Andrew writes:
> Marx called the law of the falling rate of profit the most important law
> of political economy. No one who adheres to an interpretation in
> which valuation is simultaenous has ever refuted the Okishio theorem on
> *value-theoretic* grounds. The moment someone does, then I'll be
> happy to retract my claim that only the TSS interpretation *adequately
> represents the quantitative dimension of Marx's value theory*. But
> I'm not going to hold my breath.
This observation puzzles me for a number of reasons.
1) I don't see that the issue is one of "refuting" the Okishio
theorem. Given the postulates of the theorem, the conclusion is
logically valid. Absent a demonstration that the proof is
deductively invalid, the theorem itself isn't refuted.
2) What's really at stake, it seems to me, is the legitimacy of the
assumptions. These have been challenged on a number of grounds.
However, it strikes me, after reading Andrew's RRPE article on the
subject, that the TSS approach *of itself* is neither necessary nor
sufficient for rehabilitating Marx's theory of the falling rate of
profit. Indeed, *value theory* of itself is neither necessary nor
sufficient for the rehabilitation of Marx's theory.
Not necessary: A number of alternative postulate sets re-establish
Marx's result, subject to a caveat to be mentioned below. These
postulates have to do with the microanalytic consequences of given
technical changes, not the interpretation of value theory. For
example, in an upcoming Metroeconomica article I demonstrate an
alternative conception of (competitive) labor market processes which
supports Marx's result on grounds suggested by Duncan (i.e., that the
"value of labor power" is invariant to capital using-labor saving
changes in production technique).
Not sufficient: as I understand Andrew's argument, it requires that
capitalists calculate rates of profit on the basis of *historical*
rather than *replacement* costs of capital (i.e., that capitalists
fail to ignore sunk costs). [Please correct me if this understanding
is wrong, Andrew.] Now, I doubt that this is the case, but that's
really beside the point: whether or not capitalists ignore sunk
costs is an empirical issue that does not depend on the comparative
*theoretical* fidelity of the TSS system to Marx's conception.
Finally, I don't think it's been emphasized before that Marx's theory
of the falling rate of profit is at odds with his story in in section
1 of Volume I, Ch 25, on the general law of capitalist accumulation.
If the profit rate falls due to the mechanism suggested in Volume
III, the rate of accumulation will slow down, driving the rate of
profit right back up.
I've worked out a little study of the dynamics of this process
showing that the steady-state rate of profit, given the above
considerations, is independent of the choice of technique; thus in
light of Marx's own Ch. 25 argument one cannot in general expect *any*
"tendency* for the rate of profit to fall.
In solidarity, Gil