This is a reply to Riccardo's (2092) and Andrew's (2095) on the
Kliman-McGlone interpretation of the transformation problem.
1. One of the main points of the KM interpretation, which is discussed by
Riccardo, is that the value of constant capital and the value of labor-power
are not equal to the values of the means of production and the means of
subsistence, respectively. I agree with this point and have argued as much
in published work and in previous posts. I argue (and I think that Andrew
and Ted and Alan would agree) that the reason for these inequalities is that
constant capital and variable capital are not determined as the values of
the means of production and the means of subsistence, as in the standard
Sraffian interpretation, but are instead TAKEN AS GIVEN as quantities of
money-capital that purchase the means of production and labor-power. The
value of constant capital and the value of labor-power are then determined
as the value represented by these given money quantities of constant capital
and variable capital. This is one of the main points of agreement that has
emerged in recent work of the "new orthodox Marxists" (as David Laibman has
called us) and our challenges to the Sraffian interpretation of Marx's theory.
I argue further that this interpretation of the determination of constant
capital and variable capital is based on a broader methodological
interpretation that the INITIAL GIVENS, or the initial data with which the
theory begins, in Marx's theory of surplus-value and in his theory of prices
of production are quantities of money invested as capital, not the physical
quanities of the technical conditions of production and the real wage. This
is one of the two main points that distinguishes Marx's logical method from
the method of linear production theory (or of the Sraffian interpretation of
Marx's theory) (the other main point is the prior determination of the rate
of profit; more about that below). I have presented methodological
arguments and textual evidence to support this interpretation and would be
happy to summarize these arguments in a later post. But for now, I just
want to emphasize this fundamental methodological point - that the initial
givens in Marx's theory are quantities of money-capital, not the technical
conditions and the real wage.
2. By way of comparison and partial critique, the "new solution"
interpretation of
the transformation problem is similar to the above interpretation in the
sense that it also assumes that VARIABLE CAPITAL is taken as given as the
quantity of money-capital used to purchase labor-power, and that in general
this quantity of money-capital will not be equal to the value of the means
of subsistence. However, the "new solution" is different from the above
interpretation in the sense that it assumes, to the contrary, that CONSTANT
CAPITAL is NOT taken as given as the quantity of money-capital used to
purchase the means of production, but is instead derived in the Sraffian way
- from given means of production - and is in general equal to the value of
the means of production. Thus, there seems to be an important inconsistency
in the "new solution" between the two different methods used to determine
constant capital an variable capital. It seems to me that, since both
constant capital and variable capital are components of the total capital
invested, these two components should be determined in parallel fashion.
Either they both should be taken as given as given in money terms, as I
argue they are in Marx's theory, or they should both be derived from given
physical quantities, as in the Sraffian interpretation.
3. With respect to the Kliman-McGlone interpretation, they accept the above
method of determination of constant capital and variable capital, but only
for A GIVEN PERIOD OF PRODUCTION. On the other hand, ACROSS PERIODS OF
PRODUCTIONS, or over the entire transformation process, they, in my opinion,
essentially revert to the Sraffian interpretation of the determination of
constant capital and variable capital - the inital givens that remain
unchanged across periods of production are the physical quantities of the
means of production and means of subsistence, and constant capital and
variable capital are derived from these given physical quantities and change
from period to period as a result of the transformation from values into
prices of production. Because the magnitudes of constant capital and
variable capital change from period to period, the rate of profit also
changes across periods, so that the rate of profit at the end of the
transformation process is not the same as the rate of profit at the
beginning of the transformation proces. These results, contrary to Marx's
own results, are essentially the same results as in the Sraffian
interpretation of Marx's theory. Andrew has also acknowledged (in 2095)
that, in the case of stationary prices (i.e. at the end of the
transformation process), the prices and the rate of profit determined
according to their interpretation are the same as the prices and the rate of
profit determined according to the Sraffian interpretation. I argue that
the reason KM's interpretation leads to the same results as the Sraffian
interpretation is that, across periods of production, they have adopted
essentially the Sraffian interpretation of the method of determination of
constant capital, variable capital, the rate of profit, and prices of
production - all derived from given unchanging physical quantities.
4. However, it is not true, as Andrew seems to suggest, that the assumption
of stationary prices ALWAYS leads to the same results as the Sraffian
interpretation. My interpretation of the determination of constant capital
and variable capital assumes stationary prics (i.e. assumes that the
equalization of
profit rates is complete), but does not lead to the same results as the
Sraffian interpretation. According to my interpretation, prices of
production are determined by the equation:
Pi = ci + vi + rMi
where ci, vi, Mi are TAKEN AS INITIAL GIVENS, as quantities of money capital
advanced to purchase means of production and labor-power in each industry
(ci and vi are flows and Mi is a stock), and r (the general rate of profit)
is determined by the prior analysis of capital in general in Volume 1 and is
taken as given in the determination of prices of production; r is NOT
determined simultaneously with prices of production from given physical
quantities. The key difference between my interpretation and the Sraffian
interpretation is the determination of the rate of profit. That this
different method of the determination of the rate of profit leads to
different results can be seen from the fact that the two theories yield
different conclusions with respect to the effect of technological change in
luxury goods industries on the rate of profit. As is well known, according
to the Sraffian interpretation, technological change in luxury goods
industries has no effect on the rate of profit. However, according to my
interpretation, technological change in luxury goods industries generally
changes the composition of capital in luxury goods industries, and thus also
(to some extent) changes the aggregate composition of capital for the
economy as a whole, upon which the rate of profit depends. Since the
aggregate composition of capital changes, the rate of profit also changes,
contrary to the Sraffian interpretation. Therefore, the rate of profit, and
hence also the prices of production according to my interpretation will be
different the rate of profit and prices of production according to the
Sraffian interpretation.
5. These different results also provide part of the answer the "redundancy"
critique of the labor theory of value, raised by Riccardo. Because the
labor theory of value leads to different conclusions regarding the rate of
profit and prices of production, the labor theory of value is not redundant,
but rather a DIFFERENT THEORY of the determination of the rate of profit and
prices of production from Sraffian theory, or linear production theory.
6. In conclusion, there is at least partial agreement between the KM
interpretation and my interpretation on the key issue of the determination
of constant capital and variable capital, or the nature of the initial
givens in Marx's theory (whether quantities of money-capital or physical
quantities). But important differences remain, which I hope we can continue
to discuss, and hopefully eventually to resolve.
In solidarity,
Fred