Saturday, January 29, 2022

Summaries Of My Research Program

1.0 Summary In A Single Sentence

An analysis of structural economic dynamics in post-Sraffian models shows how reswitching and capital-reversing, for example, can be brought about or taken away by technical change, variation in relative markups among industries, or variations in requirements for use.

2.0 Descriptive Keywords
  • Cambridge capital controversy
  • Choice of technique
  • Fixed capital
  • Income distribution
  • Joint production
  • Labor market
  • Leontief Input-Output models
  • Markup pricing
  • Natural Resources
  • Rent
  • Sraffian economics
  • Structural dynamics
3.0 Summary In A Single Paragraph

Researchers in post-Sraffian price theory have constructed models for the analysis of the choice of technique. Fluke switch points can be identified by considering perturbations of parameters in such models. Parameters considered here characterize technology, relative rates of profits among industries, and requirements for use - also known as net output or final demand. Parameter spaces are partitioned by fluke cases. This analysis identifies how reswitching, capital-reversing, the recurrence of processes comprising a technique, and the reverse substitution of labor, for example, can appear and vanish. Single production, fixed capital, extensive and intensive rent, and joint production in general are explored. Results are presented by means of numerical examples, with many tables and figures.

4.0 Summary In Multiple Paragraphs

If workers successfully push for higher wages, will firms tend to hire less labor? Is land that receives a higher rent per acre more fertile? If firms extend the economic life of machinery, are they adopting a more capital-intensive technique? If firms in some industry impose barriers to entry and achieve rates of profits persistently higher than others, will the answer to these questions change?

Researchers in price theory, in the tradition of the pioneering work of Piero Sraffa, have found surprising answers for these questions and more, in a rediscovery of the classical theory of value and distribution. My work extends such work by examining the effects of perturbing model parameters. Innovation in technology is represented by decreases in coefficients of production. Changes in market structure are depicted by persistent variations in relative rates of profits among industries. Variations in final demand are explored in models with long-lasting machinery, non-produced means of production, and general joint production.

Fully-specified numerical examples illustrate how parameter spaces are partitioned into regions among which qualitative behavior changes, while remaining invariant within each region. Many graphs provide unique transparency and visualization into aspects of price theory.


I have tried to summarize what I have been doing several times before.

Saturday, January 22, 2022

The Sraffian Combinatorial Explosion

Mirowski On Markomata

In the title of this post, I introduce a new technical term. Consider a Leontief input-output matrix characterizing the technique in use, in physical terms. Suppose n industries are producing n commodities. If an alternative process is available in one industry, then a problem of the choice between two techniques arises. If two processes are available in each industry, the choice is among 2n techniques. If three processes are available in each industry, 3n techniques exist.

Some researchers are quite aware of the challenges posed by combinatorics. Christian Bidard has what he calls a market algorithm. I have written a bit about a similar algorithm in my 2017 Review of Political Economy article. I think Yoshinori Shiozawa, Masashi Morioka, and Kazuhisa Taniguchi's 2019 book Microfoundations of Evolutionary Economics also has something about this sort of algorithm. By the way, D'Agata's example of the non-existence of a cost-minimizing technique is an example of an infinite loop in this market algorithm.

When analyzing the analysis of the choice of technique, Bidard champions Lemke's algorithm so that the observing economist can avoid looking at all combinations and permutations. Stefano Zambelli, Bertam Schefold, and each of their collaborators had to address combinatorial challenges in obtaining their empirical results.

Kumaraswamy Vela Velupillai, for example, in his Computable Foundations for Economics is another post-Sraffian addressing these issues. If you want to fully understand this stuff, which I do not, you might want to study algorithmic game theory, Norbert Wiener on cybernetics, Claude Shannon on information theory, the Chomsky heirarchy, and so on. I think those building on Sraffa have a contribution to make here.

I have not read a lot of the above. One might think of 'the' market as a distributed system. Markets with different rules for settling transactions can be thought of as types of automata. Somehow, many of these interacting automata comprise a capitalist economy.

Saturday, January 15, 2022


Saturday, January 08, 2022

Causes Of Inflation

Social norms exist about what wages can be expected from various types of jobs. And norms also exist for what the rate of profits or markups will be. Inflation arises when these norms conflict and institutions exist to fight about these norms.

There is no single rate of profits or a single wage for all jobs. In some jobs, you can expect to have a standard work week, weekends off, benefits, some asurance that your job will exist next week, and so. And in other jobs you cannot expect such. Here I am alluding to the theory of dual labor markets.

By the way, whether a job is in the formal or informal sector is not a matter of 'skill'. "The suggestion that any job is 'low skill' is a myth perpetuated by wealthy interests to justify inhumane working conditions, little/no healthcare, and low wages". A lot of struggle led to some jobs being considered 'skilled', and a reactionary counter-struggle resists such. Gender and race goes into this, of course. I doubt programmers were well-payed when a computer was a 'girl'. For example, I've read Richard Feynman's memoirs about how the 'computers' at Los Alamos implemented a time-sharing operating system (not his terminology). Do taxi drivers and Uber drivers face the same expectations? Bartenders at high-end restraurants in trendy parts of town and elsewhere?

How those with power understand what is going on matters. Suppose a certain set of hegemonic beliefs includes the incorrect idea that labor 'markets' tend to clear, maybe if only they could be made more 'flexible' and obstacles, such as labor unions, minimum wages, and so on are removed. And those running a country's central bank think their primary job is to fight inflation by raising interest rates whenever real wages show a slight increase. If the economy is run 'cold' for decades, much bad can result.

Consider a country where the workforce is highly unionized and collective bargaining is widely accepted, including with backing in law. Suppose contracts are staggered. Different sectors negoiate at different times. Suppose, by contrast, that the employers and employees are all expected to come together at one time. Inflation will be different in these two setups.

Another set of conventions involves families and households. Is co-habitation, without marriage, common? If you work in the formal sector, can you put your partner and non-biological children on your benefits? How many are expected, in the typical household - whatever that is - to work full or part time? What do you need for commuting? What kind of non-wage support can you expect? Have these norms varied recently? Have you tried following different conventions lately, and did you prefer it? The answer to these questions might have something to do with fluctuations in the labor force participation rate. With low unionization, a different set of institutions will resist attempts at the casualization of the work force.

Another set of expectations involves firms, their suppliers, and their customers. What proportion of restaurants and grocery stores do those who process agricultural products expect to be among those providing final demands? What level of capacity do firms expect to operate at? Does a different mode of operations change this? For example, I suspect a number of firms have realized they could double their office staff, if they had the demand and need, perhaps with an increase of support from their Information Technology support staff. If those running firms have highly uncertain or incorrect expectations, bottlenecks in some sectors can be expected to result.

I probably would not have written the above two paragraphs - maybe the whole post - without the prompting of current events. I look backwards to Joan Robinson's explanation (prediction) of stagflation and other literature.

Selected References
  • James K. Galbraith. 1998. Created Unequal: The Crisis in American Pay. Free Press.
  • Stephen A. Marglin. 1984. Growth, Distribution, and Prices, Harvard University Press.
  • Joan Robinson. 1962. "A Model of Accumulation" (In Essays in The Theory of Economic Growth, Macmillan).
  • Graham White. 2001. The Poverty of Conventional Economic Wisdom and the Search for Alternative Economic and Social Policies. The Drawing Board: An Australian Review of Public Affairs 2(2): 67-68.