At 0:14 7-05-1996 -0700, akliman@acl.nyit.edu wrote:
>A reply to Riccardo's thoughtful questions in ope-l 2092. It was
> a post "addressed" to Alan, but my name is being taken in vain ;)
> so I'll take a stab at it.
Let me first of all thank Andrew for the patience and clarity with which he
replied to some questions of mine which surely would have been unnecessary
if I were able to read all OPE-L posts ...
I hope I can continue our discussion in a relaxed way, around a
table with some boiled water you Americans dare to call coffee.
I think there is a reasonable convergence on the issueswe both thnk
must be addressed.
>But I don't accept that this scenario is "equilibrium" in any meaningful
> sense. The usual condition for equilibrium is understood to be a uniform
> rate of profit. But as Ted and I show, a uniform profit rate, supplies
> = demands, balanced reproduction are all possible even without stationary
> prices (I mean by profit rate the rate of return on actual investement
> here). And I know of no real economic process that even TENDS to produce
> stationary prices in the same sense that capital mobility tends to level
> out profit rates. (For instance, Okishio/Roemer *assume* stationary
> prices even though they are considering technical change! They fail to
> show, and it is almost impossible to believe, that if we keep getting
> technical changes, adjustment to stationary prices will occur).
I think a crucial word here is "real". I am accustomed to think that the
transformation is relative to two "abstract" economies: the first in which
prices = value and where in general profit rates diverges; the second in
which we superimpose on the same conditions of production a (particular)
rule of the distribution for the capitalist surplus. But even if we
disagree on this, please see below.
>I also agree with the implicit point Riccardo seems to be making, which
> is that under a stationary price "equilibrium," value theory is wholly
> irrelevant.
"Troppa grazia", we say in Italian - you are giving up too much! I
want to be clear on *my* position here, accordining to which value theory
MUST be always relevant in a theoretically meaningful sense [In brackets,
what can be dispensed at a first reading].
I wanted to say that under a stationary price "equilibrium", value
theory INTERPRETED AS MERELY A THEORY OF CAPITALIST PRICES is wholly
irrelevant. IF I REDUCE THE THEORY OF VALUE TO THAT, then, I'll become a
Sraffian, or better (worse?) a Steedman. But my point is exactly that for
Marx (as I understand him) value theory is FIRST OF ALL the theory of how
the capitalist surplus is created at the point of production [well, there
are some qualifications: we are in a monetary economy, value must be
actualized in exchange, the labour power must be paid at its value
capitalist surplus depends from class struggle at the point of production].
From my point of view, Marx wants - and needs - to *explain*
capital *before* determining *capitalist* prices, either stationary or not.
To do that, he must first of all imagine that wage labour simply reproduces
the economic system leaving no surplus [something very "unreal", of course:
it is in fact a counterfactual conditional]. Here, of course, prices would
be equal to values. Then he passes to the [definitely more "realistic"!]
situation where workers work *longer* [relative to the counterfactual
conditional defined above], still maintaining those prices. Here you are
able to do the comparison between living labour and necessary labour (as
'embodied' magnitudes) in a monetary economy: a comparison which gives us
surplus labour [this comparison is also adopted by Marx to criticize the
idea diffused at the time in political economy that "labour" is paid what
it's worth]. Afterwards, we may imagine different rules of the distribution
of the surplus, and fix all the prices you want different from values.
Hence, here we have a strange situation. First act: to explain the
production of capital, Marx has to assume that the input are *commodities*,
i. e. still *not* capitalist commodities [this has nothing to do with
simple commodity production!]. The exchange ratios are prices = values.
Second act: to analyze the redistribution of the capitalist surplus, those
same inputs, which are now seen as capitalist commodities, *must* be
reevalued at prices which are now different from values.
[Here, Marx's transformation procedure with the price of inputs
different from the price of outputs is rescued, if you wish, but for
reasons different from yours. If I would pursue this reasoning - mainly
adopting a normalization constraint analogous to the one of the so-called
"new interpretation" - I would say the following. From production [granted
that all value is actualized, etc.] we have a rate of surplus value: i.e.
the ratio between the surplus labour embodied [in what I would call
profit-goods] and the necessary labour embodied [in what I would call
wage-goods]. It is *the* rate of exploitation, and remains that whatever
transformation you do until you're blue in the face. Two exchange ratios
but only one rate of exploitation. At prices of production, the labour
commanded by the profit goods over the labour commanded by the wage goods -
the (gross) profits/wage ratio - will diverge from the rate of
exploitation]
In my view, here we maintain the distinction between capital in
general (vol. I) and many capitals (vol. III), the priority of the
determination of macro magnitudes over individual magnitudes, the
dialectics of essence and appearance - the last point also BECAUSE GROSS
PROFITS DIVERGE FROM SURPLUS VALUE AS SURPLUS LABOUR, AND BECAUSE THE
LABOUR COMMANDED BY THE WAGE IS DIVERGENT FORM THE NECESSARY LABOUR.
What is crucial here is the sequence: concrete/abstract labour =>
labour power/labour => necessary labour/living labour. It is the pivot of
Marx's value theory, FROM WHICH PRICE THEORY DEPENDS. That's all.
BTW, I think that this view represent the working class
perspective. They are interested: as workers, on how much do they work
(living labour); as consumers, on the use values they consume. Capital in
general is interested to: living labour; necessary labour (i.e. the use
values consumed by workers translated in the share of current living labour
whch must be devoted to their production). The fact that 'after the
harvest' the labour commanded by wage goods differs from the labour
embodied in those wage goods, well, FROM A MACRO POINT OF VIEW, ICCL. What
matters for the struggle at the point of production is the forced and
other-directness nature of work.
So you see, in my view, value theory is relevant *also* for the
stationary "equilibrium" solution.
> Evenbody in this case gets the same answers for all the
> things that matter (realrtive prices, profit rate, etc.); the whole
> wave of "transformation problem" solutions, as Samuelson rightly noted,
> are really irrelevant (in the stationary framework)--a stationary price
> model is one in which only RELATIVE prices matter, not the "normalization
> condition" that gets used to create a price/value relation in the
>aggregate. So yes, if prices were never to change, value theory would
> be irrelevant (at least "quantitative" value theory).
Well, I think it is quantitative also the analysis of how profits
emerge. By the way, in vol. I, more or less 1/6 is on money, 4/6 is on how
the surplus is originated, 1/6 on wages, accumulation etc. I take that 4/6
to be the core of Capital vol I, hence the core of the whole of Marx's
project. [May be some would say that this 4/6 of Capital vol I is no
political economy, but sociology: may be, but we have been seeing different
movies. I think they were internal for Marx to the project of a 'critical'
political economy]
>But this doesn't mean that the TSS interpretation, or Marx, are WRONG
> if prices happen to be stationary, as Riccardo at one point seems to
> imply.
See above - thanks for having written "seems".
> Accept for the moment that our interpretation is right, and that
> Marx is factually right. Then the profit rate *is* s/(c+v).
I would rather say: the rate of profit a la Marx is what explains
the rate of profit in the circular models of capital: without the reference
of the latter to the former, the rate of profit a la Sraffa would be
meaningless. EVEN if what would be seen in reality is the simultaneous rate
of profits, what would be truly experienced in work would be the actual
living labour, and the rate of exploitation in Marxian terms - well, of
course, the terms of my Marx.
> If prices
> happen to be stationary for some long period, etc., then the profit rate
> will *happen to equal* the Sraffian/simultaneist rate (r). So in this
> special instance s/(c+v) happens to equal r.
I am not sure I understand. It does not seem to me that s/(c+v)
would be equal to r. However, I agree that if we really go towards a
balanced growth of capital, we have to look at von Neumann rather than
Sraffa, and your equality holds. And what is interesting is that in models
a la von Neumann the value theory as a theory of relative prices is going
quite well. When we discard the issue of the origin of profit and we look
only at the tendency to maximum growth with equal rates of profit, the
quantitative Marx was not so bad, after all [though, I think, the
redundancy argument must be levelled against this concliliation of von
Neumann and Marx: though here again prices = values, labour is simply a
technical way to measure value]
However, once again to be clear. Like Andrew, I do not believe this
"equilibrium" Marx gives a "realistic" picture of capital. Putting again
the extraction of living labour from workers, and dynamic competition, at
the centre of our schema, the tendency would rather be towards unbalanced
growth.
>Thus, the simultaneist
>model is right in one particular special case, while Marx and the TSS
> interpretation are right in this special case AND in all other cases.
> (Given the assumptions of the 2d sentence of this paragraph.)
Steedman would deny that Marx would be right in the special case. Of
course, I think that my picture of Marx is the more general of all 8-)
>Of course, I don't think that equilibrium describes the real world, but I
> do not reject equilibrium modeling/reasoning on that basis. David
> Laibman, rightly in my view, characterizes such a tack as "crude empiricism."
> Please see my EEA paper (1996) for a full discssion of the real reasons
> I think a temporal conception of valuation is necessary (Riccardo has
> this paper; I'll be glad to send it to anyone who doesn't; I think it
> is also available from econ-value). Alan's view might be rather different
> in this regard, also Mino's view, etc.
>
>>Finally, Riccardo's discussion of TSS input prices, the value of constant
> capital, the value of variable capital, etc. is more or less correct. I
> could quibble over some of the formulations, but the basic idea, that the
> C and V depend on the PRICES, not values, of the means of production and
> subsistence, is correct. I do NOT agree however, that this means they
> differ from the labor embodied. I think the physicalist conception of
> labor embodied is quite different from Marx's. I do NOT think that
> for Marx, labor embodied can be translated univocally as "'labor needed
> to reproduce the commodity under current conditions." Embodiment is a real
> (though fetishistic and nonphysical) process in which living labor becomes
> dead labor, "congealed labor," etc. Also, value is transferred from
>means of production to the product, which takes TIME (this has been much
> discussed, especially between Fred and I). ... Also in this regard,
> Marx, even from the very outset (Ch. 8 of Vol. I of _Capital_, never
> IDENTIFIES the value of constant and variable capital with the value of
> means of production and subsistence (or labor-power). C and V are
>DEFINED as SUMS of VALUE ADVANCED, and so MP and LP are, as he says 2 pages
> from the end, simply different *forms of existence assumed* by the capital
> when it enters production; they are not the capital itself (it has 2 forms
> at this point, money, and physical). So, quite obviously, the constant
>and variable capital advanced can differ, although the amount and value
> of the MP and MS remain the same, if they are bought at changing prices.
> And in general, the value of the capital is the value laid out for MP and
> LP (which depend on the prices of MP and MS, and the quantities purchased)
> and not the "value of" the MP and LP.
Granted that Marx's was not a "physicalist" view - though my
reasons may differ, we agree on the point. However, I think that the labour
contained in the commodities is definitely not the labour 'bought' in
circulation by those commodities, as you seems to imply.
I have a more general doubt (suspect, or whatever). That in this
way a lot of the TSS are departing from what was valuable in Marxian
'orthodoxy' some time ago, losing the centrality of production in any
meaningful sense, and eventually replying all the charges against Marx
simply becaus redefining the categories so that Marx's text and the desired
results coincide. Well, I understand you disagree, and have ready some
thousands of quotes there confirming your points, so for the moment I leave
my argument here in this pitiful state.
>Yes, this does guarantee that there's no logical incoherence in Marx's
> transformation, etc. And again, Marx's value theory--and ALL value
> theory--is "redundant" if prices are always stationary.
No: if Marx's value theory is what links the distribution of
economic magnitudes to their *formation*, his value theory is not redundant
for its aim - of course we cannot define the aims of Neoricardian theorist,
and viceversa. We must be internally coherent, and have a firm grasp on our
"real" object.
Yes, it is redundant if value theory is merely a theory for
determining prices.
Don't you think that this is a wonderful result? Marx's
contradictions are in fact explained by Marx's theory itself - that is,
fetishim: the process of reification is lost in the thing itself.
> But otherwise
> Marx's theory is neither redundant nor tautologically true.
>
>If we have the price equation
>
>P(t+1) = P(t)*(A+bL)(1+r[t])
>
>(the usual Sraffian equation, except that input and output prices differ),
> then, if we take the input prices as historically given (as Marx does),
> there is ONE remaining unknown, r[t]. MARX "solves" the system by saying
> the profit rate is determined in production, before outputs go to market,
> so that r[t] = s[t]/{c[t]+v[t]}. But this is not tautological.
>Neoclassicists will generally say r is zero, at least in equilibrium. And
> there can be other theories as well. All will yield *different* predictions
> for prices. But what is simply untenable, as a general theory, is to
> wish value theory away by forcing input prices to equal output prices.
>
Well, I hope you find my reply as useful as I found yours. Thanks again
riccardo
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Riccardo Bellofiore e-mail: bellofio@cisi.unito.it
Department of Economics Tel: (39) -35- 277505 (direct)
University of Bergamo (39) -35- 277501 (dept.)
Piazza Rosate, 2 (39) -11- 5819619 (home)
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