Roger, Rakesh, Doug and others on this thread:
The debate surrounding the FROP which took place in the 80's for the last time, has recently remerged among marxist economists and this time it seems to be the end of it as a result of what it looks to be the refutation (finally) of the Okishio theorem (somebody on this thread asked what this theorem was, it is a theorem proposed by the japanese economist Obuo Okishio in the early 60's stating that contrary to Marx's proposition, any technical change introduced by capitalists at constant real wages can never bring about a decline in the general rate of profit). The current debate on the FROP is published in the latest issue of the journal "Research in Political Economy No.17" and taking place between D. Laibman and D. Foley supporting the Okishio theorem and A. Kliman and A. Freeman supporting Marx's notion of the FROP (you can also look at the archive of OPE-l where the same debate has been going on for about 4 years). The interesting insight lurking on the background of this new (and maybe final) chapter on this debate is again the issue of methodology regarding the interpretation of Marx's theory this time his theory of value(I say "this time" because in the 80's the same debate gravitated around the methodological point regarding competition with Shaikh arguing that you can only obtain Okishian results if you interpret Marx's FROP within a perfect competition framework). This time around Kliman and Freeman (as well as other authors who identify themselves with the Temporal Single Sytem (TSS) interpretation of Marx's theory) suggest that supporters of the Okishio theorem obtain the result of an increasing rate of profit due to technical change because this follows from their own methodological assumptions regarding the notion of value in Marx. This particular methodology leading to an increasing rate of profit is identified by the (TSS) authors as being the same method used by orthodox e! conomists working within the Walrasian paradigm and called "simultaneous valuation" being basically a valuation method which ignores changes of prices and values over time. When applied to Marx's theory, this method of valuation of inputs and outputs in the circuit of capital leads to the undeniable result of an increase in the rate of profit after any technical change is introduced. However, TSS authors add that once this assumption is abandoned and Marx's notion value and it interaction with continuous technical change accounting for changes of values and prices over time is adopted, then the outcome of technical change leads to a fall in the rate of profit, ie. to the tendency of a falling general rate of profit over time. This result refutes the Okishio theorem and opens the possibility for the opposite result: Marx's tendency for a falling rate of profit. Now, whether the observable profit rate falls or not requires empirical proof, but empirical proofs that reflect a!
corresponding theorical framework. You can never prove a falling rate of profit with categories based on a theory (simultaneous valuation) that tells you that the rate of profit can never fall as a result of technical change. The rate of profit can only fall, from this point of view, as a result of rising real wages (class struggle). So here you have it the backbone of the argument of a fall in the rate of profit due to class struggle only (supported by the vast majority on the left) is based on the burgeois economics notion of simultaneous valuation used by orthodox economist to describe an idealized and perfect capital system where time doesn't exist and value relations simply dissapear. Naivetely most leftist authors choose to support ideas like profit-squeeze theories of a fall in the rate of profit whithout realizing that in the process they are working within and supporting the same methodology of the apologist economists they criticize. Of course that you also hav! e marxist economists who support this arguments, but then hardly ever anybody has asked the question whether they in fact are faithful to Marx's own ideas. Most marxist economists come from a non-working class background and become orthodox economists first, they are taught to think of the economic system of capitalism from the apologetic view and following the methodology of Neoclassical/Walrasian economics, and then they become marxist years later after they read and study Capital. In this process it is only natural that in the process of interpreting Marx's Capital they unconciously carry with them many ways of thinking about social/economic phenomenon that are more appropriate to Walras apologetic interpretation of capitalism than to the historical/materialist/dialectic methodology of Marx. Fortunately, this internal critique of marxist economics began with Shaik's critique about the adoption of marxist economists of the notion of perfect competition as oppossed to Marx's notion of competition as war in the 80's, and the currect critique by Kliman and Freeman about the marxist economists' adoption of a theory of value based on simultaneous valuation as oppossed to Marx's own notion of value based on labor time. These are wake up calls regarding Marx's ideas as opposed to his 20th century interpreters. It is time for all of us to wake up and stop naivetely supporting any theory that sounds good for the "working class" and go through the painful process of studying exactly what are these theories' assumptions or to what particular framework they really belong to.
To conclude, ironically Laibman might be right after all, you do need a theory to refute another theory as he told Doug, the problem remains whether he will remember his own words. At this moment he is part of a debate where his theory (Okishio) on the FROP argument is being refuted by another theory (temporal valuation) that proves that the FROP can actually be correct, will he accept his defeat or forget his own words. Maybe Doug needs to remind him about his own take on scientific procedures.
Fabian
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