----------------- HES POSTING ----------------- Roger, I agree with Neri Salvadori's categorization of the issues involved and agree with you that there are differences in methodological approaches involved. Although reswitching (and related paradoxes) were presented in a world of steady state comparisons, the underlying technological conditions that give rise to the possibility of reswitching, which involve issues of time (delayed costs in particular) even in the original formulation of Sraffa, can lead to certain problematic outcomes in a context of intertemporal optimization such as Bliss was using. At the time he wrote (1975) these were not yet well understood (he was "blissfully" unaware of them...). One of these is the possibility of a discontinuity in the optimal time path of the economy that could manifest itself as a sudden collapse of capital value. I am not going to claim that actual stock market crashes were caused by reswitching, but this is certainly a non-trivial kind of result. Of course reswitching, per se, does not involve the actual reappearance of a previously used technique, although it could. The proper term for that is actually "recurrence." There are of course a variety of reasons that one might give for arguing that "reswitching is irrelevant" (as Joan Robinson put it). Tony Brewer mentions one, the claim that it has never been empirically observed. I would suggest that this is not the case, although it is probably true that it is a relatively unusual empirical phenomenon within profit rate ranges that are empirically relevant. Like some other folks, I shall cite myself. For a discussion of the dynamic difficulties within the intertemporal optimization framework, see Chapter 8 of my _From Catastrophe to Chaos: A General Theory of Economic Discontinuities_, 1991, Boston: Kluwer (second edition, Volume I, same publisher, 2000). For possible empirical examples, see Peter S. Albin, "Reswitching: An Empirical Observation, A Theoretical Note, and an Environmental Conjecture," Kyklos 28(1975), pp. 149-153. Raymond Prince and J. Barkley Rosser, Jr., "Some Implications for Delayed Environmental Costs for Benefit Cost Analysis: A Study of the Western Coal Lands," Growth and Change 16(1985), pp. 18-25. Barkley Rosser ------------ FOOTER TO HES POSTING ------------ For information, send the message "info HES" to [log in to unmask]