All Value-Form, No Value-Substance: Comments on Moseley’s New Book, Part 7

by Andrew Kliman

Here is the seventh 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 sixth installment.

Here are the first installment, published on May 11,

the second installment, published on May 12,

the third installment, published on June 6,

the fourth installment, published on July 14,

the fifth installment, published on July 23, and

the sixth installment, published on July 25.

7 Comments

  1. The debate between Moseley and Kliman is about the best reading of the quantitative dimension of Marx’s theory of value. Two keywords of their debate are “physicalism” and the “rate of profit.” Kliman argues that Moseley’s interpretation of Marx’s rate of profit yields results identical to physicalist results. Moseley denies that this is a correct interpretation of his own interpretation of Marx. The underlying issue it may be difficult for readers of this debate to track concerns simultaneous valuation. Kliman demonstrates that the analytic device of simultaneous valuation necessarily yields physicalist conclusions. For his part, Moseley denies that his interpretation is physicalist (mainly by distinguishing it from “Sraffian” interpretations). He also denies that he is a simultaneist in the sense entailed by Sraffian readings and the Okishio Theorem.
    In this comment, I would like to review the aspect of this debate that hinges on simultaneous valuation.
    In each of his seven “Comments on Moseley’s New Book” (Money and Totality, Brill, 2016), Kliman returns to the same conclusion concerning Moseley’s “macro-monetary” interpretation of Marx’s theory of value. So he writes in his seventh installment that “an unfortunate fact remains: Moseley’s rate of profit is quantitatively identical to that of the (other) physicalist economists, because he, like they, values inputs and outputs simultaneously. As a result, his equilibrium rate of profit is determined by the same physical quantities— technological and real wage coefficients—that determine all other physicalist theorists’ rate of profit, and in exactly the same manner. That he expresses his rate of profit as the ratio of surplus value to capital value advanced, instead of as a ratio of physical coefficients, makes no difference. It is all value-form and no value-substance.“
    Meanwhile, Moseley consistently denies that his interpretation of Marx’s value theory is physicalist. He also denies that the Okishio Theorem, which is a theorem of physicalist interpretation, applies to Marx’s theory (as a matter of method as well as results).
    The underlying and principal reason why Kliman insists that Moseley’s interpretation belongs to the conceptual horizon of physicalism is that Moseley adopts the device of simultaneous valuation, which constrains output prices to be equal to input prices (whereas in the TSSI, input and output prices can and do differ). Again in all seven of his comments, Klilman addresses the issue head-on and explicitly. But as far as I can tell in this exchange, Moseley explicitly states his own view of this issue only once, in his reply to Kliman’s “Part 3.” Moseley writes:
    “Therefore, I conclude that my interpretation of Marx’s theory of the rate of profit is fundamentally different from Sraffa’s theory. Even though input prices = output prices in my interpretation, it does not follow that my interpretation is the same as Sraffa’s theory in the sense that the rate of profit is determined only by physical quantities. The rate of profit in my interpretation of Marx’s theory is determined by the relation between surplus labor and money capital invested. Input prices = output prices in my interpretation, not because input prices and output prices are determined simultaneously (as in Sraffa’s theory), but rather because the economy is assumed to be in long-run equilibrium (as discussed in my reply to Kliman’s Part 2).”
    With respect to “long-run equilibrium,” Moseley had written in his response to Kliman’s “Part 2”:
    “This reply focuses on whether Marx’s concept of prices of production are long-run center of gravity prices around which market prices fluctuate over multiple periods of time and which change only if productivity or the real wage changes (my interpretation) or are short-run prices that continue to change over multiple periods even though productivity and the real wage remain constant and thus cannot function as long-run center of gravity prices (TSSI).”

    I will return to this disjunction below. But Moseley continues:

    “I argued in my book that Marx’s concept of prices of production are long-run center-of-gravity prices, around which actual market prices fluctuate (‘gravitate’) from period to period. These long run center of gravity prices are in the classical tradition of Smith and Ricardo, which have three key characteristics: (1) they equalize the rate of profit across industries; (2) they are ‘centers of gravity’ around which actual market prices fluctuate over extended periods of time; and (3) they change if and only if either the productivity of labor changes (due to changes in the technology of production) or (secondarily) if the real wage changes.”

    By contrast with the TSSI, then, Moseley concludes:

    “I argued that the TSSI prices of production have the first characteristic, but do not have the other two key characteristics and thus is a misinterpretation of Marx’s concept of prices of production. According to the TSSI, the transformation of values into prices of production [is an] ongoing process that takes place over multiple periods, even though productivity and the real wage remains the same in all these periods. And since TSSI prices of production change every period, they cannot be ‘centers of gravity’ around which market prices fluctuate over longer periods of time.”

    So this appears to be the reasoning on the basis of which Moseley denies that he is a “simultaneist”: his “input and output prices” are not determined simultaneously because they are not “short-run prices” but “prices of production” that are “long-run center-of-gravity prices”; such that, under the condition of “long-run equilibrium,” they “equalize the rate of profit across industries”; and once the rate of profit across industries is equalized, then “input prices = output prices” (for these rather than “Sraffian” reasons).

    Kliman’s briefer rejoinder appears in parentheses in his “Part 3.” He writes:

    “Although Moseley denies that he is a simultaneist—[a] proponent of simultaneous determination of input and output prices—he does, as we see, explicitly state that, when a uniform rate of profit prevails, input prices must equal output prices. That is exactly what the rest of us mean when we say that input and output prices are ‘determined simultaneously.’” (Kliman first made this “what the rest of us mean” point in his first installment and he returns to it again here.)

    To this point, I hope to have stated the issue concerning simultaneous valuation fairly as between Kliman and Moseley. I would also like to be on my way to a question concerning Moseley’s concept of “equilibrium.”

    In order to pose my question, I need to review some basics from Kliman’s Reclaiming Marx’s “Capital” 2007).

    Chapter 2, “Marx’s Value Theory and Contending Interpretations,” includes important basic definitions. There Kliman defines “simultaneous valuation” as “the a priori stipulation that the per-unit value (or price) of each input must equal the per-unit value (or price) of the same good or service when produced as an output of the same period…Temporal valuation is simply non-simultaneous valuation” (p. 34).

    Next, in Chapter 5, “Simultaneism, Physicalism, and the Law of Value,” Kliman explains why simultaneous valuation must logically entail physicalism: “the conclusions [simultaneous valuation] produces are necessarily physicalist. This…can be explained very simply. The aggregate value (or price) of a particular type of item is its per-unit value (or price) times the physical quantity of the item. There are thus two things that cause the aggregate value to change, changes in the physical quantity of the item and changes in its per-unit value. But simultaneous valuation eliminates the change in the per-unit value that occurs during the production period. Hence, there is only one remaining cause of changes in the item’s aggregate value—changes in its physical quantity” (pp. 78-79).

    Now here is my question. Moseley had argued disjunctively for one of (only) two alternatives: either Marx’s prices of production are long-run center-of-gravity prices; or they are short-run prices that cannot function as long-run center-of-gravity prices. Although it is not explicitly stated, it seems to be the implication of this disjunctive syllogism that the latter disjunct is unacceptable (as an interpretation of Marx’s prices of production). Therefore, the reasonable alternative appears to be the former disjunct, as Moseley thinks.

    With respect to the disjunction itself, the concept of equilibrium appears to be fundamental. By an economy in equilibrium, Moseley means an economy in long-run equilibrium, when the average rate of profit has equalized across industries, and this is the reason he gives why, under his interpretation, “input prices = output prices.”

    On the other hand, in his sixth chapter, “Was Marx a Simultaneist?,” Kliman takes up the question of “The Static Equilibrium vs. the Average Rate of Profit.” There he writes:

    “…Marx held that actual market prices in a competitive environment tend to fluctuate around prices of production, and that actual rates of profit tend to fluctuate around the general rate of profit. Thus prices of production are average prices and the general rate of profit is the average rate.

    “There is no disagreement about this. However, many simultaneist authors, especially Sraffians, argue in addition that Marx’s prices of production and general rate of profit are static equilibrium magnitudes—the prices and rate of profit that would prevail in a situation in which there is no tendency for anything in the economy to change. But if prices are not changing, then input and output prices are equal. Thus, on this interpretation, Marx’s prices of production are simultaneously determined” (pp. 91-92).

    This leads Kliman to ask:

    “So what is going on? The answer is that Mongiovi [quoted in the previous paragraph], Moseley, and other simultaneists are equating ‘average’ and ‘static equilibrium.’ This is why they characterize Marx’s references to the former as references to the latter. But if the two concepts are different…then their argument collapses. The fact that Marx understood prices of production and the general rate of profit as the average magnitudes around which actual magnitudes fluctuate does not make him an implicit simultaneist” (p. 92).

    Kliman goes on to demonstrate the difference between Marx’s “average rate of profit” and the rate of profit under (the neoclassical concept of) static equilibrium (pp. 92-94), which I will not summarize here. But by way of a preface, he impressively quotes Joan Robinson (1967), who wrote (concerning Capital 3), “There is no tendency to long-run equilibrium and the average rate of profit is not an equilibrium rate, or a supply price of capital. It is simply an average share in the total surplus which at any moment the capitalist system has succeeded in generating” (p. 92).

    Then Kliman impressively quotes his TSSI colleague Alan Freeman:

    “[Marx’s] concept of long-term average is precisely what it says: the average of a varying quantity. In no sense is this identical or even comparable to the notion of an equilibrium price. This is scientifically correct, because in all but the simplest of oscillating systems the two magnitudes are numerically different. In mechanics they are different, for example, in any system in which energy of oscillation is transformed into energy of motion, that is, in which net mechanical work is performed. Thus the average behaviour of a surfboard being propelled by a wave is quite different from the behaviour of the same board in a calm sea” (quoted on pp. 92-93).

    Next Kliman writes, “It should also be noted that, despite Moseley’s and Mongiovi’s references to the ‘long run’ and ‘long period,’ there is a great difference between the actual long-run rate of profit—if one happens to exist—and its static equilibrium counterpart. Imagine that output prices have a systematic tendency to be lower than (or higher than) input prices, and that rates of profit fluctuate around or converge upon some fixed equilibrium value in the long run. This long-run equilibrium rate of profit will be systematically lower than (or higher than) the static equilibrium long-run rate of profit to which Moseley and Mongiovi refer—the rate of profit that would prevail if input and output prices were equal” (p. 94).

    To return to Moseley’s disjunction, then, the “long-run/short-run” distinction is not relevant to Kliman’s TSSI interpretation either of prices of production or of the average rate of profit that enters into their determination. So Kliman is not in fact trapped in the jaws of Moseley’s disjunctive syllogism.

    But I wonder how Moseley would reply to the claim that he wrongly equates “average” with “static equilibrium,” since he does retain the requirement that “input prices = output prices,” which in turn is the defining characteristic of simultaneous valuation (and from which physicalism necessarily follows).

    In “Appendix 2,” of Kliman’s “Part 4,” with respect to “Theorem 2” and its proof, Kliman shows that the TSSI monetary rate of profit differs from the physicalist determination of the monetary rate of profit. This difference arises when input prices are not constrained to equal output prices. Moreover, this difference is obviously substantive and significant—not merely wordplay or “maths”—concerning the best reading of the quantitative dimension of Marx’s own presentation of the theory of value.

    Finally, it seems to me that Kliman’s refutation of physicalism and his vindication of temporalism—as a hermeneutic matter, concerning the best reading of Marx—has serious philosophical implications as well (beyond the quantitative dimension of value theory). I have argued elsewhere that “economists’ physicalism” is either identical to or logically consistent with “analytic metaphysicians’ physicalism”; that physicalism is necessarily atemporalist (or, to put it like this, it’s warmed-over Laplace); and that therefore it is inconsistent top to bottom with Marx’s evident temporalism; more acutely, his philosophy of history; and most acutely, his humanist philosophy of freedom.

    My own tentative conclusion is that Moseley’s attempt to ensnare Kliman on the wrong side of a disjunctive syllogism fails. It also seems clear that by “average,” Marx does not mean “static.”

    What Marx discovers is not the stasis of a Parmenidean world but the metastasis of capital.

    So here’s my question, in case it hasn’t appeared that I’ve asked one. Kliman quotes Moseley writing in 1999, to the effect that “prices of production and general rate of profit are ‘static positions of central gravitation’” (p. 92; internal quotation from Moseley’s 1999 paper, “Marx’s Concept of Prices of Production: Long-run center-of-gravity prices”). I wonder, Prof. Moseley, whether you still hold this view?

  2. I think Tom Jeannot’s summary of the issues at stake in this debate is accurate and thorough. Let me just mention that my ongoing series of comments on Fred Moseley’s book hasn’t yet addressed one point of his that Tom quoted:

    “According to the TSSI, the transformation of values into prices of production [is an] ongoing process that takes place over multiple periods, even though productivity and the real wage remains the same in all these periods. And since TSSI prices of production change every period, they cannot be ‘centers of gravity’ around which market prices fluctuate over longer periods of time.”

    Actually, there are 2 points here.

    (1) The claim that the TSSI interprets the transformation of values into prices of production as an “ongoing process that takes place *over multiple periods*” is false, and Moseley’s next sentence in fact contradicts it: “TSSI prices of production change *every period*” (my emph.).

    (2) The claim that prices of production that change every period cannot be “‘centers of gravity’ around which market prices fluctuate over longer periods of time” is a distinct point, but likewise false. Moseley’s “cannot be” depends on a particular construal of what it means for market prices to fluctuate around prices of production over longer periods of time. On a different interpretation of the meaning of that (negative feedback when market prices deviate from prices of production, with a strong tendency toward “overshooting”), market prices do fluctuate around temporally-determined price of production.

    (This is actually simpler than it sounds. It’s clearer when it’s visualized. Near the start of chap. 6 of _Reclaiming Marx’s “Capital”_, there’s a graph in which the average rate of profit changes over time while the two sectors’ rates of profit fluctuate around the changing average rate of profit. This graph is produced by a process in which prices of production change over time while market prices fluctuate around the changing prices of production.)

    I’ve never before seen the quoting of something, as distinct from what’s quoted, characterized as impressive. But thanks, I guess.

    I assume that “warmed-over Laplace” means perfect prediction throughout all time given perfect knowledge of initial conditions. Simultaneism is worse than that (even apart from the fact that Laplace was positing something he deemed impossible). Simultaneous valuation means that the determination of today’s values, relative prices, and rate of profit doesn’t depend at all on past values or prices.

    I’d like to suggest that Tom post his comment on below the review of Fred Moseley’s book on the Marx & Philosophy Review of Books, if he hasn’t done so already.

  3. Reply to Kliman’s Part 7

    1. Goods assumed to be inputs to their own production

    The following key arguments in Kliman’s Parts 1 and 3-6 – that are supposed to prove that my interpretation of Marx’s theory of the rate of profit is the same as Sraffa’s theory – depend crucially on the untenable assumption that *each and every good is an input to its own production.*

    1. *The derivation of his equation (1”) from his equation (1)* (and I would say also the prior derivation of (1) from (1”)). For example, the key reduction of C1/P1 to a1 by the equation:
    C1/P1 = (p1a1X1) / (p1X1) = a1.
    (p1X1) cancels out because (and only because) Good 1 is an input in its own production. The denominator (p1X1) refers to Good 1 as on output and the numerator (p1a1X1) refers to the same Good 1 as an input in the production of itself. a1 is the quantity of Good 1 used to produced one unit of Good 1. If Good 1 were not an input to its own production, then the p1X1’s don’t cancel and Kliman’s reduction of C1/P1 to a1 is not possible. Ditto for Good 2 and any other goods included in this argument (e.g. the third Good in Part 4). Therefore, if all goods are not assumed to be inputs to their own production, then equation (1”) cannot be derived from equation (1).

    2. *The calculation of “my” input-output coefficients* for various arguments. For example, a1 is calculated from the same equation above:
    a1 = C1/P1.
    But if Good 1 is not an input (C1) into the production of itself (P1), then this calculation makes no sense.

    3. *Two arguments regarding “full automation”.*

    a. *No surplus output in Sector 1 because a1 = 1* (i.e. because it takes one unit of Good 1 to produce one unit of the same Good 1!). a1 is calculated as above from C1/P1 = 10/10 = 1. But if Good 1 is not an input to its own production, and there are other inputs to the production of Good 1, then it is not even possible to calculate the surplus output in Sector 1 (or any other single industry) because the inputs and Good 1 are heterogeneous commodities with no common unit of measure. Bill Jeffries has made a similar comment on earlier posts.

    b. *Positive rate of profit in my interpretation of “full automation”.* In this argument, Kliman assumed that a1 = 0.8 and calculated C1 from C1 = a1P1 = .8P1. But again, if Good 1 is not an input for itself, the determination of C1 in this way is not possible.

    Furthermore, in this argument Kliman ignores my interpretation of Marx’s theory of the determination of profit by surplus labor and erroneously calculates “my” amount of profit in his Sector 1 by the equation: π1 = P1 – C1 – V1 = P1 – 0.8P1. So there are two problems with this equation: (1) it is not my equation for profit and (2) Good 1 is assumed to be an input to its own production. My equation for profit produced in Sector 1 is π1 = m (SL1) (where m is the MELT), and if thus SL1 = 0, then π1 = 0.

    2. Goods *not* assumed to be inputs to their own production

    In his most recent Part 7, Kliman presents another two-sector model in which the two goods are not assumed to be inputs to their own production. He first determines the rate of profit by the physical coefficients (= 0.11).

    He then asks: “What about Moseley’s equilibrium rate of profit? It is the value of r that makes the total price of each sector’s output equal to its advance of capital times ‘1 plus the rate of profit’ (i.e., 1 + r )”:

    P1 = (C21+ V1) (1 + r)
    P2 = (C12+ V2) (1 + r)

    However, these price of production equations are *not* an accurate representation of my interpretation of Marx’s theory of the rate of profit. The rate of profit in my interpretation of Marx’s theory is *not determined by these price of production equations.* The rate of profit in my interpretation of is instead determined prior to and independently of these equations by the aggregate ratio of S/(C+V) and then *taken as exogenously given (predetermined)* in these equations.

    Labor is *only a cost* in these equations (V); it is not a producer of value. There is no new-value term (N = m L) in these equations and thus no surplus-value term (S = m SL). Therefore, these equations cannot be the way the rate of profit is determined in Marx’s theory. The equations look the same on the surface, but the logic of determination is fundamentally different (sequential determination vs. simultaneous determination). The unknowns in Marx’s price of production equations are the prices of production (P1 and P2), not the rate of profit. I explain this sequential logic in detail in Chapter 2 of my book, which Kliman continues to ignore.

    Kliman then decomposes the C’s and V’s in these equations into known physical quantities and unknown unit prices (Kliman does not present these equations explicitly, but they are implied by his substitutions):
    p1X1 = (p2A21+ p2B21) (1 + r)
    p2X2 = (p1A12+ p2B22) (1 + r)

    So we are back to the Sraffian theory of the rate of profit and relative unit prices. It is thus no surprise that the rate of profit that is determined by these equations is the same as that derived from the physical coefficients (0.11), because the physical coefficients come from these equations (e.g. a21= A21/X1). Therefore, whatever conclusions Kliman derives about the rate of profit determined from these equations do not apply to my interpretation of Marx’s theory of the rate of profit.

    Notice also that, in this case, Kliman does not try to prove that my interpretation of Marx’s theory of the rate of profit is “physicalist” by deriving his equation (1”) from his equation (1), as in previous posts; that derivation is not possible if goods are not assumed to be inputs to their own production. Instead, Kliman’s argument in this case is in terms of the price of production equations, which is also *not* the way the rate of profit is determined in my interpretation of Marx’s theory.

    On the bottom half of p. 8, Kliman tries to take into account the key feature of my interpretation of Marx’s theory that he omitted from the argument on the top half of the page in terms of price of production equations – that labor is also a producer of new value. He assumes new value in Sector 1 = 4 and new value in Sector 2 = 20 from which he deduces that surplus-value in Sector 1 = 1 and surplus-value in Sector 2 = 5. Thus the total surplus-value = 6 and the rate of profit = 6/54 = 0.11 (again). However, this result follows only from Kliman’s specific assumption that the new values produced are 4 and 20 (these specific quantities for new value were no doubt chosen to produce a rate of profit = 0.11). If the quantities of new value were different, then the rate of profit would be different.

    For example, if it is assumed instead that new value in Sector 1 = 6 and new value in Sector 2 = 30, and p1 and p2 are calculated in the same way that Kliman did, by setting
    P1 + P2 = W1 + W2
    10p1 + 10p2 = (C21 + 6) + (C12 + 30)
    = (8p2 + 6) + (4p1 + 30)
    and this equation is satisfied by the prices p1 = 5 and p2 = 3.
    With these prices, V1 = 3, S1 = 3, V2 = 15, S2 = 15 (so the total S = 18), C21 = 24, C12 = 20, and the rate of profit is 18/62 = .29 ≠ .11.

    Therefore, when account is taken of the unique feature of Marx’s theory – that labor is not only a cost but also a producer of value – my interpretation of Marx’s theory is clearly different from Sraffa’s theory.

    3. Full automation again

    The fundamental difference between my interpretation of Marx’s theory of the rate of profit and Sraffian theory is most clearly seen in the case of “full automation”. According to Sraffian theory, if there is a physical surplus, the rate of profit will be positive, even though there is no labor. On the other hand, according to my interpretation of Marx’s theory (as discussed above), S = m(SL), and thus if SL = 0, then S = 0. Simple and straightforward; no ifs, ands, or buts.

    On p. 9, Kliman alters his example to assume full automation and sets real wages = 0. He first calculates the “physicalist” rate of profit from the I/O coefficients (= .77) and then he calculates “my” rate of profit and comes to the same conclusion. However, he erroneously calculates “my” rate of profit in the same way as in the previous section: by the same price of production equations and the same decompositions into known physical quantities and unknown unit prices. And since this theory of the rate of profit is the same as Sraffian theory, it is no surprise that the conclusion is the same (rate of profit = .77). But again this result does not apply to my interpretation of Marx’s theory of the rate of profit, because the rate of profit in my interpretation is not determined by these price of production equations. The rate of profit in my interpretation is determined by S/(C+V), and S = m (SL), so that if SL = 0, then S = 0.

    On p. 10, Kliman uses the rate of profit that he has erroneously calculated for me to erroneously calculate positive amounts of profit in both sectors. But in my interpretation, if S = 0, then the rate of profit = 0, and the profit in both sectors = 0.

    Kliman argued that in my argument regarding full automation I “fail to address the issue of whether Marx’s theory as interpreted by Moseley is anti-physicalist *despite its simultaneism”.* (p. 4; emphasis in the original)

    The term “simultaneism” is ambiguous and potentially misleading. What Kliman means by simultaneism is that input prices = output prices. But simultaneous in this context often means the *logic of simultaneous determination* (i.e. input prices and output prices are determined simultaneously by a system of simultaneous equations, as in Sraffian theory). My interpretation does assume that input prices = output prices, but this equality is not based on the logic of simultaneous determination, but is instead based on the assumption that the *economy is in long-run equilibrium*. This is another way in which my interpretation of Marx’s theory is fundamentally different from Sraffa’s theory (sequential determination vs. simultaneous determination).

    In any case, I derive in Chapter 2 of my book the result S = m(SL) on the basis of the assumption that the economy is in long-run equilibrium and thus input prices = output prices, i.e. that inputs are purchased at their prices of production (which are long-run equilibrium prices) and are sold as outputs at the same long-run equilibrium prices of production in the same period. Therefore, my “simultaneism” is assumed in the derivation of S, and there is nothing left to address.

    And this result (S = m SL and thus S = 0 if SL = 0) is clearly contrary to Sraffa’s theory of the rate of profit (based on physical quantities and simultaneous determination).

    4. Okishio Theorem again

    Another important example of the fundamental difference between Sraffa’s theory and my interpretation of Marx’s theory which I have discussed in previous posts is the case of *labor-saving technological change.*

    According to Sraffian theory and the Okishio theorem, labor-saving technological change will *never reduce* the rate of profit. And again the reason for this non-negative effect of labor-saving technological change on the rate of profit in Sraffian theory, is that *labor is only a COST* in Sraffian theory, so that a reduction in cost will never reduce the rate of profit.

    On the other hand, in (my interpretation of) Marx’s theory, *labor is also a producer of value*, and therefore labor-saving technological change not only reduces costs, but also reduces the value and surplus-value produced (this is what is missing in Sraffian theory), and the net effect on the rate of profit depends on the relative strength of these two opposing intermediate effects.

    Therefore, my interpretation of Marx’s theory comes to a different conclusion regarding the all-important question of the effect of labor-saving technological change on the rate of profit. The Okishio theorem does not apply to my interpretation of Marx’s theory. Labor is not only a cost, but is also a producer of value.

    Kliman also argued that I do not provide a demonstration “that the simultaneism of Marx’s theory as interpreted by Moseley is anti-physicalist *despite its simultaneism.* (p. 3; emphasis in the original)

    But again, the important conclusion of my interpretation of Marx’s theory that the rate of profit varies directly with the rate of surplus-value and inversely with the composition of capital is a simple and straightforward deduction from the above equation for S which is derived on the basis of the assumption that the economy is in long-run equilibrium and thus input prices = output prices:
    S = m SL
    R = S / C+V
    ≈ S / C = (S/V) / (C/V)
    So again my “simultaneism” is assumed in the derivation of S and R, and thus there is nothing left to Demonstrate.

    And this equation for the rate of profit is clearly different from the Sraffian theory of the rate of profit (based on physical quantities and the logic of simultaneous determination).

    5. Luxury goods industries

    The fundamental difference between my interpretation of Marx’s theory of the rate of profit and Sraffian theory is also clearly seen in the case of luxury goods industries and technological change in luxury goods industries.

    According to Sraffian theory, the technical conditions in luxury goods industries have *no effect the rate of profit, because luxury goods do not enter into the production of other goods and hence are not costs in the production of other goods. In my interpretation of Marx’s theory, on the other hand, the composition of capital in luxury goods industries is included in the composition of capital for the economy as a whole and thus has an effect the rate of profit.

    For example, if there is technological change in a luxury goods industry, then according to Sraffian theory this will have no effect on the rate of profit. According to my interpretation of Marx’s theory, on the other hand, if the technological change in a luxury goods industry increases its composition of capital, this will increase the composition of capital for the economy as a whole, and this will cause the rate of profit to fall because there is no offsetting increase in the rate of surplus-value.

    Conclusion

    I have argued that:

    1. Kliman’s key arguments in his Parts 1 and 3-6 – that are supposed to prove that my interpretation of Marx’s theory of the rate of profit is the same as Sraffa’s theory (especially the derivation of his equation (1”) from equation (1) and the calculation of “my” input-output coefficients by a1 = C1/P1) – are based on the unrealistic assumption that all commodities are inputs to their own production and thus these arguments are not acceptable.

    2. The new argument in Part 7 is based on the determination of the rate of profit by price of production equations, but these equations are not an accurate representation of my interpretation of Marx’s theory of the rate of profit, because labor is only a cost in these equations and not a producer of value, and because according to my interpretation the rate of profit is exogenously given in these equations not determined endogenously by them.

    3. Kliman’s attempt to add labor as a producer of value to his numerical example demonstrates (contrary to his aim) that my interpretation of Marx’s theory of the rate of profit is *not* the same as the Sraffian theory of the rate of profit.

    4. The following cases show the clear and fundamental differences between Sraffian theory and my interpretation of Marx’s theory of the rate of profit: (a) full automation, (b) labor-saving technological change, and (c) luxury goods industries.

  4. Fred,

    You’re trying to show that your equalized rate of profit can differ from the physicalist rate of profit. But you fail to do so because your computations at the end of your point 2 are simply ridiculous. Your avg. rate of profit (29.0%) differs from the physicalist rate (11.1%), but your rate of profit is NOT equalized, and therefore your “prices of production” are NOT prices of production. Your computations imply that Sector 1’s rate of profit is 85.2%, while Sector 2’s rate of profit is -14.3% !

    Please retract the claim that concludes this “demonstration” of yours: “Therefore, when account is taken of the unique feature of Marx’s theory – that labor is not only a cost but also a producer of value – my interpretation of Marx’s theory is clearly different from Sraffa’s theory.”

    What you need to show is that your rate of profit need not equal 11.1% given the same physical data AND AN EQUALIZED RATE OF PROFIT. You will not succeed.

    Further details are here: http://www.marxisthumanistinitiative.org/wp-content/uploads/2016/08/Moseleys-PoP-arent-PoP-8.8.16.pdf

  5. I’m glad to see Moseley responding to some of Kliman’s criticisms with some numbers. Moseley is now trying to show that his rate of profit actually differs from the Sraffians’ rate of profit. This is a step in the right direction because numbers don’t lie–as long as they are used correctly. Unfortunately, if Kliman is right, Moseley has not equalized the rate of profit he is comparing to the Sraffian rate of profit. And if his rate of profit isn’t equal in all industries, his comparison is meaningless. So I’d appreciate Moseley’s response on this point: did he compute an equalized rate of profit or not?

  6. This result shows is that if you assume given physical quantities, then there is only one rate of profit that is consistent with these given physical quantities. Adding “labor as a producer of value” to given physical quantities doesn’t change the basic logic. The given physical quantities still determine the rate of profit and will also determine the new value produced that is consistent with this rate of profit. I realize this point more clearly now.

    However, if one does not assume given physical quantities, but instead assumes given quantities of money capital and quantities of labor-time and the labor theory of value (as in my interpretation of Marx’s theory), then *the rate of profit is determined in a different way and the rate of profit determined is different.*

    This difference is most clearly seen in the case of full automation. If one assumes given physical quantities and that there is a physical surplus, then the rate of profit will be positive. However, if one assumes given quantities of money capital and labor-time and the LTV, and L = 0, then the rate of profit will be zero. These two different theories of the rate of profit clearly come to different conclusions.

    The difference between these two theories of the rate of profit is also seen in the effects of labor-saving technological change on the rate of profit (Okishio Theorem) and in the effects of luxury goods industries on the rate of profit, as I have argued in previous comments.

    These are two fundamentally different theories of the rate of profit (physical quantities vs. quantities of money capital, L, and the LTV) and they lead to different conclusions.

Leave a Reply

Your email address will not be published.


*


12 + two =