the form of Fascism and Nazism.
</P>
<P>
2. Socialism was born in Europe as a movement of protest against the diseases inherent in capitalist society. Because the
wage-earners suffered most from capitalism, Socialism first developed as a movement of the wage-earners. Since
then more and more citizens — professional and clerical workers, farmers and fishermen, craftsmen and retailers,
artists and scientists — are coming to understand that Socialism appeals to all men who believe that the exploitation of man by man must be abolished.
</P>
<P>
3. Socialism aims to liberate the peoples from dependence on a minority which owns or controls the means of production.
It aims to put economic power in the hands of the people as a whole, and to create a community in which free men work together as equals.
</P>
<P>
4. Socialism has become a major force in world affairs. It has passed from propaganda into practice. In some countries the
foundations of a Socialist society have already been laid. Here the evils of capitalism are disappearing and the community
has developed new vigour. The principles of Socialism are proving their worth in action.
</P>
<P>
5. In many countries uncontrolled capitalism is giving place to an economy in which state intervention and
collective ownership limit the scope of private capitalists. More people are coming to recognise the need for
planning. Social security, free trade unionism and industrial democracy are winning ground. This development is largely a
result of long years of struggle by Socialists and trade unionists. Wherever Socialism is strong, important steps have been
taken towards the creation of a new social order.
</P>
<P>
6. In recent years the peoples in the underdeveloped areas of the world have been finding Socialism a valuable
aid in the struggle for national freedom and higher standards of life. Here different forms of democratic Socialism
are evolving under the pressure of different circumstances. The main enemies of Socialism in these areas are parasitical
exploitation by indigenous financial oligarchies and colonial exploitation by foreign capitalists. The Socialists fight for
political and economic democracy, they seek to raise the standard of living for the masses through land reform and industrialisation,
the extension of public ownership and the development of producers' and consumers' cooperatives.
</P>
<P>
7. Meanwhile, as Socialism advances throughout the world, new forces have arisen to threaten the movement towards
freedom and social justice. Since the Bolshevik Revolution in Russia, Communism has split the International Labour
Movement and has set back the realisation of Socialism in many countries for decades.
</P>
<P>
8. Communism falsely claims a share in the Socialist tradition. In fact it has distorted that tradition beyond
recognition. It has built up a rigid theology which is incompatible with the critical spirit of Marxism.
</P>
<P>
9. Where Socialists aim to achieve freedom and justice by removing the exploitation which divides men under capitalism,
Communists seek to sharpen those class divisions only in order to establish the dictatorship of a single party.
</P>
<P>
10. International Communism is the instrument of a new imperialism. Wherever it has achieved power it has destroyed
freedom or the chance of gaining freedom. It is based on a militarist bureaucracy and a terrorist police. By producing
glaring contrasts of wealth and privilege it has created a new class society. Forced labour plays an important part in its economic organisation.
</P>
<P>
11. Socialism is an international movement which does not demand a rigid uniformity of approach. Whether Socialists
build their faith on Marxist or other methods of analysing society, whether they are inspired by religious or humanitarian principles, they all
strive for the same goal — a system of social justice, better living, freedom and world peace.
</P>
<P>
12. The progress of science and technical skill has given man increased power either to improve his lot or to destroy himself. For
this reason production cannot be left to the play of economic liberalism but must be planned systematically for human needs. Such
planning must respect the rights of the individual personality. Socialism stands for freedom and planning in both national and international affairs.
</P>
<P>
13. The achievement of Socialism is not inevitable. It demands a personal contribution from all its followers. Unlike the
totalitarian way it does not impose on the people a passive role. On the contrary, it cannot succeed without thorough-going and active
participation by the people. It is democracy in its highest form.
</P>
</BLOCKQUOTE>
<P>
Further sections of the declaration discuss the goals of political democracy, economic democracy, social democracy and cultural progress,
and international democracy. I find non-dogmatic the section on economic democracy:
</P>
<BLOCKQUOTE>
<P>
1. Socialism seeks to replace capitalism by a system in which the public interest takes precedence over the interest of private profit.
The immediate economic aims of Socialist policy are full employment, higher production, a rising standard of life, social security and a
fair distribution of incomes and property.
</P>
<P>
2. In order to achieve these ends production must be planned in the interest of the people as a whole.
</P>
<P>
Such planning is incompatible with the concentration of economic power in the hands of a few. It requires effective democratic control of the economy.
</P>
<P>
Democratic Socialism therefore stands in sharp contradiction both to capitalist planning and to every form of totalitarian planning;
these exclude public control of production and a fair distribution of its results.
</P>
<P>
3. Socialist planning can be achieved by various means. The structure of the country concerned must decide the extent of public
ownership and the forms of planning to apply.
</P>
<P>
4. Public ownership can take the form of the nationalisation of existing private concerns, municipal or regional enterprise, consumers' or producers' cooperatives.
</P>
<P>
These various forms of public ownership should be regarded not as ends in themselves but as means of controlling basic industrie
and services on which the economic life and welfare of the community depend, of rationalising inefficient industries or of
preventing private monopolies and cartels from exploiting the public.
</P>
<P>
5. Socialist planning does not presuppose public ownership of all the means of production. It is compatible with the existence
of private ownership in important fields, for instance in agriculture, handicraft, retail trade and small and middle-sized industries.
The state must prevent private owners from abusing their powers. It can and should assist them to contribute towards increased
production and well-being within the framework of a planned economy.
</P>
<P>
6. Trade unions and organisations of producers and consumers are necessary elements in a democratic society; they
should never be allowed to degenerate into the tools of a central bureaucracy or into a rigid corporative system. Such
economic organisations should participate in shaping general economic policy without usurping the constitutional prerogatives of parliament.
</P>
<P>
7. Socialist planning does not mean that all economic decisions are placed in the hands of the Government or central authorities.
Economic power should be decentralised wherever this is compatible with the aims of planning.
</P>
<P>
8. All citizens should prevent the development of bureaucracy in public and private industry by taking part in the process of
production through their organisations or by individual initiative. The workers must be associated democratically with the direction of their industry.
</P>
<P>
9. Democratic Socialism aims at extending individual freedom on the basis of economic and social security and an increasing prosperity.
</P>
</BLOCKQUOTE>
<P>
A lot of work is still required to fulfill these aims. I do not know how compatible <A HREF="http://robertvienneau.blogspot.com/2023/07/how-would-socialism-work.html">detailed proposals</A>
some have put forth are with these aims.
</P>Robert Vienneauhttp://www.blogger.com/profile/00872510108133281526noreply@blogger.com0tag:blogger.com,1999:blog-26706564.post-35505801965609310322023-12-09T08:03:00.001-05:002023-12-09T08:03:00.144-05:00Labor And Land Are No Commodities<P>
I read Karl Polanyi's <I>The Great Transformation: The Political and Economic Origins of our Time</I> years ago.
I find <A HREF="https://robertvienneau.blogspot.com/2014/07/against-mixed-economy-1.html">its</A> <A HREF="https://robertvienneau.blogspot.com/2014/07/against-mixed-economy-1.html">thesis</A> on the first passage
of the first chapter:
</P>
<BLOCKQUOTE>
<P>
"Nineteenth-century civilization rested on four institutions. The
first was the balance-of-power system which for a century prevented
the occurrence of any long and devastating war between the Great
Powers. The second was the international gold standard which symbolized
a unique organization of world economy. The third was the
self-regulating market which produced an unheard-of material welfare.
The fourth was the liberal state. Classified in one way, two of these
institutions were economic, two political. Classified in another way,
two of them were national, two international. Between them they determined
the characteristic outlines of the history of our civilization.
</P>
<P>
Of these institutions the gold standard proved crucial; its fall was
the proximate cause of the catastrophe. By the time it failed, most of
the other institutions had been sacrificed in a vain effort to save it.
</P>
<P>
But the fount and matrix of the system was the self-regulating
market. It was this innovation which gave rise to a specific civilization.
The gold standard was merely an attempt to extend the domestic market
system to the international field; the balance-of-power system was
a superstructure erected upon and, partly, worked through the gold
standard; the liberal state was itself a creation of the self-regulating
market. The key to the institutional system of the nineteenth century
lay in the laws governing market economy.
</P>
<P>
Our thesis is that the idea of a self-adjusting market implied a stark
Utopia. Such an institution could not exist for any length of time without
annihilating the human and natural substance of society; it would
have physically destroyed man and transformed his surroundings into
a wilderness. Inevitably, society took measures to protect itself, but
whatever measures it took impaired the self-regulation of the market,
disorganized industrial life, and thus endangered society in yet another
way It was this dilemma which forced the development of the
market system into a definite groove and finally disrupted the social
organization based upon it.
" -- Karl Polanyi
</P>
</BLOCKQUOTE>
<P>
By the way <A HREF="https://washingtonmonthly.com/2023/11/23/why-charlie-peters-matters/">Charles</A> <A HREF="https://newrepublic.com/article/177102/charlie-peters-washington-monthly-obituary">Peters</A> has died.
</P>
<P>
In many ways, this blog is my commonplace book.
</P>
Robert Vienneauhttp://www.blogger.com/profile/00872510108133281526noreply@blogger.com3tag:blogger.com,1999:blog-26706564.post-46303246751711942082023-12-06T07:51:00.000-05:002023-12-06T07:51:23.804-05:00Anti-Communist Literature<BLOCKQUOTE>
<P>
We live, dead to the land beneath us,<BR>
Ten steps away no one hears our speeches.
</P>
<P>
But where there’s so much as half a conversation<BR>
The Kremlin's mountaineer will get his mention.
</P>
<P>
His fingers are fat as grubs,<BR>
And the words, final as lead weights, fall from his mouth.
</P>
<P>
His cockroache whiskers leer<BR>
And his boot tops gleam.
</P>
<P>
Around him a rabble of ring-necked leaders -<BR>
Fawning half men for him to play with.
</P>
<P>
They whinny, purr or whine.<BR>
As he prates and points a finger.
</P>
<P>
One by one forging his laws, to be flung<BR>
Like horeseshoes at the head, the eye or the groin.
</P>
<P>
And every killing is a treat<BR>
For the broad-chested Ossete.
</P>
-- Oslip Mandelshtam
</BLOCKQUOTE>
<P>
This is just a bibliography.
I have posted <A HREF="http://robertvienneau.blogspot.com/2023/07/how-would-socialism-work.html">bibliographies</A> before.
I want people that are sympathetic to socialism of some sort or another.
As usual, I am limited to works in or translated to English.
Some of these examples are not clearly anti-communist. These are a mixture of novels and non-fiction.
Some of these I have not read.
I am sure this selection can be expanded.
</P>
<UL>
<LI>Richard Crossman (ed.). 1949. <I>The God that Failed</I></LI>
<LI>Milovan Djilas. 1957. <I>The New Class: An Analysis of the Communist System</I>. London: Thames and Hudson.</LI>
<LI>Stefan Heym. 2022. <I>Radek: A Novel</I>. Monthly Review Press.</LI>
<LI>Arthur Koestler. 1941. <I>Darkness at Noon</I>. Macmillan</LI>
<LI>Janos Kornai. 1992. <I>The Socialist System: The Political Economy of Communism</I>. Princeton University Press.</LI>
<LI>Nadezhda Mandelshtam. 1999. <I>Hope Against Hope: A Memoir</I>. Random House.</LI>
<LI>George Orwell. 1945. <I>Animal Farm</I>.</LI>
<LI>Boris Pasternak. 1957. <I>Doctor Zhivago</I>. New York: Pantheon Books.</LI>
<LI>Francis Spufford. 2012. <I>Red Plenty</I>. Graywolf Press.</LI>
<LI>Eugene Zamiatin. 1924. <I>We</I></LI>
</UL>Robert Vienneauhttp://www.blogger.com/profile/00872510108133281526noreply@blogger.com2