A reply to Ajit's ope-l 4912.
I have shown that Sraffa does not prove that the magnitude of an equalized
profit rate is unique, even if relative prices are stationary between the time
of input and the time of output. Ajit's objection to my demonstration was
that my prices were measured in dollars, but there are no dollars in Sraffa's
construction.
I responded :
"We can debate whether Sraffa was referring to a mythical economy without
'dollars,' or whether he intended his constructions to have some bearing on
actual economies. That would make for an interesting discussion, perhaps, but
note well that I – and Ajit – have been talking all along about 'an economy,'
i.e., any economy."
.. "Hence, I was fully aware all along that one can postulate imaginary
conditions in which 'prices do not change unless technology, real wages, or
relative profit rates change.' My reference to Sraffa's non-proof has been
posed from the beginning as an example ('For instance') of a result WHICH
APPLIES TO SOME IMAGINARY ECONOMY, BUT NOT NECESSARILY TO AN ACTUAL ECONOMY."
Ajit has now defended his objection by dismissing economic arguments that
refer to the real:
"In economics the word 'real' is used only as a rhetorical devise, and has
implied impact only on feeble minded."
Given this position, Ajit should have no difficulty agreeing with my proposal,
in the post to which he responds, on how we can settle this debate:
"I'm happy to let Ajit pursue his theory, in which the profit rate is
determined solely by technology, real wages, and relative profitability, given
only that he makes clear that the results of that theory do not necessarily
apply to any actual economies, and that such results cannot be used as
'proofs' that propositions concerning actual economies are false. Agreed?"
but his reply doesn't take up this point. So I reiterate my proposal now.
Curiously, despite Ajit's dismissal of economic arguments that refer to the
real, in the same post he objects to my demonstration that the profit rate
doesn't necessarily equal Sraffa's rate on the ground that my profit rate is
not the REAL profit rate!!
"... the *real* value of 'capital' would not change, and the profit must be
calculated on the *real* value of investment and not on the nominal value of
investment." [emphases added]
In ope-l 4638, he similarly invoked the real:
"I think given *real* wages in Marx is very important. His rate of
exploitation is an objective measure and not a monetary measure. ... So a
change in workers consumption should change the necessary labor-time. It
basically means a change in *real* wages." [emphases added]
as he did in ope-l 4678:
"As I said, time and time again, for a time period of a business cycle or so,
say long term, the *real* wage basket, on the average, is held constant.
However, in the secular time period it has a downward tendency." [emphasis
added]
and in ope-l 4710:
"In a response to Jerry, I gave the evidence from India, where money wages
have risen considerably over the last few years but not the *real* wages.
Money wages have a tendency to adjust to *real* wages rather than *real* wages
adjusting to some *given* money wages--at least not in any long term sense."
[all emphases except last added]
and in ope-l 4786:
"My point is that in the long term perspective money wages adjust to *real*
wages. Even when the class-struggle has influence (ie. upward influence), it
must be on *real* wages and not just money wages. When you take *real* wages
as determined in a socio-historical process, ie. independent of the
determination of the prices of other commodities, then you can work out an
objective measure of exploitation." [emphases added]
There's a lot more like this, but I think the point is clear.
It thus seems to me that Ajit's objection to discussion of the real in
economics is contrary to his own practice. It also seems to me that his
objections to my demonstration of Sraffa's non-proof are self-contradictory,
so that my demonstration stands.
BTW, since I myself have no objection to discussion of the real, I agree that
nominal money figures should (in certain contexts) be adjusted to obtain real
figures in measuring the profit rate. At this point, the problem arises:
what are the real figures? Those who hold to a use-value theory of value
assert that the real is a quantity of use-value, e.g., a quantity of the
"numeraire" or of the standard commodity, etc. This is based on the
metaphysical proposition that because a bushel of corn is identical physically
to a bushel of corn, a bushel of corn is always worth as much as a bushel of
corn. At least that seems to be the basis of it -- I've scoured the
literature in search of an explicit justification for this reduction of value
to use-value, but haven't found anything but assertion; the "argument" I've
just given is what I've been told when I've pressed the point. Its
proponents evidently consider it self-evident.
That does not make it any less of a metaphysical proposition. It is therefore
not possible to show that my demonstration is invalid by invoking this
proposition, as Ajit does. All well and good if the critics of TSS happen to
*believe* in it, but it must be recognized that no matter how much they
rhetorically invoke "objectivity," their "proofs" rest on metaphysical belief.
So do the objections to the TSS refutations of the Okishio theorem and
vindication of the internal coherence of Marx's law of the tendential fall in
the profit rate.
Curiously, those who object most strenuously to Marx's view that a unit of
(insert nitpicky qualifiers here) living labor always creates the same amount
of value are almost always the ones who accept *unquestioningly* that a unit
of the numeraire always has the same value!
I do not think this was Marx's concept of real magnitudes. He does not
contrast real magnitudes to value magnitudes. For him, the real magnitudes
are themselves value magnitudes. Once one adjusts the value magnitudes
(measured in money) for changes in the monetary expression of value (MEV) or,
equivalently, measure them directly in labor-time, one has the real
magnitudes. Thus, in his discussion of the falling rate of profit, he reasons
in terms of labor-time, not money, not corn.
This alternate concept of what is real is based on the proposition that a unit
of (insert nitpicky qualifiers here) living labor always creates the same
amount of value. This seems to be metaphysical as well, but Marx attempted to
derive it, not take it for granted.
Andrew Kliman