Why do marxists use equilibrium models?

Marxists often follow the traditional model that if demand goes down, then the price goes down, so everything that was produced can be sold. But that would lead to a completely static world: every producer keeps producing whatever they like and how much of it they want to produce and then they just adjust prices so everything can be sold. This is entirely different from what happens in reality. In reality, if you can't sell what you are producing, you can't arbitrarily lower the prices; instead, at some point you reduce the amount of whatever it is you produce and produce something else instead. Interestingly, if you think about it, the point at which a company can no longer reduce prices is when it can no longer cover its costs, which are mostly labor costs. Therefore, the prices (at least of goods that are not subject to speculation) are way closer to the predictions of the labor theory of value than to any 'equilibrium model' where prices fluctuate arbitrarily. So, why do Marxists so often lick the boots of neoclassical economists? Why don't you (just like post-keynesians who view prices as determined by unit labor cost + 'mark up') proudly say: 'we have the superior theory even when it comes to prices, so f**k off, mainstream economists'?

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  • Markus Pfeifer
    published this page in Ask Prof. Wolff 2017-11-21 14:52:26 -0500