Doug Henwood wrote: "1) Would bourgeois economists disagree that higher productivity means lower prices? That's Wall Street common sense for sure; what about the higher economics?"
Yes, it's the common sense on the Street and at the Fed. I think most everyone would actually agree, but there's an implication of this relationship that they run away from like the plague. If increases in productivity imply falling prices, ceteris paribus, and if falling prices imply falling profit rates, ceteris paribus (which they do), then .... High theory always or almost always circumvents the productivity-price linkage by construction. The high theorists use numéraires, or value inputs and outputs simultaneously. In the former case, the numéraire's "prices" cannot change due to anything. In the latter case, no "price" can change between time of input and time of output. "2) Why have prices increased over the long term despite constant increases in productivity?" Ceteris has not been paribus. I suspect that the main factor is excessive credit expansion, fueled in part by central bank policy and deficit financing. The tendency for the rate of profit to fall has been displaced; rather than crises that take the form of falling prices and/or output levels, we often have debt and fiscal crises. "3) Why do value theorists find it harder to agree among themselves than do bourgeois economists?" It has to do with the sociology of knowledge production. If one is a careerist, conformity is generally the ticket to success. Most mainstream economists don't really believe in what they say or write. They go with the flow. Plus, especially in economics, conformity is enforced, forcibly, in all kinds of ways -- journals' selection criteria, hiring criteria, journal rankings, reconfiguring of departments (as in the Notre Dame case), etc. The lack of agreement among "value theorists" is a reflection of sharp political divisions (e.g., Stalinism, social democracy, liberatory Marxism), sharp philosophical divisions (much of "Marxian economics" has been a long effort to re-do Marx without the Hegel), sharp divisions between those with careeerist-professionalist orientations and others, etc. Raya Dunayevskaya characterized our age as the age of counter-revolution within the revolution. This is reflected in the theoretical realm as well. It is partly because we *do* believe in what we say and write, and partly because none of the camps any longer have the kind of material resources that are needed to enforce conformity, that the divisions are sharp. Andrew Kliman -----Original Message----- From: PEN-L list [mailto:[EMAIL PROTECTED] Behalf Of Doug Henwood Sent: Friday, June 13, 2003 4:32 PM To: [EMAIL PROTECTED] Subject: Re: Falsifiability and the law of value Drewk wrote: >However, properly understood, the law of value does generate a >falsifiable hypothesis that has not been falsified: productivity >increases tend to reduce commodities' prices. My preliminary >computation for the US during the past 1/2 century indicates that >a 1 percentage point increase in multifactor productivity leads, >ceteris paribus, to almost exactly a 1 percentage point decline in >the CPI. Three questions: 1) Would bourgeois economists disagree that higher productivity means lower prices? That's Wall Street common sense for sure; what about the higher economics? 2) Why have prices increased over the long term despite constant increases in productivity? 3) Why do value theorists find it harder to agree among themselves than do bourgeois economists? Doug
