A reply to Allin's ope-l 4165 and ope-l 4180. To understand the significance
of his ope-l 4165, one needs some history. Then I'll get to the new stuff.
HISTORY
The oldest and most prevalent objection to the TSS vindication of the internal
consistency of Marx's account of the transformation of values into production
prices is the "replacement cost" objection. That is, the TSS interpretation
of the transformation does not equalize the replacement cost "profit rates,"
which are computed by valuing inputs as well as outputs on the basis of
post-production prices. The alleged problem with this is that, GIVEN CAPITAL
MOBILITY, capitalists commit their capital to the industry yielding the
highest replacement cost "profit rate," and that therefore --- again, GIVEN
CAPITAL MOBILITY --- differences among various industries' replacement cost
"profit rates" tend to be eliminated, so that prices of production are those
prices that correspond to uniform replacement cost "profit rates."
Recent posts of mine (as well as earlier ones) have demolished this argument.
I showed that, GIVEN CAPITAL MOBILITY, profit-maximizing capitalists will seek
the highest expected historical cost profit rate and that the "replacement
cost" profit rate is not a profit rate in any sense that capitalists care
about. GIVEN CAPITAL MOBILITY, profit-maximizing capitalists will *always*
choose to invest in an industry that yields the highest expected historical
profit rate rather than in an industry that yields the highest present
replacement cost "profit rate" or in an industry that yields the highest
expected future replacement cost "profit rate."
Allin implicitly acknowledged that all this was true, *unless* capitalists
treat the industry in which they invest as a "going concern." I agreed, but
noted that what he meant by "going concern" contradicted the premise of
CAPITAL MOBILITY, the very premise upon which profit rate equalization rests.
Hence, it makes no sense to require that replacement cost "profit rates" be
equalized for prices of production to exist. Hence, this alleged problem with
the TSS interpretation of the transformation is a non-problem. Marx's own
transformation and its TSS interpretation are vindicated.
NEW STUFF
In ope-l 4165, Allin implicitly acknowledges that my critique of his "going
concern" argument is correct. He writes:
"My point does not require full 'lock in' or perfect immobility of capital --
it merely requires that the costs of moving from one real sector of production
to another are appreciable, as they obviously are."
This is an implicit acknowledgment that replacement costs would not matter in
the absence of barriers to exit, and that the degree to which replacement
costs matter is directly related to the degree of immobility of capital.
What follows from this acknowledgment is that
(a) replacement cost "profit rates" cannot be equalized
(b) it is absurd to require that prices of production equalize them
(c) the only profit rates that could ever be equalized are historical cost
profit rates
(d) the uniform profit rates in Ch. 9 of Vol. III of _Capital_ are historical
cost profit rates
(e) the TSS interpretation accurately depicts the equalization of profit
rates in Marx's transformation
and, since the TSS interpretation, if valid, vindicates the internal coherence
of Marx's transformation
(f) no valid objection to the internal coherence of Marx's transformation has
ever been made; all have been refuted
This should be acknowledged. Unequivocally. In print.
With respect to ope-l 4180, I have to say the following. Allin has now
changed his objection. The new objection is that a particular implication of
the TSS transformation (equalized profit rates can coexist with unequal rates
of accumulation) strikes him as "odd." First, it doesn't strike me as odd.
Second, "oddness" doesn't make it impossible. (I find most laws of physics
odd, i.e., contrary to my intuition.) Third, the TSS transformation account
shows that it *IS* possible. Fourth, "oddness" doesn't mean the TSS
interpretation is internally incoherent. Fifth, "oddness" doesn't mean that
it differs from Marx's account. Sixth, "oddness" doesn't mean that Marx's
account isn't internally coherent.
The number of potential objections to the TSS interpretation is infinite.
Therefore, to require that we first refute them all --- including those that
haven't been dreamt up yet --- before one acknowledges the internal coherence
of Marx's value theory, and the accuracy of the TSS interpretation as a
representation thereof, is to put off judgment day forever. It is a pure
stalling tactic. What needs to be acknowledged is that the *evidence to date*
shows that there's no demonstration that Marx's value theory is internally
coherent and that the *evidence to date* shows that the TSS interpretation is
best able to replicate its theoretical conclusions. It is of course always
possible that someday some objection might be shown to be valid, just as some
objection to the theory that the earth revolves around the sun might someday
be shown to be valid. But wouldn't it be a monstrous affront to truth and
knowledge to require that all potential objections to the Copernican theory be
refuted before one acknowledges that the *evidence to date* clearly indicates
its superiority?
Andrew Kliman