A reply to Allin's ope-l 4220:
Allin writes that I "succeeded in constructing an example of a set of
transformation tableaux that displays balanced reproduction, and an equalized
rate of profit each 'period', without introducing the arbirary variation in
the rate of expansion of capital-value across the sectors that I detected in
his example for the 1996 value theory conference."
I didn't claim that my example "displays balanced reproduction," only that
rates of accumulation of value were equal even though prices were changing.
We had long ago disposed of the myth that Marx's transformation necessarily
disrupts reproduction; now Allin seemed to imply that it is incompatible with
equal rates of accumulation, and I showed that this wasn't the case.
But my example didn't display "balanced reproduction," if by that is meant
equal rates of growth of all physical quantities. There are three things that
cannot all be true at once: equal rates of growth of all physical quantities,
equal rates of accumulation of value, and nonstationary prices. But
nonstationary prices are compatible with equal rates of growth of all physical
quantities, and with equal rates of accumulation of value.
I think Allin and I are agreed that whether the growth rates of this or that
are equal is not the real issue. Rather, the real issue is whether Marx's own
transformation is compatible with the condition that all supplies and demands
are equal. Allin writes "Marx's problem was how to show the compatibility
between his value theory and the equalization of profit rates, and without
supplies = demands, equality of profit rates could only be a fleeting random
occurrence of no theoretical import."
This is exactly right, IMO. There can certainly be equalization of profit
rates even though physical quantities change at different rates, and there can
certainly be equalization of profit rates even though rates of accumulation of
value differ. But unless supplies and demands are equal, "equality of profit
rates could only be a fleeting random occurrence of no theoretical import."
Now, I wish to call Allin's attention to the demonstration, contained in the
very paper he has been critiquing, that our example is one in which not only
are prices changing and the rate of profit is uniform, but also all supplies
and demands are equal. Given the recent talk of "arbitrary" this and
"cooking" that and smaller vs. larger infinite sets of the other, it may be
thought that this example is some sort of special case. It is not. It is
entirely general. Ted and I have noted this generality in different ways in a
few different papers. In every presentation of the transformation, we have
taken care to show that all supplies and demands are equal and that each
sector's sales equal its purchases. The basic point is this: whether
supplies and demands are equal is a matter of *quantities*, not prices. If
the quantities of everything supplied and demanded are equal, then the
monetary supplies and demands are necessarily equal as well, *whatever* the
vector of prices may be. If some quantities do not balance, then the monetary
supplies and demands are necessarily unequal as well, *whatever* the vector of
prices may be.
This is true for a very simple reason: the sale price is *always* equal to
the purchase price. It must be the case. Thus, if Sj is the sum of the
quantities of item j supplied, Dj is the sum of quantities demanded, and Pj is
the price, then if Sj = Dj, then Pj*Sj = Pj*Dj. If Sj not = Dj, then Pj*Sj
not = Pj*Dj. Although the input prices and the output prices of the *same*
period may not be equal, the output prices of *this* period and the input
prices of the *next* period are necessarily equal (unless one is a
simultaneist), and this means that there is no problem of "getting the prices
right" *separate and apart* from the problem of "getting the quantities
right."
Hence, it is *impossible* that Marx's transformation disrupts the equality of
supplies and demands by letting prices change over time. Hence, there is
nothing arbitrary or "cooked" about our illustrations of the transformation.
Iif we wish to show "transformation" of input prices, we do need to specify
some output-input relations, but we could assume *any* output-input relations,
as long as they let supplies = demands (again we have to assume supplies =
demands because it is necessary for uniform profitability). And once we do
so, the equality of monetary supplies and demands, and of each sector's sales
and purchases, follows as the night the day. The "transformation problem" is
a non-problem.
Bortkiewicz tried to disprove this. But, as Ted and I have noted,
Bortkiewicz's alleged disproof is fatally flawed: he assumes that the "C" and
the "V" at the *start* of the period "buy back" the means of production and
wage goods produced at the *end* of the period. If that were the case, then
equality of supplies and demands would indeed require stationary prices. Yet
Marx's schema of expanded reproduction show that this underconsumptionist
"buying back" concept is wrong: it is the advance of capital in the *next*
period that purchases the means of production and wage goods produced in
*this* period. As Anwar Shaikh has rightly noted, the "buying back" concept
would make accumulation impossible!
Allin writes: "I can't accept as Marx's, or as scientifically profound, a
definition on which the value of a commodity is the sum of the *price* of the
means of
production (however determined) plus a share of aggregate profit in
proportion to the variable capital advanced - as opposed to the amount of
labour-time necessary to produce the commodity given technology and labour
practices."
Nor can I. The TSS "definition" of a commodity's value is precisely that it
is determined by "the amount of labour-time necessary to produce the commodity
given technology and labour practices." We just have an interpretation of the
meaning of "labour-time necessary to produce the commodity" that makes sense
of what Marx was saying and replicates his theoretical results. Moreover, the
stuff about "share of aggregate profit in proportion to the variable capital
advanced" is absurd and false. In our interpretation, value added is the
(monetary expression) of the living labor extracted in capitalist production.
There is no reason to think that variable capital is proportional to living
labor extracted (i.e., wage rates and exploitation of labor in production
aren't always equal across sectors).
Allin also writes: "My fundamental objection to the TSS conception is, and
always has been, that I see it as departing from the conception of 'value' (a)
that I consider Marx to have held and (b) that I find most scientifically
fruitful."
I have no problem with this. I'm not asking Allin, or anyone else, to embrace
the TSS interpretation. All I want our critics to do is to state PUBLICLY, IN
PRINT, AND WITHOUT EQUIVOCATION that the TSS interpretation has disproved
charges of internal consistency in Marx's value theory and that it can
replicate many crucial theoretical results of Marx's that their
interpretations cannot, while the reverse is not the case. Then they can
state their objections to it, and, for all I care, go on objecting to it from
now until doomsday.
There is book after book, article after article out there that states false
things about the transformation, the law of the falling rate of profit, etc.,
etc. -- and they keep coming out (see the Brewer tirade in HOPE.) If you want
to debate different conceptions, as to their faithfulness to the text, and as
to their profoundity or whatever, fine. There will be TSSers to debate this.
But the facts are that we have produced an interpretation which eliminates the
appearance of internal inconsistency in Marx's value theory and which,
according to existing evidence, replicates his theoretical results in every
respect. These facts remain facts *whether or not* anyone else thinks we have
the most faithful interpretation or the most profound, etc. The historical
record must be corrected to reflect these facts and have them be known. It is
a matter of simple intellectual honesty.
Andrew Kliman