Re: How Is This Possible?

From: Robert Vienneau (rvien_at_see.sig.com)
Date: 09/27/04 

Date: Mon, 27 Sep 2004 16:46:38 -0400

In article <20040926093409.22356.00001092@mb-m16.aol.com>,
aft627@aol.com (Andy F) wrote:

> Robert Vienneau wrote:

> >With that allusion to a closure of the model with neoclassical
> >assumptions, I turn to this bit of ignorance from Andy:

> >> >> A neoclassical economist would 'close' the model by making the
> >> >> standard
> >> >> assumptions of neoclassical theory, i.e. that investors are
> >> >> rational
> >> >> profit
> >> >> maximisers. From this it can be directly inferred that if the
> >> >> marginal
> >> >> product
> >> >> of capital is not equal to the interest rate, the economy will not
> >> >> be
> >> >> in
> >> >> equilibrium.

> >> >Andy is simply wrong, as was demonstrated in the first post on the
> >> >previously referenced thread.

> >> >My model had profit-maximizing firms. That does not close the model,
> >> >and Andy's claim does not follow.

> >> Anyone with a basic knowledge of economics will know that a
> >> profit-maximising
> >> investor is not the same as a profit-maximising firm. Vienneau's
> >> construction
> >> of economic models is flawed.

> >If Andy were not ignorant of how to construct an argument, he might
> >have specified how it matters what sort of agent is profit-maximizing.
> >Andy simply made a mistake - his specification of a neoclassical
> >closeure of the model does not close the model.

Andy repeats a mistake:

> Anyone with a basic knowledge of economics will understand how the
> actions of
> rational investors would be expected to lead to interest rates being
> equal to
> the marginal return to capital.It is quite remarkable that an expert such
> as
> Vienneau would not understand this.
>
> This equality could be used to write another equation in the model in
> Vienneau's post
 
> <rvien-9D890C.05382926062004@news.dreamscape.com>

Andy remains simply wrong. Profit maximizing does not close the model.
On the other hand, assuming an intertemporal utility-maximizing
agent does close this sort of model. I demonstrate the latter
point in:

 <http://www.dreamscape.com/rvien/Economics/Essays/Sraffa3.pdf>

(An interactive version of the production side of these sort of models
is at:

 <http://www.dreamscape.com/rvien/Economics/ChoiceOfTechnique.xls>

The aggregate production function is on the last spread*** in that
workbook. I know that "function" doesn't look like what many of
you will have seen in economics classes. But mainstream economists
often teach falsehoods.)
 
> The implications of these equations can be worked out by anyone who
> wishes to
> do the maths.

The above is just another manifestation of Andy's inability to construct
an argument. Andy has not done the math:
 
> If Vienneau's calculations are correct,

Doesn't Andy know? Hasn't he worked through the model he keeps
mentioning?

> These implications would include
> a
> proof of the labour theory of value, given the assumptions in the model.

I don't know how Andy manages to incorrectly reach that conclusion.
I state in the post he references that the labor theory of value is
generally not true.
 
> Since this is a highly simplified model in which labour and capital are
> the
> only factors of production,this would not be a remarkable result. Ricardo
> probably proved something similar in the 19th century.

Andy probably doesn't understand Ricardo's demonstration in the first
chapter of his Principles that the labor theory of value is generally
not true.

> >> >> Vienneau keeps referring to 'price Wicksell effects' but there is
> >> >> no
> >> >> indication
> >> >> in his posts of what he imagines that to mean.

> >> >Andy insults the reader's intelligence. I explained repeatedly
> >> >what are in the post starting off the
> >> >thread previously referred to.

> >Andy has edited the above quote to make it ungrammatical.

> >> I don't think you explained it very clearly. Perhaps you could explain
> >> again in
> >> simple terms, for the benefit of your less intelligent readers, what
> >> 'price
> >> Wicksell effects' actually means.

> >Does Andy state where he finds my explanation in the previous thread
> >unclear? Does Andy look up any of the references I gave in the
> >previous thread and comment on where he finds the reference unclear?
> >Of course not. That would be to say something substantial, and we
> >cannot have that. So why should I bother restating something I
> >find quite trivial?
 
> Observers might speculate that the bumbling amateur Vienneau is simply
> parroting a phrase which he does not understand, if indeed it has any
> meaning
> at all.

Does Andy state where he finds my explanation in the previous thread
unclear? Of course not. He seems incapable of developing an argument.

As for insulting the reader's intelligence - he's good at that.

> >Does Andy have any training in economics?
 
> I have a bachelor's degree with some economics content.

OK, so Andy's ignorance, confusion, and incapacities are not good
for illustrating the sociology of academic economics. But, since he
is being so stupid, I'll leave him in my Usenet fumbles page. I might
even add more examples from this thread. 

-- 
r           c
 v         s a           Whether strength of body or of mind, or wisdom, or
  i       m   p          virtue, are found in proportion to the power or wealth
   e     a     e         of a man is a question fit perhaps to be discussed by
    n   e       .        slaves in the hearing of their masters, but highly
     @ r         c m     unbecoming to reasonable and free men in search of
      d           o      the truth.    -- Rousseau
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