# All Value-Form, No Value-Substance: Comments on Moseley’s New Book, Part 3

by Andrew Kliman

Here is the third installment of “All Value-Form, No Value-Substance,” the series of comments I’m writing on Fred Moseley’s new book, Money and Totality: A Macro-Monetary Interpretation of Marx’s Logic in Capital and the End of the “Transformation Problem.” It responds to Moseley’s reply to the first installment.

Here are

the first installment, published on May 11,

and

the second installment, published on May 12.

1. Fred Moseley says:

This is a reply to Part 3 of Kliman’s comments on my recent book Money and Totality: A Macro-Monetary Interpretation of Marx’s Logic in Capital and the End of the ‘Transformation Problem’. There are two points.

1. In my reply to Kliman’s Part 1, I asked how his monetary equation (1) for the rate of profit was derived.

Kliman replied in footnote 1 of his Part 3:
“Moseley (2016b, p. 1) wants to know how the two-sector version of this relation was derived in Part 1. The answer is that I worked backward. I began with the physicalist equation for the determination of the rate of profit, equation (1′′). I then translated each input-output coefficient into its “macro-monetary” equivalent … Next, I replaced the input-output coefficients in (1′′) with the right-hand side “macro-monetary” equivalents, and finally I cancelled out the price ratios. I have used the same methods here.”

Now I understand how Kliman derives equation (1) and also how he derives his equation (1”) from his equation (1) – because equation (1) is derived from his equation (1”)! He starts with the physicalist equation (1”), which he converts into his monetary equation (1) (as explained in footnote 1); and then he reverses the logic and moves back to the starting point – the physicalist equation (1) (as explained in the body of the paper).

Kliman says that he “worked backward” to derive equation (1) from equation (1”). But then he turned around and also worked forward to “derive” equation (1”) from equation (1). Symbolically: (1”) → (1) → (1”). A clear case of circular reasoning. That circular reasoning is what enables him to cancel out the price ratios in equation (1) and have only physical quantities in (1”), no matter how many commodities (1, 2, 3, etc.) are assumed – because he converted the physical quantities in (1’’) into the price ratios in (1) to begin with.

2. Kliman wrote in his Part 1:
It is instructive to analyze exactly why Moseley’s rate of profit falls from 50% to 25%. Note that (again, because input and output prices are constrained to be equal),

(P1 – total C) / total C = (p1X1 – p1A) / p1A) = (X1– A) / A,

where A is the total physical amount of good 1 used as an input by both sectors. (X1– A)/ A is the relative physical surplus of good 1 – the percentage by which the amount of it that’s produced exceeds the amount of it that was used up in production throughout the economy. Before the technical change, it was (18 – 12) / 12 = 50%.
After the technical change, it falls to (15 – 12) / 12 = 25%.

Similarly,

(P2 – total V) / total V = (p2X2 – p2B) / p2B) = (X2– B) / B

is the relative physical surplus of good 2, where B is the total physical amount of good 2 consumed by workers in both sectors. This relative physical surplus falls to the same extent, from (18 – 12) / 12 = 50% to (5 – 4) / 4 = 25%. Hence, the reason that Moseley’s rate of profit falls from 50% to 25% is that the relative physical surpluses fall from 50% to 25%.”

In my reply to Part 1, I stated:
“In Sector 1, C, V, S, and W all remain the same, but profit is reduced from 6 to 3 (as a result of the reduction in the general rate of profit) and thus price is reduced from 18 to 15. In a later narrative, Kliman states that the quantity of output in Sector 1 is also reduced from 18 to 15. But this is a bizarre result – the quantity of output in Sector 1declines even though both the inputs of C and V remain the same. What kind of “technological change” is this? I wish Kliman would explain why output in Sector 1 declines.”

Kliman replied in footnote 3 of his Part 3:
“In his reply to Part 1, Moseley (2016b, p. 1) claims that ‘Kliman states that the quantity of output in Sector 1 is also reduced from 18 to 15.’ I did not. The numbers 18 and 15 are the total price of Sector 1’s output before and after the technical change. Above, I have made it clearer than I did in Part 1 that, although I am computing the relative physical surpluses of each good, the computations use the monetary sums given as data in the tables. This is valid because Moseley’s interpretation is simultaneist and therefore the relative physical surpluses are equal to the analogous monetary ratios …”

Kliman’s argument seems to be: Contrary to Moseley’s statement, the actual output (X1) in Sector 1 does not fall. But because Moseley measures X1 by p1X1, his [my] monetary measure of X1 falls, even though the actual physical X1 does not fall. And because my monetary measure of X1 falls, so does my monetary measure of the rate of profit, even though the actual physical rate of profit does not fall.

Kliman does not explain what happens to output in Sector 2 as a result of “technological change” in Sector 2. p2X2 in his example falls drastically from 18 to 5 (in his example in Part 1). Presumably the actual physical output X2 would not fall or would not fall as much as its “monetary measure”. So a similar point applies to Section 2 as to Sector 1 – the monetary rate of profit falls but the actual physical rate of profit does not fall or does not fall as much.

But Kliman is supposed to prove that my monetary rate of profit is the same as the actual physical rate of profit, not that my monetary rate of profit is the same as the “relative physical surplus” for a single industry that he has invented and mistakenly attributed to me. Kliman has not proved what he is supposed to prove – that my monetary rate of profit is the same as the actual physical rate of profit – and in fact he has proved the opposite! That my monetary rate of profit is clearly different from the actual physical rate of profit; because in his example my monetary rate of profit falls, but the actual physical rate of profit does not fall.