Sen on Sraffa's silliness

In an economy with no Knightian Uncertainty, Profit would not be the reward of risk but the return on some type of Capital and thus it would be meaningful to speak of the interest rate as determining Investment by means of expansion or contraction along the curve described by the marginal efficiency of that type of Capital. Sadly, unless Darwin, not Dueteronomy, was wrong, we live in a world of radical uncertainty and thus must minimize regret we might later feel rather than maximise utility here and now.

Sraffa, like Gramsci, had no truck with Uncertainty at least in our social or 'species' life.
Gramsci wrote

In acquiring one’s conception of the world one always belongs to a particular grouping which is that of all the social elements which share the same mode of thinking and acting. We are all conformists of some conformism or other, always man-in-the-mass or collective man. 

Thus- since entrepreneurs are conventionally supposed to be optimistic 'boosters'- it follows that even if Knightian uncertainty obtains, still Capital will be deployed as if it didn't at all because the 'invisible hand' would very quickly weed out the unlucky guessers among the class of top-hatted exploiters.

How can one be certain one will always belong to a certain class? Suppose I'm very good at cooking dosas. I might discover a tastier type of batter or a new type of filling. With a bank loan, or angel investor, I might buy a food truck and start serving my new type of dosa. The thing may become a sensation. A venture capitalist might get involved. I might become the McDonalds of dosas with franchises all over the world.

Of course, things might go the other way. I may lose my job or my pension fund might collapse and so I may end my days scraping dosas in some third rate dhabha.

There may have been a time in England when people knew which class they belonged to. But for 'baby boomers' like me, no such certainties obtained. Social Class was as much subject to Knightian Uncertainty as anything else that was supervenient on Economic processes.

Not so for the followers of Gramsci- or, indeed, revivers of Sraffa.

Gramsci said-‘language itself, ... is a totality of determined notions and concepts and not just of words grammatically devoid of content'.

Sen has pointed out that 'determinations' in Sraffa's work are of a purely mathematical, or analytic, not causal or descriptive type.

What this means is that there is an equation which specifies the object referred to. However this equation may not itself be computable. We know there must be such an equation but have no means of finding out what that equation is or of verifying that we have the found the right one.

It must be the case that there is an equation which specifies the dynamics of everything I am doing as I type this and the next sentence. But I can't know that equation because xxa3945uno233.x- fuck, I didn't mean to do that.

It is true that an i-language can be constructed, given infinite time and patience, for any given historical language after it has ceased to be spoken. In that sense, Gramsci, or Chomsky, is right. However, the thing is not mathematically tractable. Back in the '60's people thought computers would develop to a point where they could be programmed with different i-languages and so act as a universal translator. We no longer believe any such thing. Google translate is based on e-language, not i-language. It accumulates a lot of facts and works on the basis of induction. I imagine we will co-evolve with it to such an extent that the way we write or read our own language, for certain specific purposes, will change such that, for certain domains, a universal translator (or babel fish) will in fact exist. But it is more  likely that there will simply be a convergence to a certain jargon- e.g. that of the airline pilot or other such professional.

However, this type of jargon will be highly context dependent and restricted in application.  In semantic situations where radical ambiguity (probably reflecting Knightian Uncertainty) is strategic, the thing would add noise to signal.

One way round this problem is to pretend that human beings are 'conditioned' by Language. We don't speak, we are spoken. In this case, the pay off for embracing a particularly foolish type, and immediately empirically refutable, type of determinism is that we can continue to pretend that Gramscian or Sraffian or Chomskian availability cascades aint gobshittery of an exponential sort.

Consider the recent attempt to resurrect Sraffa in the context of Piketty type junk social science or Occupy Wall Street type puerility.

The fact is, if there is no Kinghtian Uncertainty, then we don't really need price signals or mimetic effects. So Demand doesn't matter. We know in advance that, if the wage is exogenous, then any macro-state has a determination in purely material terms. We needn't bother with what is useful or needed or desired by actual human beings. We can treat them as deterministic meat machines. Forgetting we are human enables us to concentrate on the really important stuff which is about how like Capitalism is brainwashing my neighbour's cat to conduct surveillance on me and report back to the vacuum cleaner which tried to seduce me on orders from the Lizard people of Planet X. How long are ordinary people like you and me supposed to put up with this unceasing surveillance? Flesh is weak. Sooner or later we're gonna let the vacuum cleaner have its wicked way with us. I tell you, Brexit is not enough! We need a Total Revolution in this country!

Forgetting the Human element is the way to get rid of Knightian Uncertainty. It is an observable fact that the neighbor's cat is watching me as I write this now. You may say- 'pussy likes sitting in the window in the sun. The fact that its window faces yours is just happenstance. If you had decided to go for a walk, pussy wouldn't be watching you now.'

My answer is 'You are appealing to a counterfactual. Kindly read Sraffa to understand why that is not licit'.

Amartya Sen, Sraffa's student, writes-

Sraffa noted that in opting for a cost-based explanation (in line with Sraffa 1960), we can rely entirely on “observed” facts, such as inputs and outputs and a given interest rate, without having to invoke any “counterfactuals” (that is, without having to presume what would have happened had things been different).

But, such cost-based explanations would entail disastrous policy choices. Why are we wasting money on an Army and a Navy when nobody has invaded us for hundreds of years? Scrap the thing immediately. Why are you paying fire insurance? It is 'counter factual' that your house could burn down. Why spend money on going to College. It is counter-factual to say your brain could contain information it does not already have. Why use a condom? It is counter-factual to say that a lady not currently pregnant could get pregnant. Why look right or left when crossing the road? It is counter-factual to say a car not currently hitting you might suddenly do so.  

This is not the case with the utility-based explanation, since “marginal utility” inescapably involves counterfactual reasoning, since it reflects how much extra utility one would have if one had one more unit of the commodity.

Nonsense! Marginal utility is defined as the utility gained by the last unit consumed. That isn't counter factual at all. How ignorant of econ was Sen? 

Whether or not one agrees with Sraffa’s judgement on the unreliability of counterfactuals, it is indeed remarkable that there is such a methodological contrast between the utility-based and cost-based stories (in the Sraffian form).

There is none. Marginal utility or marginal factor product is just that arising from the last unit utilized. 

The difference between them lies not merely in the fact that the former focuses on mental conditions in the form of utility

Nope. Utility is only 'mental' in the sense that the mental supervenes on biology. But a good enough Life Science could stipulate what this would be better than we can. In any case, Doctors do make judgments re. the utility of mentally incompetent patients.  

while the latter concentrates on material conditions of production (a contrast that is easily seen and has been much discussed),

Utility arises from the way in which the body utilizes goods of various types. It is produced by the body and the mind, if not impaired, can measure it well enough- except where it can't by reason of lack of expertise.

but also in the less-recognized distinction that the former has to invoke counterfactuals, whereas the latter—in the Sraffian formulation—has no such need

Evolution proceeds through regret minimizing strategies. Regret is all about counterfactuals- what might have been. Economics is very much a branch of, not 'Moral Science' or 'Political Philosophy', but the study of Evolution.

Sen by no means endorsed Sraffa's silliness, but as he grew older and his fitness landscape became wholly Credentialised and Careerist, ended up spouting sententious shite based on a similar denial of Knightian Uncertainty.

Sraffa's silliness was to think there could be a 'Standard commodity' under uncertainty which would allow him to ignore the Demand side of things.  Sen's stupidity to think the same thing of entitlements or capabilities thus permitting him to ignore Supply side considerations.

Neither Sraffa's Standard Commodity not Sen's Entitlements or Capabilities can be independently determined- indeed they only come into existence as a result of the forces they foreclose or ignore. What are those forces? They are the product of entirely human regret minimizing strategies (specifically, these are multiplicative weight update algorithms) of a sort found everywhere Evolution holds sway.