A reply to Ajit's ope-l 5296.
Ajit writes: "The big problem with you Andrew is that you don't understand
plain English. Go and read the passage you had quoted from Marx again, and
this time real slow. ... x+a in Marx's example is not revenue. Marx is not
talking about a situation where even simple reproduction will not be possible.
I think you would develop a good critique of your own theory if you started to
read Marx a bit closely."
Here's the passage in question:
"If the annual surplus-value on a capital C = x, for example, the cheapening
of those commodities that go into the consumption of the capitalist may bring
it about that x - a is sufficient to procure the same means of satisfactions,
etc. as before. A portion of the capitalist's revenue = a is thus set free
and can now serve either to expand his consumption or be transformed back into
capital (accumulation). Conversely, if x+a is required in order to continue
with the same mode of life, either this expenditure must be restricted or else
a portion of income = a that was previously accumulated must now be spent as
revenue" (Karl Marx, _Capital_, Vol. III, Ch. 6, section 2, fourth paragraph,
p. 206 of Vintage ed.).
And here's what Ajit evidently thinks a "close reading" of it is:
"Marx is talking about a total surplus value equal to x. A part of x goes
into capital accumulation and another part goes into capitalist consumption.
[I don't seem to see this stipulated.] So revenue is less than x to begin
with. [I don't seem to see this stipulated.] Now if it becomes easier to
produce the capitalist consumption goods [I don't seem to see anything about
the production of capitalist consumption goods], then let's say "a" amount of
labor is released [I don't seem to see anything about labor or its release
here. I would have thought that since capitalists "procure ... means of
satisfactions" with money, not labor, that "a" is an amount of money, not of
labor] after the system has produced same amount of goods and services it had
produced in the previous case. [I don't seem to see anything about the overall
amount of goods and and services produced in the system.] Now this "a" amount
of labor [Which '"a" amount of labor? Marx's? Or yours?] can be used in two
ways: either it could go for increasing the rate
of accumulation ["Rate"? I don't seem to see anything here about the *rate* of
accumulation] or increasing the capitalist consumption (or a bit of both is
also possible). [I don't seem to see anything in the text about labor
allocation.] "Conversely", if it becomes difficult to produce capitalists'
consumption goods, the the situation is reversed. [I still don't seem to see
anything in the text about the production of capitalist consumption goods.]
This time to maintain the same rate of accumulation and the same amount of
capitalists' consumption [I don't seem to see this tradeoff posed], x+a amount
of surplus [surplus what?] would be needed. But since there is only x amount
of surplus [surplus what?] in the system, either accumulation must go down by
"a" amount or the capitalists' consumption go down by the "a" amount (or a bit
on both sides adding up to "a") [To what part of the text does this clause
refer?]. So x+a in Marx's example is not revenue. Marx is not talking about a
situation where even simple reproduction will not be possible."
I think this is not a close reading, but a symptomatic reading (_lecture
symptomale_). It constructs Marx's problematic for him by imposing the
Dmitriev-Tugan-Bortkiewicz-Sraffa conceptual framework upon nearly every word
of the passage and upon the whole of it. Given that this is the way he reads,
it is not surprising that Ajit "finds" Marx to be a precursor of Sraffa, nor
that he "finds" Marx guilty of internal inconsistency.
Again: algebraic symbols don't lie. x = surplus-value. a > 0. "x+a is
required in order to continue with the same mode of life." Therefore, the
capitalist needs to spend more than the whole of surplus-value "in order to
continue with the same mode of life." If s/he does, not only x is spent as
revenue, but a as well.
I'll also note that Ajit's post does not respond to the following:
Ajit: "I doubt that this is what Fred's position is. How can one deny that a
system could be run down to the ground."
Fred doesn't deny that. He reasons this way, more or less:
Marx states that the part of surplus-value spent on capitalist consumption is
"revenue."
Therefore, Marx defines the part of surplus-value spent on capitalist
consumption as "revenue."
Therefore, Marx defines "revenue" as the part of surplus-value spent on
capitalist consumption.
Therefore, "revenue" is a part of surplus-value.
No part can be larger than the whole of which it is part.
Surplus-value is the whole of which "revenue" is part.
Therefore, "revenue" cannot be larger than surplus-value.
Ajit: "As far as your 'difference equation' is concerned. I must admit, I
don't understand what is going on there."
Why is "difference equation" in scare quotes? Do you deny that I wrote down a
difference equation?
The essence of the matter is very simple. The equation gives cyclical
behavior for total value. In the expansionary phase of the cycle,
surplus-value exceeds revenue, in the downturns the opposite occurs. The
point is that this is *long run* behavior yet, because the system is not a
*static equilibrium* system, the existence of revenue > surplus-value even in
the long run does not mean that the system runs down into the ground, as you
alleged that it did.
Your mistake was to assume wrongly that, in the long run, stationary (growth)
equilibria and breakdown are the only possibilities. You've made that mistake
before. For instance, you confuse average prices with stationary equilibrium
prices, though the two will be equal in general only if the system in question
is a static equilibrium one. You also seem to argue at times that the mere
persistence of a system in the long-run means that its behavior can be
approximated by means of static equilibrium equations.
Ajit: "But then I'm not much interested in carrying on this strand of the
debate. I have to start grading the exams like a mad man from tomorrow."
Yes, and you still have to meet the challenge of producing a set of prices
that acquits your price theory of internal inconsistency.
Andrew Kliman