Episode 18: The Value-Form Paradigm vs. Marx’s “Capital,” Part 2
The second half of a two-part interview on the “value-form paradigm”—a Marx-inspired and market-focused strand of political economy. Some years ago, the noted value-form theorist Patrick Murray responded to criticisms of the paradigm, leveled by Andrew and others in a published symposium. In this episode––guided by Brendan’s questioning, and for the first time anywhere––Andrew continues his reply to Murray.
The co-hosts discuss the source of profits, the quantity theory of money, and intra-firm trade. The discussion focuses on Andrew’s argument that the implications of the value-form paradigm contradict what Marx wrote about these issues, and on Murray’s attempts to explain away the apparent contradictions. Andrew explains why he finds Murray’s rebuttals to be unsuccessful.
The segment includes references to chapter 3 and chapter 5 of Capital, volume 1, and to Marx’s draft chapter, “Results of the Direct Production Process.”
In the current-events segment, the co-hosts respond to a recent “anti-neoliberal left” piece in Salon, in which Varsha Gandikota-Nellutla once again puts the political interests of “the left” ahead of the life-and-death struggle against Trumpist reaction.
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Value-form is yet another attempt to argue that profits originate in the market. If one succeeds with that agenda, then one does not need to consider capitalism’s conflict between the wage earner and the capitalist, which arises in production. The “method” that value-form uses is they introduce a tautology to Marx’s value theory
Tautology = saying the same thing twice. So, under value form, saying it the first time is Marx’s own argument that abstract labour originates in production. Saying it the second time is that, allegedly, labour becomes abstract (or fully abstract) only in exchange — hence, exchange plays a role in creating abstract labour. Consequently, production and exchange both play a part in value creation.
So, if, allegedly, Marx is wrong, then all is good with capitalism. AS WELL AS THEIR CAREERS built on their twisting of Marx.
Having just got to ‘The Working Day’ (ch 10) it was great to get a refresher on value, but oh-boy! ‘value theory’ makes no sense at all. It’s probably my ignorance here, by why is the value theory even taken seriously? And how can it be called a ‘theory’, rather than a hypothesis in need of empirical support, which raises the question, is there any evidence that supports the hypothesis? In contrast, Marx’s law of value has clear empirical support, as shown by, among others, Michael Roberts in his book ‘Marx 200’. Having just finished that book, I’d love to here Andrews thoughts on Marx’s theory or law of the tendency of the rate of profit to fall.
When you write “value theory,” do you mean “value-FORM” theory? I’m asking because you write “‘value theory’ makes no sense at all. … why is the value theory even taken seriously?,” but you also write “Marx’s law of value has clear empirical support.” Marx’s law of value is definitely among the things that the term “value theory” refers to.
If you did mean “value-FORM theory,” I basically agree with you. It’s taken seriously because it gives voice to the common-sense intuitions of a numerically important social force–the people who are pro-capitalist but anti-market, have turned toward social democracy, etc.
But why is it taken seriously as an interpretation of Marx’s theory? I think the answer is that very many people have cavalier attitudes to theory and truth claims. They don’t really think it’s important that theory be right and that characterizations of other people’s theories be right.
There are lots of theories (including theories of Marx’s) that make empirical claims. And any theory that makes empirical claims requires empirical support, of course. So I don’t think the distinction between theory and “hypothesis in need of empirical support” is tenable.
Marx’s law of the tendential fall in the rate of profit (LTFRP) follows, in pretty direct fashion, from his value theory, esp. the tenet that commodities’ values are determined by the amount of labor needed to produce them. So one key way to test the overall theory is to test the LTFRP.
I agree that there is strong empirical support–in the case of the US–for the LTFRP, and thus for Marx’s overall value theory. I presented the evidence in my book, The Failure of Capitalist Production (available on this site, and Amazon, etc.) Generally speaking, I don’t think the available statistics for other countries are good enough to test the LTFRP, in part because the “capital” figures for the denominator of the rate of profit aren’t actually the amounts of capital invested (advanced).
I have a lot of problems with how Michael Roberts and some others deal with data and with the concept of “rate of profit.” And in his case, with theory–what he’s been presenting to the public as “Marx’s law” is not Marx’s actual LTFRP. At one point, I got him to admit on his blog that it might not be. But he didn’t care less. His attitude was like “whatever; I still think my version is an interesting theory” (see above point on “cavalier attitudes to theory and truth claims”).
“I don’t think the available statistics for other countries are good enough to test the LTFRP, in part because the “capital” figures for the denominator of the rate of profit aren’t actually the amounts of capital invested (advanced).
Andrew, did you check the following literture dealing empirically with the rate of profit, post-WWII Germany.
Empirische Befunde zum tendenziellen Fall der Profitrate in Deutschland nach dem zweiten Weltkrieg
VON MARTIN SCHLEGEL
Die Untersuchung von Roth ist aber nicht die einzige, die sich empirisch mit der Entwicklung der Profitraten in Deutschland seit dem 2. Weltkrieg beschäftigt. Es ist verwunderlich, dass diese Untersuchungen in der theoretischen Diskussion über das Gesetz nicht berücksichtigt wurden, zumal auf einige von ihnen auch im Wikipediaartikel  zum Gesetz des tendenziellen Falls der Profitrate hingewiesen wird. Neben dem genannten Buch von Rainer Roth sind das vor allem die neueren Bücher von Stephan Krüger ( und ), Heinz-J. Bontrups Bücher ( und ), Robert Brenners Buch  und die Untersuchungen im Umkreis der Profitratenanalysegruppe (PRAG), das sind die Arbeiten von Harald Mattfeldt ( und ), von Nikolaus Dinkelacker und Harald Mattfeldt , von Harald Mattfeldt , von Kathrin Deumelandt  und von Rajko Pientka . Diese Arbeiten habe ich bezüglich ihrer empirischen Ergebnisse zur Entwicklung der Profitrate in Deutschland nach dem zweiten Weltkrieg untersucht. Die Arbeit von Brenner wird nicht berücksichtigt, weil sie ihren Fokus hauptsächlich auf die USA richtet.
I haven’t, because I don’t read German. But I’d be very surprised if what these papers call “the rate of profit” is profit as a percentage of the actual amount of capital invested. The German Federal Statistical Office doesn’t collect such data, they aren’t in the OECD database, etc.
What lots of people have done is assume that other measures, for which there are data–especially profit as a percentage of the amount of money that would now be required to replace the whole stock of fixed capital–are good enough proxies for what Marx (and basically everyone else) meant by the rate of profit, i.e., that they display trends that are similar, etc. That turns out NOT to be the case.
The divergent trends in the two series are clear and stark in the US data. The latter so-called “rate of profit” artificially collapsed because of rising inflation in the 1970s, and then it rebounded just as artificially in the 1980s when, and because, the rate of inflation fell. (Rates of profit as a percentage of actual capital investment exhibit no such artificial fall and rise.) This is the source of the incorrect claims that the deep recession of the mid-1970s was triggered by the fall in the “rate of profit” (both were triggered by rising oil prices) and, especially, that the “rate of profit” rebounded under “neoliberalism.”
My 2012 book, The Failure of Capitalist Production: Underlying Causes of the Great Recession, looks at US data on both the rate of profit and what is frequently, but incorrectly, called “the rate of profit.” It contains a detailed discussion of the divergent trends and, more importantly, the crucial conceptual difference.
One reason the conceptual difference is crucial is that, if one is supposedly testing Marx’s law of the tendential fall in the rate of profit empirically, but one is looking at something very different from what he meant by the term rate of profit–indeed, something that’s not really a rate of profit at all–then the test is just illegitimate and worthless.