Daniel Davies wrote:
Surely this is the entire problem at the heart of the Cambridge Capital Controversy; you can't work out what the total amount of capital is without making an assumption about the rate of profit and vice versa.
You caught me! Yes, you're absolutely right. My exercise is formally flawed. Yet, Marx would pull a trick out of his dialectic hat and say: "In practice, the markets solve the paradox all the time."
We'd look around and note that -- after all -- marketable assets do get priced. So, at a point in time, the sum of their values must be some definite number. How flimsy will that number be if it is based on circular reasoning? As flimsy as the human condition is.
If we think about it, this paradox is at the heart of any theory of value. What's the measure of all things? "For all we know, other things," the "neoclassical" would claim. The claim of the humanist (the Marxist included) would be: "For all we know, we humans are the measure of all things." How can humans measure their humanity using their humanity as the standard? Well, we can -- we do it somehow as we proceed to live our lives.
And we won't be able to move beyond that point...
Julio
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