Date: Sat, 10 Feb 2001 17:19:26 -0600 From: "Michael McIntyre" <mmcintyr at wppost.depaul.edu>
Perhaps if I forward Andrew's response as an attachment this time the = listserv will refrain from eating large chunks of it as it passes through.
Michael McIntyre
From: "Drewk" <Andrew_Kliman at msn.com> To: "Michael McIntyre" <mmcintyr at wppost.depaul.edu> Date: Sat, 10 Feb 2001 03:56:11 -0500 Message-ID: <NDBBIJEHKLPKMPJICFGHCEFICIAA.Andrew_Kliman at msn.com>
Hi, Michael,
I'm still unable to post directly to LBO. Could you forward this for me please?
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I thank Michael McIntyre for his thoughtful reply. Here are some responses:
(1) "Perhaps, rather than use up bandwidth here, it would be appropriate to ask Doug to post Kliman's paper from the Brecht Forum event on the lbo website, from which point I (and others interested) could get a better sense of the "Copernican revolution" he speaks of."
I haven't thought of writing up a formal paper for the talk. A lot has been written on these issues over the years. I'll be happy to supply references. For academically trained economists, I would recommend as a start:
_Marx and Non-equilibrium Economics_, Alan Freeman and Guglielmo Carchedi, eds., Edward Elgar, 1996.
"A Temporal Single-system Interpretation of Marx's Value Theory," Andrew Kliman and Ted McGlone, _Review of Political Economy_, 11:1, January 1999.
I'll be happy to send offprints of the latter.
(2) "In some sense, the story Marx tells in chapter nine has to be an equilibrium story, because it's a story about how you get from a uniform rate of surplus value to a uniform rate of profit."
It is certainly an equilibrium story in *that* sense. But this has gotten confused and conflated, over the years, with a different notion of equilibrium -- stationary prices.
The reason for the confusion and conflation is that Bortkiewicz claimed to prove, in 1907, that Marx's account of the value-price transformation led to "internal contradiction," specifically to a spurious disruption of reproduction, because Marx's input prices (values) differed from his output prices. Bortkiewicz then claimed to "correct" Marx's procedure by creating *two systems*, one in which input and output values were equal, another in which input and output prices were equal (and the rate of profit was also equal). It was this construction that negated the results Marx had derived: total price = total value, total profit = total surplus-value, the avg. "price" and "value" rates of profit are the same.
In "The Transformation Non-Problem and the Non-Transformation Problem," _Capital and Class_ 35, Fall 1988, Kliman and McGlone disproved Bortkiewicz's claim that nonstationarity of prices leads to a disruption of reproduction. The importance of this issue and our refutation were not well understood, so we have returned to it both in a paper in _Marx and Non-equilibrium Economics_ and in "A Temporal Single-system Interpretation of Marx's Value Theory."
(3) [ Michael's point (2)]: "If you calculate the rate of profit as a capitalist would, that is, as the difference between the price of a commodity and its cost-price on a base of its cost-price, then the rate of profit is not constant [uniform] in Marx's calculations. Instead, in Marx's examples in chapter 9, THAT rate of profit would vary from about 24% to a bit shy of 150%. So, it turns out, the rate of profit that capitalists would care about is not uniform. In which case, why go through the exercise of deriving a constant "r" in the first place?"
What Michael is calling the rate of profit is often called the profit margin. Firms do care about it and compute it. But they also compute and care about their rates of return on investment, profit divided by investment. The rates of profit that are equalized in Marx's account are rates of return on investment. There is good reason to believe that investment funds *tend* to flow to where the expected value of this variable is highest, and thus, good reason to believe that it is this variable that competition *tends* to equilibrate.
(4) "I confess that I don't understand the last point of Kliman's rebuttal. Perhaps somewhere in here I've smuggled in "the bizarre premise that input and output prices must be equal", but I honestly don't see where."
I wasn't charging you with that. I raised the issue for two reasons. First, to explain (in response to your initial query) how rejection of "equilibrium" is involved in the refutations of the allegations that Marx's value theory is internally inconsistent. Second, to indicate (in response to your statement that "I won't say that the transformation problem can't be solved, but as far as I know it hasn't been yet") that there exists no problem that needs to be solved once one allows input and output prices to differ.
(4) All of Michael's remaining points concern, in one way or another, the claim that there is a "transformation problem" because the cost price reckoned in terms of values differs from the cost price reckoned in terms of prices (of production?). (For instance, the notion that the denominator of Marx's profit rate consists of "unobservable values" depends on this claim.)
The term "single-system" in the phrase "temporal single-system interpretation" refers to the fact that we reject this claim. Rather than there being two sets of cost prices and thus two discordant systems of values and prices, there is one set of cost prices and thus a single system of values and prices. (The value of a sector's output equals the cost price plus surplus-value, while its price of production equals the *same* cost price plus average profit.)
Please keep in mind that in Marx's own, original account of the transformation, there was a single cost price and a single system of values and prices. Bortkiewicz was the one who created the dual system. He did so not because he misinterpreted Marx. He was fully aware that Marx's account refers to a single set of cost prices. Bortkiewicz created the dual system because he wrongly thought he had proven that the single system led to a spurious disruption of reproduction, stemming from inequality of input prices, and therefore that he needed a dual system to *correct* Marx's error.
The references I've cited above (and lots of others) discuss the textual evidence for the single-system interpretation. But I believe the single best piece of evidence that this interpretation is correct is that Marx's own results can be derived on its basis, whereas the dual-system interpretation leads to the negation of these results.
A detailed discussion of the evidence is not something I have time for now. So I'll just say a few words about the issue. It is crucial to bear in mind the difference between the value of the (constant and variable) *capital* that is advanced, and the value of the *inputs* (means of production and labor-power) acquired with those advances. For instance, precisely because prices differ from values, a microchip might have a value of 200, but a price of 150, and so the SUM OF VALUE advanced to acquire it (i.e., the value of the investment) is 150, not 200. And it is the value of capital advanced or invested, NOT the values of inputs, with which Marx's account of the transformation begins (see Ch. 9). (Thus the [single] cost price depends on the prices of the inputs, not their values.)
Ironically, Marx said exactly as much in a passage usually cited in order to try to prove that he was admitting that his account of the transformation was in error. He wrote something like "if the cost price of the commodity is equated with the VALUE OF THE MEANS OF PRODUCTION consumed in it, it is always possible to go wrong" [my emphasis -- the passage is on p. 265 or 266 of the Penguin/Vintage edition of _Capital_ III]. This is no admission of error. He was foreseeing how readers might go wrong -- as they have for a full century! -- and warning them not to do so.
In sum, there is no need to separate value and price into two *unconnected* systems, decoupled by virtue of having distinct cost prices, because Bortkiewicz's "proof" that this is necessary has been refuted. And once one keeps in mind that the starting point of the period is the value of *capital*, not the value of *inputs*, there is nothing wrong with Marx's own account of the transformation. There's also nothing "metaphysical" about it. Rather than making unobservable, unknowable, entities that no one cares about (values of inputs) the controlling factor in the system, he is seen instead to be saying something much simpler but also much more significant. Namely this: in the economy as a whole, just as in a single factory, the size of the difference between the sum of value that capitalists invest (M), and the sum of value that returns to them (M'), is determined by the amount of surplus-value extracted in capitalist production.
Andrew ("Drewk") Kliman Dept. of Social Sciences Pace University Pleasantville, NY 10570 USA phone: (914) 773-3968 fax: (914) 773-3951
Home: 60 W. 76th St. #4E New York, NY 10023 USA
"The practice of philosophy is itself theoretical. It is the critique that measures the individual existence by the essence, the particular reality by the Idea."