[lbo-talk] malicious liar

bhandari at berkeley.edu bhandari at berkeley.edu
Sun Nov 25 08:30:46 PST 2007


I don't think it's google fair to put anyone's name in such a header even if it is to defend him from the accusation. I am proud to say that I am hated (I mean truly hated) by both sides of this personal dispute.

But the real issues don't come out in this personal dispute; Kliman has real intellectual criticism to attend to. And I don't think he always does so persuasively.

But it's worth thinking about Kliman's recent book which is extremely well written and most sincere in its attempt to do so.

He defends a position called temporal single system. First, the single system means that Marx understands value and price as one system. For example the value of a good is incorporative: it includes not only direct labor time expended but also the indirect labor time represented by the consumed means of production and raw materials. Kliman and others argue however that indirect labor incorporated into the good is determined as the labor value represented by the money needed to purchase means of production and raw materials at current prices. Hence, we need to know prices to determine values (we also need some way to translate money prices into values, which means that we need some way to determine the value of money). Values and prices are not two systems; if this is understood, then putatively Marx's major logical lapses disappear. I don't find this argument persuasive (as I have let known for years) but I would make an argument for a single system in a different way (and even toy with analogies to measurement in quantum mechanics to do so).

However, I do find the temporal aspect of his argument not only persuasive but vitally important. Marx makes the argument that capitalists in their ceaseless attempts to raise productivity and therewith reduce unit prices will tend to depress the profit rate: if the exploitation of live labor is the source of surplus value, then the the result of there being fewer workers relative to capital investment should be at least a tendency for the profit rate to fall.

But the counter-intuition is that technological progress also means the devaluation of capital goods and raw materials and wage goods, lowering the costs of investment and thereby raising the profit rate.

This argument left the realm of intuition and was generalized using matrix algebra. And the result was something called the Okishio Theorem, which is an impossibility theorem: no technical change which capitalists would consider viable can by itself depress the profit rate. Indeed the result will tend to be positive on the profit rate as long as the real wage remains constant (a dubious assumption which has led Duncan Foley and others to dismiss the real world relevance of the Theorem).

What Kliman and several others have shown is that while this may be true if we consider a one shot form of technical change which is given time to work its way through the system as it goes from one equilibrium to another in comparative static fashion, it is not impossible for technical change to depress the profit rate if the technological change is constant, happening period to period. Hence, the temporality of his system. Indeed capitalism does not come to rest, going from one perch to another. This bird is in continuous flight.

I do not know of a good effective argument against his argument understood as a critique of the Okishio impossibility theorem.

The consensus in the economics profession has been that it's impossible for viable technical change in itself to depress the profit rate. Kliman and others have broken through impossibility, which is often the form of real intellectual progress.

Almost without exception the economists have rejected both of Kliman's argument. I think that's a terrible mistake.

Rakesh



More information about the lbo-talk mailing list