Reviewed by Patrick Murray
Fred Moseley does not solve the transformation problem; he does better than that. He dissolves not the problem—since he shows us why there is no such problem—but rather encrusted traditions of interpreting Marx’s Capital. Regarding attempts to solve the transformation problem, Moseley remarks, ‘the “cure” very definitely kills the patient, even though the patient is not even sick!’ (241). No solution is needed where there is no problem. To Immanuel Kant’s remark that the failure—up until Kant’s own proof—to demonstrate the existence of the external world was the scandal of philosophy, Martin Heidegger retorted: the true scandal is thinking that any demonstration is needed. In Money and Totality, Fred Moseley makes a compelling case, conceptually and textually: when we grasp Marx’s method properly, we realise that ‘there is no “transformation problem” in Marx’s theory’ (4). Moseley’s book thus demonstrates the inseparability of methodological and substantive issues. As a result of his reexamining Marx’s method, Moseley observes, “I and others have come to the surprising and disappointing conclusion that Marx’s theory has been fundamentally misunderstood for most of the 20th century” (373). The ‘transformation problem’ is a bubble based on a misunderstanding.
Money and Totality has two main parts, the first consists of five chapters that explain why there is no transformation problem. Moseley’s “macro-monetary interpretation” stresses Marx’s ‘logical method’ and assembles textual support, drawing heavily on recently available sources. In the first six chapters of the second part, Moseley assesses the leading contributions to the literature on the transformation problem: the standard view (von Bortkiewicz and Sweezy), Anwar Shaikh’s ‘iterative interpretation’; the ‘New Interpretation’ developed by Duncan Foley, Gerard Duménil and Simon Mohun; the Temporal Single System Interpretation (TSSI) developed by Andrew Kliman and Ted McGlone; the Rethinking Marxism interpretation developed by Rick Wolff, Bruce Roberts and Antonio Callari; and the Organic Composition of Capital interpretation developed by Ben Fine and Alfredo Saad-Filho. In the final chapter of Part II, Moseley replies to David Laibman and to Riccardo Bellofiore. A short concluding chapter makes up the third part.
Moseley’s investigations into the transformation problem have been aided and his conclusions confirmed by several previously unavailable manuscripts of Marx. Moseley cites Enrique Dussel’s observation that with these texts a new and better era of Marx scholarship has begun. Moseley’s untying the knot of the transformation problem counts among the most important developments of this era. Of these newly available texts, Moseley highlights three: 1) the complete Manuscript of 1861-63 (about two-thirds of which had previously been published as Theories of Surplus-Value), 2) Marx’s full manuscript of Capital III in the Manuscript of 1864-65, and 3) what remains of the draft of Capital I in the Manuscript of 1864-65. In Chapter 3, Moseley discusses each at length, after first combing the Grundrisse for material on Marx’s method and the transformation problem. Moseley refers to the English translation of the manuscripts of Capital III as ‘in the works’ (144). It is now available in the Historical Materialism book series, translated by Ben Fowkes, with an introduction by Moseley, who saw to the translation and publication of the book.
In Capital, there are many transformations; which one yields the “transformation problem” and what is the problem? The transformation, which Marx works out in Parts One and Two of Capital III, is from the category of value to price of production. This transformation is necessary due to the differing organic compositions [the ratios of constant capital (c) to variable capital (v)] and different turnover times of capitals: selling commodities at their (individual) values would contradict the formation of a general rate of profit for industrial capitalists. The price of production is cost price (the sum of constant and variable capital) plus profit (the cost price multiplied by the average rate of profit). Prices of production differ from individual values, and profits differ from individual surplus values, but the two equalities crucial for the labour theory of value hold: the sum of production prices equals the sum of values, and the sum of profit, interest and rent equals the sum of surplus values. The magnitude of the aggregate surplus value, which is a determinant of the average rate of profit, is determined by the magnitude of the aggregate surplus labour in production. Marx will not abandon a labour theory of value; without it, the magnitude of the average rate of profit, which is required to arrive at prices of production, is left dangling, unexplained. With this transformation of value into price of production, Marx reconceives the labour theory of value.
The standard statement of the problem with Marx’s transformation is that he failed to transform the cost price of commodities from (individual) values, which were thought to be carried over from Volume I, to prices of production. Efforts to clean up the mess that Marx allegedly left have generally failed to save the two equalities on which Marx’s labour theory of value stands or falls: the equality of the sum of values with the sum of prices of production and the sum of profit, interest, and rent with the sum of surplus value. Moreover, many solutions end up making the labour theory of value superfluous. As a result, Moseley observes, ‘this alleged logical contradiction in the determination of prices of production in Volume III has probably been the most frequently cited justification for rejecting Marx’s theory over the last century’ (xii). That gives us some idea of the significance of Moseley’s bursting the bubble of the transformation problem.
The crux of Moseley’s argument in Money and Totality is that there never was a transformation problem because the cost price of a commodity always was transformed: even in Volume I, c and v were prices of production, not (individual) values. Due to his method in Capital, however, Marx could not say that until Volume III. Since the cost price of a commodity always was the money capital actually expended on the constant capital and the variable capital required for production, that money capital, symbolised by M in Chapter 4 (and C in Chapter 9) of Volume I, always represented the sum of the prices of production of the constant and the variable capital.
The subject of Capital does not change—“Marx’s theory in all three volumes of Capital is about a single system, the actual capitalist economy” (6), writes Moseley—and in capitalist societies commodities do not sell at their values. In Capital, Marx was never presenting a theory of individual values or surplus values, which he knew to be untenable for at least ten years before Volume I appeared.
The standard interpretation of Capital, on the basis of which the transformation problem was contrived, holds that for most of Capital, Marx advocated the individualistic theory of value and surplus value that he had long overthrown. Recognizing how unlikely that would be, Moseley argues that most of Capital is about ‘capital in general’, about the total social capital, not individual capitals taken individually. Moseley gets to the nub of the problem. The standard conception of what is being transformed is wrong: ‘The “transformation problem” is usually conceived as a transformation of individual labour values to individual prices of production. But that is not what Marx’s theory of prices of production is about; Marx’s theory is about the transformation of aggregate price to individual prices of production and the transformation of the total surplus-value into its individual parts’ (6). There are no individual labour values to transform. What is said of aggregate prices and profits, the topic of Volume I, remains true after the Volume III transformation. There never was a mistake on Marx’s part; the mistake has always been on the part of his interpreters.
Moseley defends Marx’s theory of profit: “According to Marx’s theory, all the individual parts of surplus-value come from the same source—the surplus labour of workers in production. Therefore, the total surplus-value must be determined prior to its division into the individual parts, and the total surplus-value is determined by the total surplus labour, and nothing else’ (5). The phrase ‘determined prior to’ is tricky. ‘Determined’ can mean conceptually determined and explained, and it can mean empirically determined. To determine what heat is and what determines its magnitude, we look to the theory of thermodynamics for explanations; whereas to determine the present temperature in the room, we check a thermometer. Surplus value (ΔM) is monetised surplus labour, and the magnitude of surplus value is determined by the quantity of ‘surplus labour in production’. Can I read ΔM off production sites, counting up hours of surplus labour? No, ΔM is determined in that empirical sense by summing the parts of surplus-value: profit of enterprise, interest and rent. Determination in this sense is subsequent to the division of the surplus value. But the Volume I explanation of the total surplus value retains logical priority.
Three elements of the new readings of Marx are present, if somewhat muted, in Money and Totality: systematic dialectics, value-form theory and social form theory. The ‘macro’ and the ‘single system’ aspects of Moseley’s interpretation of Capital fit the method of systematic dialectics. The categories of Capital are mutually presupposing: value in Volume I presupposes the prices of production of Volume III, which presuppose the logically prior development of value. The ‘monetary’ aspect of Moseley’s interpretation is rooted in Marx’s value-form theory: money is the necessary form of appearance of value. Moseley’s mind is so set on this inseparability of value and price that he introduces the hybrid term ‘value-price’: “I will call the price form of appearance of value in units of money the ‘value-price’ of commodities’ (29-30). Social form theory runs throughout the book. Take Moseley’s contrasting of Marxian with Sraffian theory, ‘the logical framework of the [Marxian] theory is not a physical quantities input-output matrix, but is instead the circuit of money capital, expressed symbolically as M – C … P … C’ – M’’ (xiii). The inputs to production are not simply ‘physical quantities’; they are forms of capital, which is a definite social form aimed at a definite social purpose: profit.
In this criticism of Sraffian theory, Moseley’s appeal to specific social forms and their implications is muted. Sraffa describes his theory as production of commodities by commodities; however, Moseley counters, ‘it would be more accurate to describe it as “the production of commodities by means of physical quantities”, since the physical inputs are not treated as commodities with existing prices’ (15 n. 22). From Marx’s point of view, taking the givens as physical quantities that have no specific social form or purpose and trying to derive values and prices from them is a non-starter. Sraffian theory falls into the illusion that an economy-in-general with sheer ‘physical quantities’ actually exists and can be an object of scientific inquiry. In criticizing David Laibman’s reliance on Sraffian theory, Moseley writes, ‘But physical reproduction is not the only way value and surplus-value can be determined’ (371). But it is no way, since value, money, surplus-value and capital—at least in Marx’s sense of these terms—are all specific social forms, none of which can be derived from a general notion such as physical quantities.
Here is why Moseley’s case against the transformation problem is so compelling. When Marx introduces the circuit of capital, M—C—M + ΔM, in Chapter Four of Volume I, he calls ΔM surplus-value. Both the M that begins the circuit and ΔM, which is the goal of the circuit, are quantities of money. As is made clear in Chapter Eight and stated at the beginning of Chapter Nine of Volume I, the M that begins the circuit (quantitatively unchanged but now represented by C, since at that point we understand how money can function as capital) is what is actually spent on constant and variable capital: C = c + v. This C, which begins the capital circuit and which, in Volume II, Marx terms money capital, is the sum of the two quantities of money represented here by c and v. Since, in capitalism, commodities do not sell at their individual values, their actual prices are production prices. So the c and v of Chapter Nine need no transformation.
Chapter Five of Volume I makes it clear that the ΔM introduced at the beginning of Chapter Four refers to the total social surplus-value (which is confirmed in Volume III). How so? The question of Chapter Five is whether or not ΔM can be explained as arising simply through the exchanges that take place in simple commodity exchange. The answer is, yes, if we are talking about individual capitals taken individually. One capitalist can extract ΔM from another by selling above value, buying below value, or a combination of the two. But the point of Chapter Five is that such exchanges, which rob Peter to pay Paul, can do nothing to explain how ΔM accrues to capitalists aggregated as a class. ‘In Chapter 5, Marx argued … that the “capitalist class as a whole cannot defraud itself,” thereby indicating again that Marx’s theory is about the total surplus-value of the capitalist class as a whole’ (114). The ΔM that was introduced in Chapter Four and which Chapter Five demonstrates cannot arise simply from commodity exchange, is the total social ΔM. This ΔM (total surplus-value) returns at the beginning of Volume III as profit, which is numerically identical but conceptually transformed. And the M that was the beginning of the circuit in Chapter Four, which returned in Chapter Nine as C, the sum of constant capital (c) and variable capital (v), returns in Volume III as cost price, k, which, likewise, is numerically identical to M (or C) but conceptually transformed. Since they are identical, there is no quantitative adjustment to make between M (and C) and k: there is no transformation problem.
Will Moseley’s exposure of the scandal of the transformation problem move the needle and renew the viability of Marx’s unique labour theory of value? The fact that methodological questions regarding the organization of Capital play a crucial role suggests that it will take further progress toward some consensus regarding those questions for Moseley’s interpretation to take hold, as it should.
11 July 2016