A reply to Mike Williams' ope-l 5027.
Mike: "The price/Money system and the value system are in fact not separate
systems at all, nor is there a one way 'causal' relation from value to price.
They are constitutive moments of the same, single, system. (Which is why I
cannot understand Andrew K's apparent exasperation with the ideal-real value
string)."
I don't know why you think I'm exasperated. I don't think I am.
You are using "single-system" here in a different sense than Ted and I (for
instance) have. One difference is that, as we have used it, the single vs.
two system distinction doesn't refer to money vs. labor-time. Bortkiewicz
measured both values and prices in money, but definitely had two separate
systems of price and value equations instead of Marx's one. The
misinterpretation of value as labor-time and price as money is a derivative
and later error.
Second, we mean by "single-system" something different from "They are
constitutive moments of the same, single, system." "Constitutive moments"
carries ontological and structuralist connotations we do not intend. In
interpreting commodity values and prices of production in Marx's theory as
opposed terms in a single-system, we were not concerned with the relations
between the abstract entities "value" and "price," but with the quantitative
relation between the value magnitudes and the price magnitudes of a given
period. Also, we certainly were not trying to use the phrase to suggest that
everything determines everything; rather, we hold that, for Marx, price of
production and average profit are *forms of* value and surplus-value. This is
shown by the fact that competition and the market simply redistribute but do
not alter the already determined sums of value and surplus-value.
This does not mean there is a "one way 'causal' relation from value to price."
In the TSS interpretation, input prices are determinants of the magnitude of
constant and variable capital advanced, while surplus-value and the "value"
rate of profit are determinants of the magnitudes of output prices. Thus one
could say that value and price interpenetrate. But again, we are not
concerned with abstract terms. In the traditional debate, people were arguing
over whether "values" unilinearly determine prices or not. Wolff, Roberts,
and Callari came along and said the determination is two-directional; "values"
and prices are "overdetermined." (Actually, however, in both one- and
two-system simultaneist interpretations, technical and real wage coefficients
determine everything -- unidirectionally.) The TSS interpretation dissolves
this whole problematic by situating the whole thing in historical time.
Rather than ask questions about timeless abstractions, we ask how the
particular price and values magnitudes of this moment are determined.
I am appending part of a recent paper of mine which addresses these issues
further. I would appreciate Mike Williams' (and others') comments on it, and
to my remarks above, since we're now being asked how our interpretation
relates to the "value-form" interpretation. At present I have difficulty
answering largely because I am unsure of the "value-form" view of the
quantitative relations of determination of the capitalist system.
WHY RELATIONS OF DETERMINATION IN MARX'S VALUE THEORY MUST BE TEMPORAL
Recently, in a paper comparing the TSS and simultaneous interpretations,
Laibman (1996: 12, 4, emphases added) has written that "[s]imultaneous
equation models ... capture one *essential* aspect of the capitalist economy:
interdependence among atomistically separated units of control" and that they
show exploitation to be "inseparable from the entire web of interconnections
in the structure of production *and exchange*." These are indeed implications
of the simultaneist constructions, yet the implications of Marx's theory, and
his theoretical intentions, were the exact *opposite*.
In his discussion of the value/production price transformation, Marx supposes
at one point "that the five different capital investments in the above
example, I-V, belong to one and the same person." Whether this person's
accounts recorded profit where it arose or imputed it to each investment in
proportion to its size, the "total price of commodities I-V would ... be the
same as their total value. ... And in the same manner [this is the case] for
the commodities produced in society as a whole" (Marx 1981b:259). Whether
ownership is collective or atomized, the result is the same.
Elsewhere, Marx's transformation account abstracts from the multiplicity of
capitals by examining the "total social capital." This concept, however, has
much the same theoretical import:
in considering the total social product ... it is necessary to avoid falling
into the habits of bourgeois economics, as imitated by Proudhon, i.e. to avoid
looking at things as if a society based on the capitalist mode of production
lost its specific historical and economic character when considered *en bloc*,
as a totality. This is not the case at all. What we have to
deal with is the collective capitalist (Marx 1981a:509).
Hence, as Marx himself stressed, the main purpose of the Ch. 9
transformation, and of Volume III as a whole, was to show that competition and
multiple ownership do not alter the laws of value and surplus-value in any
way. He had developed these laws in Volume I on the basis of the
capital-labor relation in the immediate (unmediated) process of production,
without regard to how they are mediated (i.e., brought about through the
agency of) competition. Now he wished to show that the only thing that
competition alters is the form in which these laws appear; in society as a
whole they continue to hold exactly as he had developed them in Volume I.
Thus, for Marx, the essence of capitalism, that what gives it its "specific
historical and economic character" is thus its mode of *production*. Whether
this mode of production appears in the *form* of a competitive society of
atomized owners, or a collective society in which the total capital "belongs
to one and the same person," its *essence* is unchanged.
This is what he *wished* to show. He was *able* to do so by means of a
temporal conception of valuation. The problem is that competition does indeed
matter. When Marx claimed that it does not alter the law of value, he was
certainly not suggesting that competition has no effect. He was acutely aware
that the exchange of last period's outputs at prices different from their
values will *affect* the capital outlays and thus the output prices, profits,
etc. of the current period. If one forgets this, "there is always the
possibility of an error" (Marx 1959:165).
Yet Marx held that value and surplus-value cannot be *created* in
circulation. Competition cannot alter the sums of value and surplus-value
that have already been created, because they have created *before* the outputs
go to market. Hence, current output prices, profits, etc. will differ from
what they would have been had value been distributed differently in the past,
but only because of *previous* periods' deviations of prices from
values--"this error in the past" (Marx 1981b:265).
"As soon as the amount of surplus labour it has proved possible to extort has
been objectified in commodities, the surplus-value has been produced. But
this production of surplus-value is only the first act .... Now comes the
second act in the process. The total mass of commodities, the total product,
must be sold .... The conditions for immediate exploitation and for the
realization of that exploitation are not identical. Not only are they
separate in time and space, they are also separate in theory" (Marx
1981b:352).
The key to Marx's reconfirmation of the law of value in the real world of
competition was precisely his theorization of the temporal and spatial
separation of production and circulation. He accomplished this by means of
the circuit of capital (M-C ... P ... C'-M'). *First*, there is the
acquisition of commodities on the market (M-C). *Then* the commodities enter
into the production process (C ... P ... C'). *Then*, as soon as the living
labor extracted therein has been objectified in new commodities, the total
value and surplus-value have been produced. What happens *next*, when the
commodities go to the market and are sold (C'-M'), cannot change the value
magnitudes produced, and can certainly not alter the prior advances to
production retroactively.
What's done is done. The profit rate is "prior" to output prices, not
ontologically or logically, but temporally. It is the determination of the
profit rate in the production process, before commodities go to market, that
determines the magnitude of prices as a whole in Marx's theory.
All this may seem to be "crude empiricism," but if so, it is not something
the TSS interpretation has invented. In any case, its purpose was to avoid
being ensnared in the "web of interconnections" to which Laibman refers:
The annual process of reproduction is easily understood, as long as we look
solely at the sum total of the year's production. But ... movements of the
individual capitals and personal revenues cross and intermingle, and become
lost in a general alternation of positions, i.e., in the circulation of
society's wealth. This confuses the onlooker" (Marx 1977:737).
The web of interconnections make it difficult to distinguish between the
different effects of different processes: production "determines" value,
exchange "determines" value, demand "determines" value, etc. In popular
language, capitalists need all of these to "make money." Simultaneous
equation models add to the confusion by making it seem as if it is all
happening at once.
Yet by reconstructing the temporal and spatial separation of these distinct
processes in the realm of theory, Marx was able to trace the money-making to
its origin, to maintain that surplus-value, though realized for the
capitalists in the market, is created in the production process. He was able
to avoid the circularity of "cost of production" theories, which determine
profit as the excess of price over cost and price as cost plus profit, by
maintaining that the magnitude of profit is determined as a result of
production, before the sale of outputs. He was thus able to separate the
class antagonism between capital and labor in the production process from the
rivalry of all against all in the market, and to maintain that the
specifically capitalist mode of extorting surplus labor is the essence of
capitalist society, whatever may be the forms of property and distribution in
which it appears.