Roger Douglas
Pen-lers, I am scheduled to debate with Roger Douglas of (in)famous New Zealand neo-conservatism next Tuesday (April 5) here at the University of Manitoba. He is making the rounds here in Canada, I believe under the auspices of an ultra-right think tank, spouting monetarism, privatization, deregulation etc. He also claims, of course, a certain credibility because of his experience as finance minister in the last NZ "Labour" (sic) government. Now I know, in general, the NZ history, but not the details and the history of the NZ economy since his predations. Can I ask anybody on the list who is familiar with his views and evidence/argument to counter them to send me their comments asap. Paul Phillips [EMAIL PROTECTED]
No Subject
Ajit writes I think, F M's baby is still born. The problem may be that they are intelligent mathematicians who do not understand the nature of economic theory. Economic theoreticians are not interested in prices as any merchant or trader would be. For economic theory, price is just a character (sometimes important and sometimes not so important) in a story, and is of interest only as a character of the story. E.G. During the preparation of his PRINCIPLES, Ricardo, on December 30, 1815, wrote to James Mill, "I know I shall be soon stopped by the word price"; i.e. his story had come to a halt without this character. In the surplus approach economics, prices play a role of DISTRIBUTING the SURPLUS PRODUCT (which is determined independent of prices) among the exploiting class according to certain rules (uniform rate of profit being one rule). In the neo-Classical economics, prices play the role of DISTRIBUTING (or allocating) the SCARCE RESOURCES to various ends to satisfy human wants. In THE LAWS OF CHAOS, prices are taken as empirical facts and the authors attempt to predict the empirical prices by using the method of mechanical statistics. For them a prediction of the observed prices is the sole purpose of the price or value theory, independent of any economic theory or the larger story of which it is part and parcel of. Of course, they try to put the old Marxist story as their larger story. F M's attack on the whole classical tradition, including Marx, for postulating uniform rate of profit is also not very interesting. Who does not know that if you look at the data of a year, most likely the rate of profit will not be equal accross sectors. The rate of profit is affected by tech. change, degrees of monopolization, international trade, changes in demand patterns, govt. interventions, wars, and a whole host of things. The classical theory of value or prices of production ASSUMES that these factors are either constant or do not exist. If F M want to discredit the classical position, they must show that under the given conditions of classical theory, this is an illogical position. But they don't do this. They only say that the "real world" profits don't equalize. But this is no criticism. Theory is far from "real world" and will always remain far from it. Ajit's position seems to me to smack of post modernism and idealism. It is not the task of science to narrate beautiful or edifying tales. Its job is to uncover the causal laws that govern the real world. In the epistemological break from ideology to science, explanations in terms of subjective purposes and teleologies are dispensed with to be replaced with explanations in terms of objective causal processes. It is certainly true that political economy, by virtue of its position within the ideological formation of bourgeois society has since its inception been heavily loaded with ideology and story telling. The question is whether it should remain as such. Althusser and Balibar argued that Capital represented a fundamental epistemological break from the ideological matrix of political economy. With F M's work one can see that elements of that matrix were carried forward. They are able to present the economy as the famous process without a subject that historical materialism claims to present history as. F M s work is a theory as well, but one whose objectivist foundations are unfamiliar to economics, but as any good scientific theory should, it offers empirically testable propositions. It is no accident that they are trained in physics. Physics has long known that there may be multiple internally consistent theories about the world, but it takes obsevation and experiment to decide which one is right. A theory that can only be judged on its internal consitency and is impervious to its axioms being counter factual, will never rise above the level of ideology. Paul Cockshott ,WPS, PO Box 1125, Glasgow, G44 5UF Phone: 041 637 2927 [EMAIL PROTECTED] [EMAIL PROTECTED]
Devine and LTVs
I am in broad agreement with Jim on the characterisation of LTVs. I also think that there is no conflict between what he calls the sociological theory of value and the stochastic one. Because the LTV is statistically a good approximation of reality, it means that the relationship between the worker and employer in an individual enterprise models the relationship between labour and capital in general and you can explain laws which hold good at the level of society as a whole by examining the labour process in the individual factory. Obviously it is only some of the laws which can be modeled at the level of the individual enterprise, but when it comes to explaining the preconditions of profits they are the most important ones. Paul Cockshott ,WPS, PO Box 1125, Glasgow, G44 5UF Phone: 041 637 2927 [EMAIL PROTECTED] [EMAIL PROTECTED]
Re: Economic Laws
I am quite embarrassed to find myself agreeing with Stalin, of all people! Of course, he was paraphrasing the Marx's afterword to the second German edition of CAPITAL, in which he talks about how different modes of production have different "natural" laws. IMHO, dropping the word "natural" is a step forward, even though Marx didn't mean it the way we do (rather, he saw capitalism has acting as if it were a "second nature"). in pen-l solidarity, Jim Devine BITNET: jndf@lmuacadINTERNET: [EMAIL PROTECTED] Econ. Dept., Loyola Marymount Univ., Los Angeles, CA 90045-2699 USA 310/338-2948 (off); 310/202-6546 (hm); FAX: 310/338-1950 if bitnet address fails, try [EMAIL PROTECTED]
Aggregate Demand, with Apologies
Dear Penners, Oh my. I started this whole brouhaha about AD but have only now had time to read people's comments. May i ask your forbearance to slip in one more thought on the AS-AD controversy? A few people suggested that properly labeling the vertical axis as the inflation rate rather than the price level would improve the AD-AS framework immeasurably. Certainly the AS story begins to sound reasonable when the issue is output vs. inflation, rather than output vs. the price level. Why then is the price level placed on the vertical axis rather than the inflation rate? Let me venture a guess. By using the price level rather than the inflation rate on the vertical axis, textbook writers are able to concoct an odd and unlikely -- but a logically consistent -- tale about the AGGREGATE DEMAND curve. It is a weird stor story about the AGGREGATE DEMAND curve. It is a weird and implausible story, relying on assumptions of fixed money supplies and foreign substitution affects, but it is MUCH LESS WEIRD than the story one would need to fabricate in order to generate a negative relationship between the inflation rate and aggregate demand for output. In short, the price level is used because otherwise there would be no AD curve. Without an AD curve, there would be nothing to hang the vertical AS curve upon. Best, Ellen Frank
economics of sustainable development
A friend working at EDGE: The Alliance of Ethnic and Environmental Organizations is looking for a "progressive" economist in the Southern California area, to talk about sustainable development at a small planning conference on population and immigration, Saturday, April 30, at University of Southern California. If you are interested yourself or can suggest appropriate folks, please email me at my address: [EMAIL PROTECTED] and/or give my address to anyone who might be interested in participating and/or have them call Andrea directly at EDGE: 415-421-6891. Thanks. Blair Sandler
Small countries, sovereignity impossible?
This is a somewhat revised letter to Brent McClintock which may also be of interest to to this list. Brent among other things said to me that based on his New Zealand experience, national sovereignity for small countries in today's world is well-nigh impossible due to free transnational capital flows and currency speculation. He among other things said: The exchange rate was fixed, of course, under Bretton Woods and then pegged afterwards .. in the early 1980s this economic policy collapsed because it .. could not by itself counter the speculation of corporate finance against the currency. ... Pegging exchange rates invites speculation against the currency for instance by financiers who usually have deeper pockets than the government. Yes I agree. But a Norw. additional instrument when fixed exchange rates were abandoned was administrative control of capital flows. Until as late as June 1990, no one could move more than a million NOK (1NOK = 0.133 USD) out of Norway without a license from the Central Bank. This eliminated currency speculation, large cash movements were allowed mostly only for trade payments. If this sounds bureaucratic and inefficent to you, remember that in the 15 years _before_ 1990, Norway underwent what is possibly the largest industrial build-up per inhabitant in the world in that period, i.e. the rise of the oil and gas industry on the continental shelf, with very substantial equipment imports and very substantial domestic and foreign investment. "Partners" in this process were oil companies like Shell and Phillips, not exactly known for their naivete when cooperating with small gvts. In spite of the ensuing growth in cross-border cash flows, and all sorts of ensuing international influence on Norway, it is only fair to say today that this build-up went very smoothly and efficiently EVEN if cash flows were administratively regulated as described above. And this happened on top of an economy which has always been extremely open. My point is that it is quite feasible to administratively steer the largest (and therefore not to frequent) cross-border cash movements. In fact, computer technology makes it _easier_ to do this than before. What makes my proposition "unrealistic" is therefore not objective facts, but political "choice" engendered by the propaganda of the MNC's, which portrays everything that counters their interests as impossible and unrealistic. The change in Norway to free movements of capital in 1990 has resulted in no economic improvement, only in net capital flight from Norway, and a new mighty class-struggle weapon for the rich: If they don't have their ways, they will send their cash out of the country. Before 1990 they simply did not have that weapon in Norway! The importance of administratively curbing cross-border capital movements can not be exaggerated. Freedom of transnational capital movement is the single most important reason for capital having the definite upper hand in the struggle against the poor, working class and trade union movements in today's world. Additionally, the progressive efforts within a country such as New Zealand are hostage to the fluctuations of export markets largely beyond the control of NZ. A bad export market means curbing those elements of the fiscal budget that are "expendable" -- policies supporting labor and the wider community. I agree. The way to counter this is to insist on upholding a minimum of diversified production in own countries, and the right to use some means to achieve this. I enclose below a proposal for an alternative and just world trade regime which should make this possible. Note that this trade regime is fundamentally a free trade regime, but with damping mechanisms built in to counter instabilities/runaway situations. It is also balanced in the sense that it gives the same rights to all countries, except for special advantages for poor countries. I know that this is contrary to the GATT agreement, but I see no other choice than fighting nationally to minimize the damages due to GATT in each country, and at the same time work for international solidarity and coordinated action for trade reform proposals. Additonally and actually, there are a lot of possibilities for maneuvering for better economic policies in each country without formally contradicting GATT rules, or at least exploiting the large grey areas that any such complicated world regime opens up. But when you have governments that are spineless and psychologically impregnated with market liberalism (as we presently have in Norway), they are of course not willing even to consider maneuvering for national independence. They are in fact more catholic than the Pope, and excel in demonstrating their faith in the Liberalist Gospel. In Norway we have seen this by the Brundtland gvt. letting MNC's buy up and then terminate
No Subject
Ajit writes I think, F M's baby is still born. The problem may be that they are intelligent mathematicians who do not understand the nature of economic theory. Economic theoreticians are not interested in prices as any merchant or trader would be. For economic theory, price is just a character (sometimes important and sometimes not so important) in a story, and is of interest only as a character of the story. E.G. During the preparation of his PRINCIPLES, Ricardo, on December 30, 1815, wrote to James Mill, "I know I shall be soon stopped by the word price"; i.e. his story had come to a halt without this character. In the surplus approach economics, prices play a role of DISTRIBUTING the SURPLUS PRODUCT (which is determined independent of prices) among the exploiting class according to certain rules (uniform rate of profit being one rule). In the neo-Classical economics, prices play the role of DISTRIBUTING (or allocating) the SCARCE RESOURCES to various ends to satisfy human wants. In THE LAWS OF CHAOS, prices are taken as empirical facts and the authors attempt to predict the empirical prices by using the method of mechanical statistics. For them a prediction of the observed prices is the sole purpose of the price or value theory, independent of any economic theory or the larger story of which it is part and parcel of. Of course, they try to put the old Marxist story as their larger story. F M's attack on the whole classical tradition, including Marx, for postulating uniform rate of profit is also not very interesting. Who does not know that if you look at the data of a year, most likely the rate of profit will not be equal accross sectors. The rate of profit is affected by tech. change, degrees of monopolization, international trade, changes in demand patterns, govt. interventions, wars, and a whole host of things. The classical theory of value or prices of production ASSUMES that these factors are either constant or do not exist. If F M want to discredit the classical position, they must show that under the given conditions of classical theory, this is an illogical position. But they don't do this. They only say that the "real world" profits don't equalize. But this is no criticism. Theory is far from "real world" and will always remain far from it. Ajit's position seems to me to smack of post modernism and idealism. It is not the task of science to narrate beautiful or edifying tales. Its job is to uncover the causal laws that govern the real world. In the epistemological break from ideology to science, explanations in terms of subjective purposes and teleologies are dispensed with to be replaced with explanations in terms of objective causal processes. It is certainly true that political economy, by virtue of its position within the ideological formation of bourgeois society has since its inception been heavily loaded with ideology and story telling. The question is whether it should remain as such. Althusser and Balibar argued that Capital represented a fundamental epistemological break from the ideological matrix of political economy. With F M's work one can see that elements of that matrix were carried forward. They are able to present the economy as the famous process without a subject that historical materialism claims to present history as. F M s work is a theory as well, but one whose objectivist foundations are unfamiliar to economics, but as any good scientific theory should, it offers empirically testable propositions. It is no accident that they are trained in physics. Physics has long known that there may be multiple internally consistent theories about the world, but it takes obsevation and experiment to decide which one is right. A theory that can only be judged on its internal consitency and is impervious to its axioms being counter factual, will never rise above the level of ideology. Paul Cockshott ,WPS, PO Box 1125, Glasgow, G44 5UF Phone: 041 637 2927 [EMAIL PROTECTED] [EMAIL PROTECTED]
Devine and LTVs
I am in broad agreement with Jim on the characterisation of LTVs. I also think that there is no conflict between what he calls the sociological theory of value and the stochastic one. Because the LTV is statistically a good approximation of reality, it means that the relationship between the worker and employer in an individual enterprise models the relationship between labour and capital in general and you can explain laws which hold good at the level of society as a whole by examining the labour process in the individual factory. Obviously it is only some of the laws which can be modeled at the level of the individual enterprise, but when it comes to explaining the preconditions of profits they are the most important ones. Paul Cockshott ,WPS, PO Box 1125, Glasgow, G44 5UF Phone: 041 637 2927 [EMAIL PROTECTED] [EMAIL PROTECTED]
Aggregate Demand, with Apologies
Dear Penners, Oh my. I started this whole brouhaha about AD but have only now had time to read people's comments. May i ask your forbearance to slip in one more thought on the AS-AD controversy? A few people suggested that properly labeling the vertical axis as the inflation rate rather than the price level would improve the AD-AS framework immeasurably. Certainly the AS story begins to sound reasonable when the issue is output vs. inflation, rather than output vs. the price level. Why then is the price level placed on the vertical axis rather than the inflation rate? Let me venture a guess. By using the price level rather than the inflation rate on the vertical axis, textbook writers are able to concoct an odd and unlikely -- but a logically consistent -- tale about the AGGREGATE DEMAND curve. It is a weird stor story about the AGGREGATE DEMAND curve. It is a weird and implausible story, relying on assumptions of fixed money supplies and foreign substitution affects, but it is MUCH LESS WEIRD than the story one would need to fabricate in order to generate a negative relationship between the inflation rate and aggregate demand for output. In short, the price level is used because otherwise there would be no AD curve. Without an AD curve, there would be nothing to hang the vertical AS curve upon. Best, Ellen Frank
Re: Economic Laws
I am quite embarrassed to find myself agreeing with Stalin, of all people! Of course, he was paraphrasing the Marx's afterword to the second German edition of CAPITAL, in which he talks about how different modes of production have different "natural" laws. IMHO, dropping the word "natural" is a step forward, even though Marx didn't mean it the way we do (rather, he saw capitalism has acting as if it were a "second nature"). in pen-l solidarity, Jim Devine BITNET: jndf@lmuacadINTERNET: [EMAIL PROTECTED] Econ. Dept., Loyola Marymount Univ., Los Angeles, CA 90045-2699 USA 310/338-2948 (off); 310/202-6546 (hm); FAX: 310/338-1950 if bitnet address fails, try [EMAIL PROTECTED]
economics of sustainable development
A friend working at EDGE: The Alliance of Ethnic and Environmental Organizations is looking for a "progressive" economist in the Southern California area, to talk about sustainable development at a small planning conference on population and immigration, Saturday, April 30, at University of Southern California. If you are interested yourself or can suggest appropriate folks, please email me at my address: [EMAIL PROTECTED] and/or give my address to anyone who might be interested in participating and/or have them call Andrea directly at EDGE: 415-421-6891. Thanks. Blair Sandler
Saturn
Does anyone know about conditions at GM's Saturn plant? I had a most disturbing conversation today with a business type who went off like a rocket (no pun intended) when I mentioned Saturn. He believes they have serious problems with quality/rework and accidents in the plant, mainly due to stress associated with harsh supervision and a UAW local that refuses to back up workers on much of anything. To add to this, at a conference here last week, a Saturn union rep claimed they had 100 grievances last year with 90 of these for unfair dismissal. While the union has a 'duty' to represent the workers, they 'hate to go against the teams.' In the context of the presentation, this sounded democratic, but in light of today's conversation, it seems quite ominous. Any information, positive or negative, would be greatly appreciated. Please send e-mail to the address below. Cheers, Bob Drago PS. Many thanks to those who responded to my query about NUMMI (the other unionized and 'transformed' workplace). The answer to the question of whether NUMMI has gains-sharing is that a system was introduced recently, over the objections of the UAW local. An article by a worker in the plant also claimed that Toyota threatened to pull out last year if they did not receive further concessions from workers, which were promptly provided. I cannot vouch for the validity of these claims, but will gladly forward the messages to anyone who is interested. //--------------------\\ Bob Drago, Econ. Dept.[EMAIL PROTECTED] UW-Milwaukee (414)229-6494 (voice) Milwaukee WI 53201-0413 (414)229-3860 (FAX) \\--------------------//
