At 12:27 AM 5/23/96 -0700, Rakesh Bhandari wrote: >There is a very powerful brief criticism of neoclassical microeconomics by >Carchedi in Alan Freeman and Guglielmo Carchedi, eds. Marx and >non-equilibrium economics. Brookfield, VT: Edward Elgar, 1996. _______________________________ If it is supposed to be the "powerful criticism of neoclassical economics," then I think we should all pack our bags and go home. This in my opinion is truly pathetic, and since it comes in the name of 'Marxist attack' it surely makes us all look bad. in despair, ajit sinha > >Here are some examples: > >"Since individuals can only react to given prices and prices changes >(according to the demand and supply curves model), the aggregation of >individual behaviours (that is of the individual demand and supply curves) >cannot explain price formation. Neither the individual nor the collective >demand and supply curves can explain the formation of prices, including the >equilibrium ones." > >"But the determination of the downward sloping demand curve is not only >circular, it is also based on a dubious argument: if the quantity consumed >increases, consumer satisfaction (marginal utility) decreases and with it >demand. This is certainly possible. However, first, this applies at most >to people as consumers. The capitalists' demand for means of production >and labour power can in no way be explained on these grounds. In times of >economic expansion, the more the means of production and labour power are >consumed, the more they are demanded. In tiems of economic depression and >crises, the opposite is true. Secondly, even in the case of individual >consumers, under capitalism an increase of the quantity consumed of a >certain good can only be achieved throuhg an increase in the purchasing >power allocated ot that good. Thus, the lower demand with an increase in >the quantity consumed can be the result of 'the fact that with increasing >purchaes the purchasing power at the disposal of the buyer or demander >declines' (Linder 1977...)rather than being the result of the lower MU(a). >This is certainly the case for the great majority of the world population, >the poor of the world." Internal quote is from Marc Linder's two volume >Anti-Samuelson. > >"There are many objections which can be raised agaisnt general equilibrium >analysis. The most one is that the method of simultaenous equations >cancels time. Instead of there being a determination of the prices of the >production factors (inputs) at time t(1) and of the prices of the products >(outputs) at time t(2), the prices of the inputs and of the outputs of the >*same* production procution process are determined simultaneously....By >seeking refuge in general equilibrium analysis, neoclassical economics >retreats even more from, rather than rooting itself more deeply into, the >real world." > >"To sum up, the social content of partial equilibrium theory is its >functionality for the reproduction of the capitalists' system at the >ideological level, its theorization of an economic system (1)excluding >classes, and thus the production of value and surplus value (2)postulating >a mythical, masculine rationality as the natural form of human rationality >(3)assuming equal power in exchange relations based on equal economic >endowments (4)operating on the basis of the most rational and equitable >price, that is distribution system (5)tending towards equilibrium and (6) >reducing specific, that is capitalist social relations, to a historical >utility relations between individual and things thus misrepresenting the >former as the "natural" form of economic relations." > >The following essay by Paolo Giussani in this volume attempts an internal >critique of the foundations of neo-classical economics. > >I think it would be helpful if students were also introduced to the >problems in value theory. From what I have read, there is no better place >to begin than Robert Heilbroner's "The Problem of Value" in *Behind the >Veil of Economics* (New York: Norton, 1988) > >Rakesh Bhandari >UC Berkeley > > > > >
