I have been very interested in the recent discussion between Duncan and Paul
C. about Marxian empirical research, and the justification for doing Marxian
empirical research in terms of money and prices, rather than in terms of
labor-times.
Paul explained that he and Allin were originally motivated to do their
empirical work on the correlation between prices and labor-times to overcome
objections by referees from Capital and Class that their estimates of the
rate of profit and the rate of exploitation were in terms of prices, and
that this was illegitimate because Marx's concepts are in terms of
labor-values. Their estimates showing a strong correlation between
individual prices and values provided a justification for their macro
estimates in terms of prices.
I agree with Duncan that "this story is a good example of the way in which
the embodied labor coefficient dogma has tended to strangle imaginative and
original
empirical work in the Marxist tradition" (2529). But I was pleased to be
reminded that the ultimate objective of Paul and Allin's work was the
derivation of macro-price estimates that related to Marx's theory of
immiserisation and theory of the falling rate of profit. This got lost in
my own mind (and perhaps others') because the individual price-value
correlations have been emphasized much more in recent discussions.
Duncan said (in 2511) that his motivation for doing empirical work in terms
of prices was to rescue the LTV as an operational theory that could analyze
capitalism at the phenomenal level of the national income and asset
accounts. Duncan did not in this post explicitly explain his theoretical or
empirical justification for taking this approach. I might be able to guess
what Duncan's justification would be from his published works, but I will
let Duncan speak for himself.
My own justification for doing Marxian empirical research in terms of prices
(e.g. my book on the Falling Rate of Profit) is that Marx's concepts of
constant capital, variable capital, and surplus-value are in fact defined in
terms of MONEY: quantities of money-capital that are invested and recovered
in the capitalist economy as a whole. This is seen most clearly by the
general concept of capital, of which constant capital, variable capital,
and surplus-value are components parts. As is well known, capital is
defined by Marx in Chapter 4 of Volume 1. This definition of capital is in
terms of money: capital is money that makes more money, expressed
symbolically by the familiar M - C - M'. The title of Part 2 is "The
Transformation of Money into Capital", which also suggests that capital is
defined in terms of money, money that performs certain unique functions and
undergoes a unique form of circulation that makes this money capital.
Constant capital are defined in Chapter 8 as the two components of the
initial money-capital (M) that initiates the circulation of capital, and
therefore are also defined in terms of money. Constant capital is the
money-capital used to purchase the means of production. Variable capital is
the money-capital used to purchase labor-power. Surplus-value is defined in
Chapter 4 as delta M, the increment of money that emerges in the third phase
of the circulation of capital and that transforms money into capital.
Therefore, not only is it LEGITIMATE to estimate constant capital, variable
capital, and surplus-value in terms of money, is NECESSARY to do so. Money
and prices are the observable phenomena to which these concepts refer.
I recognize of course that according to Marx's theory, these observable
phenomena of money and prices are explained by quantities of labor-time.
But the labor that explains the quantities of money and prices is ABSTRACT
SOCIAL LABOR, which is not directly observable as such. The unit of
abstract labor is labor without special skills and of average intensity. No
one has yet (so far as I know) devised an appropriate way to estimate
abstract labor. This requires a conversion of skilled labor to unskilled
labor and a conversion of labor of unequal intensities to labor of average
intensity. Therefore, it appears to be very difficult, and perhaps
impossible, to derive rigorous estimates of abstract labor. Not only is it
not necessary to justify Marxian empirical research in terms of prices by
means of correlation between prices and labor-times, it may even be
impossible to do so rigorously (i.e. in a way that is consistent with Marx's
concept of abstract labor).
It is not clear to me how Paul and Allin estimate abstract labor in their
Capital and Capital article. They mention that they tried two different
methods to estimate abstract labor, and refer to "discussions of Models A
and C below" for further description of these methods, but I was not able to
find these discussions in the article. Perhaps the Capital and Class
referees, after insisting that you do this unnecessary empirical test, then
made you cut the description of your estimation procedures.
Paul or Allin: would you please send me this description of your methods of
estimation? Perhaps you have solved this very difficult problem. But, even
if you have, I would still argue that this type of correlation analysis of
individual prices and values is not necessary to justify Marxian empirical
research in terms of prices.
Comradely,
Fred