‘Money and Totality: A Macro-Monetary Interpretation of Marx’s Logic in Capital and the End of the ‘Transformation Problem’’ reviewed by Patrick Murray

Reviewed by Patrick Murray

About the reviewer

Patrick Murray is Professor of Philosophy at Creighton University, Omaha, Nebraska …

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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

53 comments

  1. To Fred, I’ve tried my best to follow your exchange with Andrew Kliman, what I’m struggling with is the idea of a “physical rate of profit” at all. What has this got to do with anything?
    In Sraffa’s model inputs are physically identical with outputs, and are never used up in the production process, surplus simply appears by magic. It is assumed to exist on the output side, coming from nowhere as a simple addition. Moreover, as the physical relationship between commodities can only exist if there relationship is fixed, the physical proportions of production cannot change. If there is “tehcnological change” then it is a technology that can create something out of nothing, but which does not effect the physical proportions of production. What technology is this? Magic again.
    This magical addition is then compared with the original amount of physical things to produce a proportion which is the physical “rate of profit”. The problem is that this physical rate of profit does not exist and violates the essence of the system of production it proposes to model.
    It is true in this system there is no need for value, labour, prices of production, money or even exchange after all it does make sense in its own terms, if no other.
    Every actual production process transforms the physical nature of inputs into physically different, distinct and incommensurate outputs (in other words it uses up or destroys inputs to create different outputs) and so there is no fixed physical proportion between inputs and outputs and so no physical rate of profit.
    Indeed if the “rate of profit” is physical, that is if it is the proportion of physical surplus to physical inputs taken in aggregate, then there can be no processing of inputs to produce outputs and so no consumer goods industry or any other processing industry. Processing inputs into outputs (or in other words production itself) reduces the quantity of physical surplus relative to physical inputs and so reduces the “physical rate of profit”.
    The problem is the very idea that the “physical rate of profit” can exist at all. It is this acceptance whether in a one, two, three or multi-millioned, set of industries, that means there is no need for the labour theory of value. As the labour theory of value is only necessary for an actual production process in which physical inputs are incommensurate with physical outputs. In other words where a reduction in physical surplus, through for example, processing flour, butter, sugar and vanilla essence into cake, adds value and increases labour surplus. As the output is more valuable than the inputs, even if, physically smaller.

  2. Andrew derives the “physical rate of profit” in his example, by replacing iron and steel or wheat and pigs from Sraffa, with the abstractions “means of consumption” and “means of production”, unfortunately, far from clarifying the situation, this obscures it.

    The “means of production” are a combination of raw materials (i.e. iron, steel, corn and pigs) and machines used up through installing new machines or depreciating old ones. But the inputs of the “means of consumption” sector are still physically different form the outputs of the “means of consumption” sector and so incommensurate. As they are incommensurate, so they cannot be compared and so there can be no physical rate of profit of the means of production sector. The same thing applies for the “means of consumption” sector. The consumption goods used up are different from the consumption goods produced to replace those used up. As this is generally true of all production, the “physical rate of profit” is an abstraction that has no meaning in any real production process.

    The Sraffian’s (although not Sraffa) attempt to get round this problem by arguing that although their example does not work in any actual production process, that is at the micro level, if it were possible to aggregate all production together post factum, then a physical “rate of profit”, i.e. the physical quantity of inputs used up compared to the physical quantity of outputs, could be estimated. And this is possible Although it would mean that a producer would not know whether the output they had produced was more valuable than the inputs that had been destroyed in producing it, not only after the act of production, but after the act of exchange!

    Furthermore this aggregation procedure violates the viability condition that the object of production is to produce surplus or profit maximisation for short. If physical surplus is analogous with surplus, then no sector would produce that reduces physical surplus. In other words, no sector would exist that uses up a larger quantity of physical inputs “means of production” or “means of consumption” than the quantity of physical outputs it produces. As this is true of all manufacturing and service production, except those sectors that produce raw materials, it means that (for the Sraffian’s to be right) then no production would take place except raw material production. As this is not true, then the physical rate of profit cannot exist and so discussing algebraic models of it doesn’t seem particularly fruitful.

  3. I’m discussing the physicalist “rate of profit” not because it is realistic, but because:

    (1) Fred Moseley (incorrectly) denies that his interpretation of Marx is implicitly physicalist;

    (2) physicalism has been the main weapon wielded by economists, especially those on the left, to suppress Marx’s critique of political economy in its original form; and

    (3) the claim that the Great Recession has nothing to do with falling profitability, because profitability supposedly rebounded under neoliberalism, is based on use of the physicalist (i.e., current-cost or replacement-cost) “rate of profit.”

    I shall not engage further with Bill Jefferies.

  4. Well that’s a shame.
    Unfortunately it doesn’t get round the problem or really answer my point, which is, that there is no physical rate of profit, and that the physical rate of profit violates the essential purpose of production, which is to transform one set of physical inputs into a different set of physical outputs. As this is true of every single production process, modelling the thing that does not exist and which essentially contradicts the process it is supposed to be modelling, doesn’t actually achieve anything.
    Its true that Sraffa’s physical model is presented as the main alternative to the labour theory of value, and it is, but the reason in my opinion, that Marxists have been unable to effectively defend the LTV is that they accept the premises of the model that they seek to oppose, namely that the physical rate of profit exists (as paradoxically Andrew does too in his own physical models of the rate of profit).
    Given that the LTV is not necessary in models where there is a physical rate of profit, then that defence answer cannot succeed, as it accepts the premises of the very thing that it seeks to oppose.
    The direction of the rate of profit is really a separate argument.

  5. Andrew’s fifth instalment of his criticism of Fred’s book claims that;

    “In Part 4 of this series of comments on his new book (Kliman 2016b), I showed that a certain mathematical relation (equation 1) is universally true for any system of prices of production (given two sectors and no fixed capital). In particular, it holds true whether or not the rate of profit is determined by “physical quantities.” Equation 1 therefore holds true for Moseley’s price-of-production system. I then showed that, when taken together, two features of his interpretation—equation 1 and his stipulation that per-unit input and output prices must be equal—imply that the rate of profit is physically determined.

    Hence, Moseley’s rate of profit is physically determined. That he expresses his rate of profit as the ratio of surplus-value to capital value advanced, instead of as a ratio of physical coefficients, makes no difference. It is all value-form and no value-substance.”

    Andrew claims that the mathematical equivalence between a physical series, where the equivalence of for example “means of production” of “means of consumption” is not actual but assumed, and a value series in which equivalence is actual and not assumed, means that the physical series is equivalent to the value one.

    This is an illusion of his algebra, which creates, or assumes, a unit for means of production or means of consumption, where no such unit exists. The mathematical equivalence, assumed by Andrew, conceals the real distinction. There is no unit for “means of production” or “means of consumption” as physical outputs are incommensurate with physical inputs. Therefore, the physical rate of profit (or output) does not actually exist.

    On the other hand, there is a unit for value inputs, socially necessary labour time and a unit for outputs also socially necessary labour time. The value series (however, modified for price) measure a real thing, the change in socially necessary labour time, while the physical series measures an illusion.

    Therefore, the mathematical equivalence discovered by Andrew has only an algebraic and not real existence either, and so Andrew’s argument falls.

  6. Bill Jeffries is of course correct. Straffa was a magician born out of the confusion thrown up by the victory of Stalinism and the advent of material balance planning in the USSR. The collapse of the USSR showed you cannot run an economy based on illusions namely fictitious prices circulating “planned” quantities of goods. Who would have thought that Straffian magic would survive this collapse in any form. Turning to Fred Moseley’s book which I have yet to read, but having followed the debate around it I remain disturbed that it is not at one with Marx’s method. In volume 1 and 2 Marx describes the commodity as a product of labour. He had to if he was to analyse the social relations it embodies, that gives rise to it, and that transforms the commodity into its various forms notably money, capital and surplus value. However, commodities in reality do not circulate as products of labour but as products of capital, that is not at their market value but at their prices of production. The transformation problem, described as such by Marx, is the need to explain the transition from market value to prices of production or their final form, market prices of production. Hence it is methodologically wrong and unacceptable to try and equate volumes1 and 2 with 3 because the former is abstract the latter concrete, and by concrete we understand the following: what was removed is now added back, their is modification and a new series of inter-relationships are established. What was the product of simplification is now rendered complex. The important fact has little to do with this. It is that Marx’s categories applied to the current data allow us to concretely represent the world as it is and to move away from this endless speculation over what Marx actually said or meant. Brian Green theplanningmotive.com

  7. Brian Green,

    1. Interpretation isn’t “speculation.” There are clear norms and protocols of (genuine, serious) interpretation, and they allow us to rule out some interpretations and decide which are more adequate.

    2. I’m probably the last person to disagree that “Marx’s categories applied to the current data allow us to concretely represent the world as it is,” but to do that, one first has to know what those categories are and aren’t, what they mean and don’t mean–and knowing that is interpretive activity.

    3. You violate your call to “move away from this endless speculation over what Marx actually said or meant” earlier in your comment when you tell us what you think Marx actually said or meant.

    4. There’s no doubt that some people don’t want to regard their own interpretations as interpretations, because they regard them as self-evidently correct. The problem is that other people, holding contrary interpretations, think that the latter are correct. So there’s an interpretive dispute.

    5. The only way to avoid insisting, dogmatically, that one’s interpetation is self-evidently correct is to accept this fact. There is no one–including Marx himself–who didn’t have to interpret what he said and meant.

    4. The economists have changed Marx, in various ways. The point is to interpret him–correctly.

  8. Andrew’s advocacy of post-modernism (there are no facts – only interpretations) is curious for a Marxist, but revealing of his own method. Indeed his claim that the purpose of economists (i.e. philosophers) is not to understand the world in order to change it, but to interpret an interpreter of it (even Marx), is even curiouser. However, the obliteration of the distinction between fact and opinion, the thought and the thing itself, materialism and idealism, of post-modernism, underpins Andrew’s own critique of Fred.

    Andrew asserts that his maths proves that the algebra in Fred’s model of the value is identical, or similar to Andrew’s model of physical production. For Andrew this algebraic similarity means that Fred’s model is in fact a physical model and so Fred is a “physicalist”. For the sake of argument, let us assume that Andrew’s assertions about the algebraic similarity of the models is correct. Does it then follow that this mathematical identity mean that the models are essentially the same? That
    Fred is an inadvertent physicalist, as his sums could also work in a physical model?

    It does not follow, provided that the distinction between fact and interpretation, the thought and the thing itself, materialism and idealism is maintained. The unit in Andrew’s physical model for either “means of production”, “means of consumption” or some physical proxy “pigs”, “corn”, “iron”, “coal” do not and cannot exist in any real production process. In every real production process the outputs are physically different to the inputs that were destroyed in the production of them. As inputs are physically different from outputs so they are incommensurate, they cannot be measured the one against the other, and so there is no physical unit of value or price. Consequently, physical “value” models, violate the essential nature of the social process they are modelling. In contrast in a value system the unit, socially necessary labour time is real, no matter how modified it is by the price mechanism. So the mathematical similarity of the physical and value models, even conceding it exists, is a purely ideal one. As this similarity has no existence in the world, so it should be rejected, as simply a matter of interpretation.

    By the way, thanks for your kind words Bran Gren, but its Sraffa not Straffa and Jefferies, not Jeffries.

  9. Professor Kliman wrote:
    >4. The economists have changed Marx, >in various ways. The point is to interpret >him–correctly.

    With the greatest respect to Professor Kliman, the above statement is inappropriate. I fully understand that Professor Kliman wants us to read Marx aright. But in the end, and I believe that Professor Kliman would agree, what really matters is whether any assertion or view corresponds to historical, social reality.

  10. Sorry, Sydney, I don’t agree at all. There are statements about external (e.g., historical, social) reality outside of texts, and there are statements about texts (e.g., those of Marx). These are radically and irreducibly different kinds of statements.

    The former aren’t more or less correct because they accord with what’s in some text (the Bible, Marx’s works).

    By the same token, the latter aren’t more or less correct because they accord with external reality outside of texts. It makes zero sense to say that one’s understanding of Marx is correct because it’s (allegedly) useful for understanding external reality, changing the world, or whatever.

    And I think the correctness of statements really, really matters.

    You might be thinking that I’m contradicting Marx’s statement about “the point” being to change the world. I’m not. There’s more than one front we have to fight on, and so there’s more than one “point.” Marx was criticizing Feuerbach and people in his own circle. I’m criticizing Marxian economics. Different foes, different “points.”

    One needs to understand the context of my statement in order to evaluate it properly. It’s the conclusion I reached at the end of “Production of ‘Internal Inconsistencies’ by Means of Simultaneous Valuation,” which is available at http://akliman.squarespace.com/writings/. The whole argument leads up to it.

  11. Sydney wrote:
    “what really matters is whether any assertion or view corresponds to historical, social reality.”

    I completely agree! But the problem is that the starting point of these authors is *marxology* and not a empirically viable Marxist political economy. The poverty of their numerical examples is striking once you compare them with, say, the rigorous theoretical or empirical work of Pasinetti or Shaikh.

  12. I have demonstrated that Andrew’s argument was a form of scholasticism that rested on an irreducible separation between the text (or maths) and the world. Andrew makes this argument very clearly,

    “It makes zero sense to say that one’s understanding of Marx is correct because it’s (allegedly) useful for understanding external reality, changing the world, or whatever.”

    Indeed he extends this method to his theory as a whole, pointing out that the statement about the purpose of economists originated in his book. He attempts to reconcile this fundamentally idealist method – critical criticism in effect – with Marxism by claiming that Marx’s Theses on Feuerbach were not a general methodological statement but limited to a criticism of “foes” around his circle. This is more or less the opposite of the truth, at the time the theses were unpublished.

    Just how far Andrew is from Marx and Engels method is illustrated by thesis II,

    “The question whether objective truth can be attributed to human thinking is not a question of theory but is a practical question. Man must prove the truth — i.e. the reality and power, the this-sidedness of his thinking in practice. The dispute over the reality or non-reality of thinking that is isolated from practice is a purely scholastic question.”

    Andrew’s argument is a scholastic one that cannot be proven in the real world.

    To Prob, I think you’ve got a point, but of course Shaikh and Passinetti also use idealist physical models.

  13. Bill Jefferies’ comment (30 Jul 2016 at 3:33am) is worse than the worst of Stalinist philosophy/apologetics. False statements remain false even after one alleges that they are useful for this or that. Jefferies’ position has nothing in common with Marx’s own Marxism. Marx condemned the termination of the scientific phase of bourgeois economics as follows:

    “It was thenceforth no longer a question, whether this theorem or that was true, but whether it was useful to capital or harmful, expedient or inexpedient, politically dangerous or not. In place of disinterested inquirers, there were hired prize fighters; in place of genuine scientific research, the bad conscience and the evil intent of apologetic.” https://www.marxists.org/archive/marx/works/1867-c1/p3.htm

    The only difference is that Jefferies is an unpaid prize fighter. At least, I presume he is unpaid.

    Jefferies’ charge that Kliman “claim[s] that Marx’s Theses on Feuerbach were not a general methodological statement but limited to a criticism of ‘foes’ around his circle” is also false. But of course, the charge is “true” by Jefferies’ standards, since it’s useful to him, expedient, and politically astute. Marx made a general methodological statement about what the “point” is (one not “limited to a criticism of ‘foes’ around his circle”). That doesn’t make it the point of absolutely everything under the sun. For example, the point of Jefferies’ intervention isn’t to change the world, but to troll it.

  14. Bill,
    You’ve made a rather simple mistake in your reading of Andrew’s point regarding interpretation. There are ‘good’ and ‘bad’ ways to interpret a text, and right and wrong ways too. That’s not an endorsement of postmodernism. Otherwise all Andrew could be doing is saying well Moseley has his way, Stalin has his, and I have mine, and none of us are more or less right. And since Andrew is not doing that, maybe we need to consider that he’s doing something else? Something less postmodern (there’s great irony in the fact that you’re not interpreting even Andrew correctly!)?

    Having read his book Reclaiming Marx’s Capital, and several of his essays, he’s not doing anything painstakingly cumbersome, or rigidly dogmatic, he’s simply applying the principle of charity (something every philosopher, academic, and person of good faith, ought to do and almost always tries to do) with a text she’s reading. If there are two (or more) interpretations of a text, and one of them renders the text consistent, while another does not, opt for the consistent reading. There’s literally nothing controversial, nor postmodern about that. As a matter of fact, going out of your way not to find consistency in a text is controversial, and seems an extremely dubious practice. Even if one goes out of their way to way read a text poorly, it won’t motivate the prudent-charitable reader to change her mind, since she can see consistency past contrived inconsistency.

    Regarding all this confusion Sydney makes about: “what really matters is whether any assertion or view corresponds to historical, social reality” – if we aren’t even clear what the view is, how can we ever check off that it does or does not correspond to social reality? And isn’t the best way to get clear on the view to pick the clearest most consistent view?

    I’ll be the first to admit I cannot even begin to wade into the waters of the debate between Andrew and Moseley regarding their input-output systems, but at a bare minimum Kliman’s interpretation practices are transparent, prudent, and incumbent upon anyone doing any serious scholarship and/or study, and for that reason I’m always stupefied at the backlash his work receives from people who in any other instance would employ the principle of charity.
    -Chris

  15. Bill,

    You’ve made a rather simple mistake in your reading of Andrew’s point regarding interpretation. There are ‘good’ and ‘bad’ ways to interpret a text, and right and wrong ways too. That’s not an endorsement of postmodernism. Otherwise all Andrew could be doing is saying well Moseley has his way, Stalin has his, and I have mine, and none of us are more or less right. And since Andrew is not doing that, maybe we need to consider that he’s doing something else? Something less postmodern (there’s great irony in the fact that you’re not interpreting even Andrew correctly!)?

    Having read his book Reclaiming Marx’s Capital, and several of his essays, he’s not doing anything painstakingly cumbersome, or rigidly dogmatic, he’s simply applying the principle of charity (something every philosopher, academic, and person of good faith, ought to do and almost always tries to do) with a text she’s reading. If there are two (or more) interpretations of a text, and one of them renders the text consistent, while another does not, opt for the consistent reading. There’s literally nothing controversial, nor postmodern about that. As a matter of fact, going out of your way not to find consistency in a text is controversial, and seems an extremely dubious practice. Even if one goes out of their way to way read a text poorly, it won’t motivate the prudent-charitable reader to change her mind, since she can see consistency past contrived inconsistency.

    Regarding all this confusion Sydney makes about: “what really matters is whether any assertion or view corresponds to historical, social reality” – if we aren’t even clear what the view is, how can we ever check off that it does or does not correspond to social reality? And isn’t the best way to get clear on the view to pick the clearest most consistent view?

    I’ll be the first to admit I cannot even begin to wade into the waters of the debate between Andrew and Moseley regarding their input-output systems, but at a bare minimum Kliman’s interpretation practices are transparent, prudent, and incumbent upon anyone doing any serious scholarship and/or study, and for that reason I’m always stupefied at the backlash his work receives from people who in any other instance would employ the principle of charity.

    -CB

  16. To Chris, the point is that Andrew’s starting point is paradoxical, Andrew thinks that the distinction between values and prices is an inconsistency- and so Andrew “interprets” Marx to remove this inconsistency. This “interpretation” has nothing to do with the text, where there is an absolutely clear and unambiguous distinction between values and prices, but the need to render Marx “consistent” with Andrew’s interpretation. After all – according to Andrew – even Marx didn’t know what he was saying – but had to interpret himself!

    As Andrew’s “interpretation” cannot be clearly established from the text, Andrew has to argue that all interpretations are just interpretations, although again paradoxically, he also concludes that his interpretation is correct, even though its just an interpretation.

    Andrew demonstrates the “consistency” of this interpretation through the application of corn models, in which outputs are physically identical with inputs, apparently unaware that in such models the labour theory of value is not required, as inputs are directly commensurate with outputs.

    The test of consistency fails as reality is inconsistent, fraught with contradictions that actually exist. This is why the text must be tested against the world. As values have to really be transformed into prices in the capitalist production process itself, “interpreting” Marx so that values do not exist, actually diminishes the power of the analysis and coherence of the text.

  17. OK. My brief original comment has been misinterpreted, so I will enlarge on it, with the moderator’s permission.
    I wrote:
    >I fully understand that Professor Kliman >wants us to read Marx aright. But in the >end, and I believe that Professor Kliman >would agree, what really matters is >whether any assertion or view >corresponds to historical, social reality.

    The first sentence should make it clear that I agree that a correct interpretation of a text is necessary.

    Now, most readers on this list are trained philosophers, and the title of the list gives a clue that would perhaps, perplex even Inspecteur Maigret.

    We have a difference of opinion as to what a text means. How do we resolve the issue? The notions that Professor Kliman advances in this regard in his book, Reclaiming Marx, seem to me, an amateur in this field, mostly quite sound. But his opponents are unconvinced. So, what to do? We could dispute this matter of interpretation, one lot claiming they are right because they have gone about the problem correctly, the other lot denying this claim, until judgement day. Precisely as religious people currently do and have always done. Very amusing and without any resolution.

    So, again, what to do? What should philosophers do when they cannot agree among themselves regarding the interpretation of a text.

    Until this trouble-maker Karl Marx came along to muddy the waters, the philosophers would have continued their disputes ad infinitum.

    Now, I have on this list argued strongly, against strong criticism, that it is crucial to think of the work of Karl Marx as a very important SCIENTIFIC contribution to human knowledge.

    Why, do I say this?
    because, and I repeat:
    >But in the end, and I believe that >Professor Kliman would agree [he does >not apparently, see above], what really >matters is whether any assertion or view >corresponds to historical, social reality.

    In reality, if a dispute cannot be settled intellectually what is to be done? I hesitate to explain to a Marxist list my answer. But I have nonetheless given it immediately above. Marx pointed this out, and scientists and technologists have repeatedly shown it to be the ultimate proof of validity. I concede to Professor Kliman that this solution says nothing about the original problem of interpretation; so he must persist if he wishes. That is OK.

    Finally, I want to express my view of the substantive problem. I am neither an economist not a philosopher. When I read Capital I did not know about this transformation problem and I did not see it. Having read a bit more, I am of the opinion that although Sweezy was in many ways an excellent economist, he was simply wrong when he agreed that there is a “transformation problem”. He claimed that there was a logical problem, but he did not explain what problem he saw in the text of Volume 3. This is not the place, I think, to engage with those non-Marxist commentators who find errors in Marx. If one does not accept the validity, in full, of the labour theory of the [exchange] value of commodities, then of course, much or most of what Marx wrote is incoherent.

    However, IMHO, there is no problem.
    A simple-minded reading of Volume 3 finds that Marx needed to answer the mocking that Samuelson threw at him some half a century later. Samuelson said that people asked the “price” of commodities in a shop, not the “[exchange] value”. But of course, Marx was well aware of this and so he devoted a long section of Volume 3 to explaining his explanation of how “values” are changed into “prices”. I find his explanation satisfactory and I am content with it. It is not only coherent, IMHO, it also accords, I think with social reality. But, a big but, one needs to have understood something about the process to follow the explanation that Marx provided.

    In my understanding, the costs of production; the costs of raw materials, constant fixed capital and variable capital all are derived from the labour theory of capitalist [exchange] value. For a given capitalist they are historical values; fixed in stone. But when the same capitalist comes to realise the exchange value of the capital commodity products, the capitalist must go to market to realise their value. At the market, at a given place and at a given time the capitalist will find out at what price he is able to realise the social exchange value inherent in the capital commodity products. Whatever the capitalist may have paid for the raw materials, wages etc., may be re-assessed at the given market at that given time. In this important sense, the valuation, the realisation of the value, of the commodity is made at the time and place of sale and at no other time and place. In this sense, we can talk of valuation being only in the present. But this is a subtle point, as can be seen when we consider two different capitalists. The first capitalist A happens to be in the top 10% of production efficiency in that market and the capitalist will know this from experience. The second capitalist B may happen to be in the bottom 10% of production efficiency. They will realise the value inherent in their commodities at a common price, because they are neighbours in a market at a given place and time. But their profits will be very different. This shows how the change from value to price is repeatedly made, assessed afresh at each market and at each time for any given set of commodities.

    Now Marx in conformity with normal practice throughout the 3 volumes considers the average capitalist and the aggregate of capitalists.

    My view of the change from value to price retains as far as I can tell, all three aggregate parameters that Marx emphasised.

    In my view, in conclusion, I find that there is no problem about the manner in which Marx changes [exchange] values into prices. What he wrote seems to me to be both consistent with the labour theory of value and coherent with everything else in the 3 volumes.

  18. Andrew’s latest posting is a useful summary of his position which concludes that,

    “Moseley’s rate of profit is quantitatively identical to that of the (other) physicalist economists, because he, like they, values inputs and outputs simultaneously.” (p7)

    This is exactly the point I have made repeatedly above, a quantitative mathematical similarity or identity prove nothing as it ignores the qualitative distinction between the two models – the unit of measurement. Fred’s value series uses a value measure – socially necessary labour time – while Andrew’s physical series uses an assumed ideal “measure” e.g. good 1 and good 2, in which outputs are identical to inputs.

    By way of analogy physicists could discover the laws (including the appropriate maths) for the orbit of the moon around earth. Someone might want to prove that these physicists are actually cheesists, as they point out that *if* it is assumed the moon is made of cheese it is possible to model the cheese moon’s orbit around the earth with the same mathematical architecture as that developed by the physicists. The physicists might object the quantitative similarity of the maths ignores the qualitative distinction between rock and cheese, but there is still nothing to stop the someone from accusing them of cheesism as *if* the physicists assumed that the moon was made of cheese then their formulas would be identical.

    But the moon is not made of cheese and there is no physical unit to model physical “value” series. In any real production process outputs are always physically different from inputs. This is true even if a part of output is used as inputs in its own production, as for example in the electricity industry, which combines a massive variety of physical inputs, (which change depending on the process used, e.g. coal burning, hdyro, bomass etc. but probably also usually include electricity) to produce just electricity. As the electricity produced is physically distinct from the combination of things that were used up to create it, so it is incommensurate with them and consequently it cannot be measured against them.

    Any attempt to do so is purely ideal. It places an assumed fantastical ideal measure, in Andrew’s case good 1 or good 2 on the same level as a real measure, socially necessary labour time. Paradoxically, Andrew “proves” Fred is a “physicalist” by using a “value” measure which cannot exist!

  19. The debate between Moseley and Kliman is about the best reading of the quantitative dimension of Marx’s theory of value. Two keywords of their debate are “physicalism” and the “rate of profit.” Kliman argues that Moseley’s interpretation of Marx’s rate of profit yields results identical to physicalist results. Moseley denies that this is a correct interpretation of his own interpretation of Marx. The underlying issue it may be difficult for readers of this debate to track concerns simultaneous valuation. Kliman demonstrates that the analytic device of simultaneous valuation necessarily yields physicalist conclusions. For his part, Moseley denies that his interpretation is physicalist (mainly by distinguishing it from “Sraffian” interpretations). He also denies that he is a simultaneist in the sense entailed by Sraffian readings and the Okishio Theorem.

    In this comment, I would like to review the aspect of this debate that hinges on simultaneous valuation.

    In each of his seven “Comments on Moseley’s New Book” (Money and Totality, Brill, 2016), Kliman returns to the same conclusion concerning Moseley’s “macro-monetary” interpretation of Marx’s theory of value. So he writes in his seventh installment that “an unfortunate fact remains: Moseley’s rate of profit is quantitatively identical to that of the (other) physicalist economists, because he, like they, values inputs and outputs simultaneously. As a result, his equilibrium rate of profit is determined by the same physical quantities— technological and real wage coefficients—that determine all other physicalist theorists’ rate of profit, and in exactly the same manner. That he expresses his rate of profit as the ratio of surplus value to capital value advanced, instead of as a ratio of physical coefficients, makes no difference. It is all value-form and no value-substance.“

    Meanwhile, Moseley consistently denies that his interpretation of Marx’s value theory is physicalist. He also denies that the Okishio Theorem, which is a theorem of physicalist interpretation, applies to Marx’s theory (as a matter of method as well as results).

    The underlying and principal reason why Kliman insists that Moseley’s interpretation belongs to the conceptual horizon of physicalism is that Moseley adopts the device of simultaneous valuation, which constrains output prices to be equal to input prices (whereas in the TSSI, input and output prices can and do differ). Again in all seven of his comments, Klilman addresses the issue head-on and explicitly. But as far as I can tell in this exchange, Moseley explicitly states his own view of this issue only once, in his reply to Kliman’s “Part 3.” Moseley writes:

    “Therefore, I conclude that my interpretation of Marx’s theory of the rate of profit is fundamentally different from Sraffa’s theory. Even though input prices = output prices in my interpretation, it does not follow that my interpretation is the same as Sraffa’s theory in the sense that the rate of profit is determined only by physical quantities. The rate of profit in my interpretation of Marx’s theory is determined by the relation between surplus labor and money capital invested. Input prices = output prices in my interpretation, not because input prices and output prices are determined simultaneously (as in Sraffa’s theory), but rather because the economy is assumed to be in long-run equilibrium (as discussed in my reply to Kliman’s Part 2).”

    With respect to “long-run equilibrium,” Moseley had written in his response to Kliman’s “Part 2”:
    “This reply focuses on whether Marx’s concept of prices of production are long-run center of gravity prices around which market prices fluctuate over multiple periods of time and which change only if productivity or the real wage changes (my interpretation) or are short-run prices that continue to change over multiple periods even though productivity and the real wage remain constant and thus cannot function as long-run center of gravity prices (TSSI).”

    I will return to this disjunction below. But Moseley continues:

    “I argued in my book that Marx’s concept of prices of production are long-run center-of-gravity prices, around which actual market prices fluctuate (‘gravitate’) from period to period. These long run center of gravity prices are in the classical tradition of Smith and Ricardo, which have three key characteristics: (1) they equalize the rate of profit across industries; (2) they are ‘centers of gravity’ around which actual market prices fluctuate over extended periods of time; and (3) they change if and only if either the productivity of labor changes (due to changes in the technology of production) or (secondarily) if the real wage changes.”

    By contrast with the TSSI, then, Moseley concludes:

    “I argued that the TSSI prices of production have the first characteristic, but do not have the other two key characteristics and thus is a misinterpretation of Marx’s concept of prices of production. According to the TSSI, the transformation of values into prices of production [is an] ongoing process that takes place over multiple periods, even though productivity and the real wage remains the same in all these periods. And since TSSI prices of production change every period, they cannot be ‘centers of gravity’ around which market prices fluctuate over longer periods of time.”

    So this appears to be the reasoning on the basis of which Moseley denies that he is a “simultaneist”: his “input and output prices” are not determined simultaneously because they are not “short-run prices” but “prices of production” that are “long-run center-of-gravity prices”; such that, under the condition of “long-run equilibrium,” they “equalize the rate of profit across industries”; and once the rate of profit across industries is equalized, then “input prices = output prices” (for these rather than “Sraffian” reasons).

    Kliman’s briefer rejoinder appears in parentheses in his “Part 3.” He writes:

    “Although Moseley denies that he is a simultaneist—[a] proponent of simultaneous determination of input and output prices—he does, as we see, explicitly state that, when a uniform rate of profit prevails, input prices must equal output prices. That is exactly what the rest of us mean when we say that input and output prices are ‘determined simultaneously.’” (Kliman first made this “what the rest of us mean” point in his first installment and he returns to it again here.)

    To this point, I hope to have stated the issue concerning simultaneous valuation fairly as between Kliman and Moseley. I would also like to be on my way to a question concerning Moseley’s concept of “equilibrium.”

    In order to pose my question, I need to review some basics from Kliman’s Reclaiming Marx’s “Capital” (2007).

    Chapter 2, “Marx’s Value Theory and Contending Interpretations,” includes important basic definitions. There Kliman defines “simultaneous valuation” as “the a priori stipulation that the per-unit value (or price) of each input must equal the per-unit value (or price) of the same good or service when produced as an output of the same period…Temporal valuation is simply non-simultaneous valuation” (p. 34).

    Next, in Chapter 5, “Simultaneism, Physicalism, and the Law of Value,” Kliman explains why simultaneous valuation must logically entail physicalism: “the conclusions [simultaneous valuation] produces are necessarily physicalist. This…can be explained very simply. The aggregate value (or price) of a particular type of item is its per-unit value (or price) times the physical quantity of the item. There are thus two things that cause the aggregate value to change, changes in the physical quantity of the item and changes in its per-unit value. But simultaneous valuation eliminates the change in the per-unit value that occurs during the production period. Hence, there is only one remaining cause of changes in the item’s aggregate value—changes in its physical quantity” (pp. 78-79).

    Now here is my question. Moseley had argued disjunctively for one of (only) two alternatives: either Marx’s prices of production are long-run center-of-gravity prices; or they are short-run prices that cannot function as long-run center-of-gravity prices. Although it is not explicitly stated, it seems to be the implication of this disjunctive syllogism that the latter disjunct is unacceptable (as an interpretation of Marx’s prices of production). Therefore, the reasonable alternative appears to be the former disjunct, as Moseley thinks.

    With respect to the disjunction itself, the concept of equilibrium appears to be fundamental. By an economy in equilibrium, Moseley means an economy in long-run equilibrium, when the average rate of profit has equalized across industries, and this is the reason he gives why, under his interpretation, “input prices = output prices.”

    On the other hand, in his sixth chapter, “Was Marx a Simultaneist?,” Kliman takes up the question of “The Static Equilibrium vs. the Average Rate of Profit.” There he writes:

    “…Marx held that actual market prices in a competitive environment tend to fluctuate around prices of production, and that actual rates of profit tend to fluctuate around the general rate of profit. Thus prices of production are average prices and the general rate of profit is the average rate.

    “There is no disagreement about this. However, many simultaneist authors, especially Sraffians, argue in addition that Marx’s prices of production and general rate of profit are static equilibrium magnitudes—the prices and rate of profit that would prevail in a situation in which there is no tendency for anything in the economy to change. But if prices are not changing, then input and output prices are equal. Thus, on this interpretation, Marx’s prices of production are simultaneously determined” (pp. 91-92).

    This leads Kliman to ask:

    “So what is going on? The answer is that Mongiovi [quoted in the previous paragraph], Moseley, and other simultaneists are equating ‘average’ and ‘static equilibrium.’ This is why they characterize Marx’s references to the former as references to the latter. But if the two concepts are different…then their argument collapses. The fact that Marx understood prices of production and the general rate of profit as the average magnitudes around which actual magnitudes fluctuate does not make him an implicit simultaneist” (p. 92).

    Kliman goes on to demonstrate the difference between Marx’s “average rate of profit” and the rate of profit under (the neoclassical concept of) static equilibrium (pp. 92-94), which I will not summarize here. But by way of a preface, he quotes Joan Robinson (1967), who wrote (concerning Capital 3), “There is no tendency to long-run equilibrium and the average rate of profit is not an equilibrium rate, or a supply price of capital. It is simply an average share in the total surplus which at any moment the capitalist system has succeeded in generating” (p. 92).

    Then Kliman quotes his TSSI colleague Alan Freeman:

    “[Marx’s] concept of long-term average is precisely what it says: the average of a varying quantity. In no sense is this identical or even comparable to the notion of an equilibrium price. This is scientifically correct, because in all but the simplest of oscillating systems the two magnitudes are numerically different. In mechanics they are different, for example, in any system in which energy of oscillation is transformed into energy of motion, that is, in which net mechanical work is performed. Thus the average behaviour of a surfboard being propelled by a wave is quite different from the behaviour of the same board in a calm sea” (quoted on pp. 92-93).

    Next Kliman writes, “It should also be noted that, despite Moseley’s and Mongiovi’s references to the ‘long run’ and ‘long period,’ there is a great difference between the actual long-run rate of profit—if one happens to exist—and its static equilibrium counterpart. Imagine that output prices have a systematic tendency to be lower than (or higher than) input prices, and that rates of profit fluctuate around or converge upon some fixed equilibrium value in the long run. This long-run equilibrium rate of profit will be systematically lower than (or higher than) the static equilibrium long-run rate of profit to which Moseley and Mongiovi refer—the rate of profit that would prevail if input and output prices were equal” (p. 94).

    To return to Moseley’s disjunction, then, the “long-run/short-run” distinction is not relevant to Kliman’s TSSI interpretation either of prices of production or of the average rate of profit that enters into their determination. So Kliman is not in fact trapped in the jaws of Moseley’s disjunctive syllogism.

    But I wonder how Moseley would reply to the claim that he wrongly equates “average” with “static equilibrium,” since he does retain the requirement that “input prices = output prices,” which in turn is the defining characteristic of simultaneous valuation (and from which physicalism necessarily follows).

    In “Appendix 2,” of Kliman’s “Part 4,” with respect to “Theorem 2” and its proof, Kliman shows that the TSSI monetary rate of profit differs from the physicalist determination of the monetary rate of profit. This difference arises when input prices are not constrained to equal output prices. Moreover, this difference is obviously substantive and significant—not merely wordplay or “maths”—concerning the best reading of the quantitative dimension of Marx’s own presentation of the theory of value.

    Finally, it seems to me that Kliman’s refutation of physicalism and his vindication of temporalism—as a hermeneutic matter, concerning the best reading of Marx—has serious philosophical implications as well (beyond the quantitative dimension of value theory). I have argued elsewhere that “economists’ physicalism” is either identical to or logically consistent with “analytic metaphysicians’ physicalism”; that physicalism is necessarily atemporalist (or, to put it like this, it’s warmed-over Laplace); and that therefore it is inconsistent top to bottom with Marx’s evident temporalism; more acutely, his philosophy of history; and most acutely, his humanist philosophy of freedom.

    My own tentative conclusion is that Moseley’s attempt to ensnare Kliman on the wrong side of a disjunctive syllogism fails. It also seems clear that by “average,” Marx does not mean “static.”

    What Marx discovers is not the stasis of a Parmenidean world but the metastasis of capital.

    So here’s my question, in case it hasn’t appeared that I’ve asked one. Kliman quotes Moseley writing in 1999, to the effect that “prices of production and general rate of profit are ‘static positions of central gravitation’” (p. 92; internal quotation from Moseley’s 1999 paper, “Marx’s Concept of Prices of Production: Long-run center-of-gravity prices”). I wonder, Prof. Moseley, whether you still hold this view?

  20. As Tom explains at length, Andrew claims that the use of “simultaneous valuation” transforms a value series into a physical one. It doesn’t. The use of a particular operation makes no difference at all to the unit of measure.
    The quantitative similarity – accepting that it exists – does not alter the qualitative distinction between a value series in which the unit is socially necessary labour time – and a physical series in which there is no real unit.

    Tom confirms the point I have made repeatedly above that Andrew confuses a quantitative similarity with a qualitative one. This is such an elementary mistake that maybe Tom hasn’t noticed it.

    Andrew’s own system paradoxically rests on the assumption of a physical unit, where no such physical unit can exist in the real world, as outputs are incommensurate with inputs. Once a physical unit is ruled out – as an ideal assumption which conflicts with the essential basis of production – then the entirely false basis for Andrew’s comparison is all the more obvious.

  21. Just a few further thoughts on the significance of time, temporalism or simultaneity. As Tom points out this has been a much debated issues over the years, as simultaneity has been equated with “physicalism” while it is claimed Marx was a “temporalist”.

    This is related to the physical model proposed by Sraffa in which there is no time. Sraffa’s model (and all genuinely physical models) are a snapshot in which the physical relations of production are fixed. This is necessarily the case as Sraffa’s measure of value the standard commodity (or a physical numeraire), only works if production expands exactly proportionately (this conflicts with various explanations for the creation of surplus, which is attributed to a change in technology but be that as it may). Therefore, it is perfectly true that Sraffa is a simultaneist, but this is a subordinate feature of his value system.

    The key issue with physical “value” models is not the issue of time or simultaneity but the unit of measure. The unit of measure is ideal. The purpose of production is to transform useless inputs into physically different useful outputs. Whether this is measured simultaneously or temporally is entirely secondary. Therefore, outputs are physically different from inputs and so cannot be measured against them.

    The TSSI “solution” to the transformation problem is to allow variables to change in value through “time”, through the course of the production process but not between it, to reconcile differences in values and prices. Therefore, it is claimed those who did not accept this “temporal” solution to the TP and advocate simultaneity preclude this solution and are “physicalists”. This is wrong at many levels, but mainly that simultaneous or temporal valuation does not change the unit. Simultaneous value models based on socially necessary labour time are not physicalist as they do not have a physical unit of value.

    Actually the real point of attack against the physicalists – that is the real ones – is that the physical unit of value cannot exist – as outputs are always (in every single case) physically different from inputs. This is true even in aggregate. The issue of simultaneous or temporal valuation is a subordinate feature of the model necessary due to the need to ensure commensurate expansion.

    But the use of “simultaneous” valuation in value models (i.e those based on socially necessary labour time) is in any respect different from in physical value models. As production can only exist in the real world it must exist in time. It is necessarily therefore, temporal, but it can also be simultaneous meaning “at almost the same time”. Sprinters in a race start simultaneously, not at exactly the same time, but almost, in effect simultaneously. This can also perfectly legitimately be used in models of production, as Marx did for example, where he held values constant through the process of production so that the change in value of inputs and outputs due to various factors could be analysed effectively.

    Andrew’s criticism of Fred therefore, falls down on all points. Fred is not a physicalist as his unit is socially necessary labour time. The use of simultaneous valuation does not change the unit of measurement. The issue of temporal or simultaneous valuation is a confused melange of different points that misses the main issue – the unit of valuation. The use of a physical “value” measure is always ideal. The essential reason why physical value systems is wrong is straightforward, their value measure makes no sense in the real world.

  22. A comment on Fred Moseley’s reply to part 7 of my “All Value-Form, No Value-Substance”:

    “Fred,

    You’re trying to show that your equalized rate of profit can differ from the physicalist rate of profit. But you fail to do so because your computations at the end of your point 2 are simply ridiculous. Your avg. rate of profit (29.0%) differs from the physicalist rate (11.1%), but your rate of profit is NOT equalized, and therefore your ‘prices of production’ are NOT prices of production. Your computations imply that Sector 1′s rate of profit is 85.2%, while Sector 2′s rate of profit is -14.3% !

    Please retract the claim that concludes this ‘demonstration’ of yours: ‘Therefore, when account is taken of the unique feature of Marx’s theory – that labor is not only a cost but also a producer of value – my interpretation of Marx’s theory is clearly different from Sraffa’s theory.’

    What you need to show is that your rate of profit need not equal 11.1% given the same physical data AND AN EQUALIZED RATE OF PROFIT. You will not succeed.

    Further details are here: http://www.marxisthumanistinitiative.org/wp-content/uploads/2016/08/Moseleys-PoP-arent-PoP-8.8.16.pdf

    Moseley’s computations are here: http://www.marxisthumanistinitiative.org/miscellaneous/all-value-form-no-value-substance-comments-on-moseleys-new-book-part-7.html/comment-page-1#comment-383128 .

  23. Fred’s response to Andrew’s points is pretty comprehensive, most of which, outside the mathematical issue are not addressed by Andrew. The link didn’t work above. It is here,

    http://www.marxisthumanistinitiative.org/miscellaneous/all-value-form-no-value-substance-comments-on-moseleys-new-book-part-7.html#comments

    What Andrew’s argument amounts to is that a claimed quantitative similarity between Fred’s model and Andrew’s physical one means that Fred’s model is in fact a physicalist one. It isn’t, as the unit is different. This does not change even if the quantitative similarity is established. Hence Andrew is wrong even if he is right. (This doesn’t change no matter how often it is repeated).

    Just one other point on the idea of physical surplus. There cannot be a physical surplus in a physical model for any individual producer or industry, as their inputs are different from their outputs. (In this sense Andrew’s model is also wrong as it assumes a physical surplus for individual producers or goods which cannot exist).

    At the level of aggregates there can be a physical surplus, that is an increase in the physical aggregate of output compared with the physical aggregate of input, and (if values do not change except during production) this can be elided with a “rate of physical surplus”, except not in the real world.

    This is an illusion as not only will the physical outputs be different from the physical inputs even if they appear the same, i.e. a carrot is not a carrot, as all carrots are different, but how are the different quantities of physical surplus compared, is a ton of carrots “worth” more than a ton of flowers?

    As there is no physical unit of production, the existence of a physical surplus further assumes that the physical proportions of production do not change in order that the relative quantities of inputs and outputs can be compared the one with the other and a relative physical relationship be established with them. This is impossible, as a precondition for production in general and capitalist production in particular is the constant change or revolutionising of these physical relationships.

    When you throw in a further difficulty that most manufacturing and service industries produce final consumption goods that destroy physical inputs in aggregate to produce consumption goods, or in the physical model are physical “value” destroyers then there cannot be a physical measure of output or a physical rate of profit.

    It is paradoxical that Andrew’s solution to the transformation problem only works under assumptions that do not exist in the real world and conflict with the essential nature of production it purports to model.

  24. As an aside this is also the answer to Dimitrev the Russian economist of the turn of the nineteenth century who imagined a fully automated economy in which a machine produced more machines. The “profit” was the increase in machines produced relative to the original machines.

    Andrew was unable to answer what he calls Dimitrev’s “challenge” directly (see page 24 of the collection also reviewed here) and so invented the TSSI. Actually the answer is altogether more prosaic. In producing more “machines” other inputs, i.e. coal, oil, metal, electricity, plastic, sandwiches, tea and of course other machines, will be used up. Consequently, the output, the new machines, will be physically different from the inputs used up in their production. As inputs and outputs are physically different so they are incommensurate, and so it is impossible to say if the increase in machines is of greater “value” than the inputs used up in producing them or indeed if there is a “physical” rate of profit or profit at all. As Sismondi established some time ago, something cannot come out of nothing.

    Sraffa repeated this method in his famous book. In simple reproduction there is no actual production, the same type and quantity of inputs are simply relabelled outputs. In expanded production the “surplus” simply appears from nowhere like magic.

    There are of course, numerous examples of fully automated production systems that do not require human intervention already in the world. Trees for example, produce a “surplus” of leaves by processing carbon dioxide, water and other inputs into outputs. But there is no value or surplus as a tree or forest is not an economic system, which is a form of human organisation, but an arborial one.

  25. I’m glad to see Moseley actually responding to some of Kliman’s criticisms with some numbers. Moseley is now trying to show that his rate of profit differs from the Sraffians’ rate of profit. This is a step in the right direction because numbers don’t lie–as long as they are used correctly. Unfortunately, if Kliman is right, Moseley has not equalized the rate of profit he is comparing to the Sraffian rate of profit. And if his rate of profit isn’t equal in all industries, his comparison is meaningless. So I’d appreciate Moseley’s response on this point: did he compute an equalized rate of profit or not?

  26. Andrew says,

    “What he needs to show is that his rate of profit need not equal 11.11% given the physical data
    above AND AN EQUALIZED RATE OF PROFIT. Hic Rhodus! Hic Salta!
    He will not succeed”

    He will succeed.

    Andrew has forgotten that turnover can vary in the value model but not the physical one. The physical model (purely fantastic with the non-exist value) measures the actual physical quantity of inputs consumed relative to output produced. The value model, on the other hand, measures the amount of value advanced by capitalists to pay wages *not* the amount of value added by wages. If the turnover is more than one, as Marx and Engels both point out it invariably is, then the amount of value advanced will not equal the amount of value added by wages and so the rates of profit will vary.

    Getting the “right” answer is simply a case of manipulating the numbers.

  27. A reply to Andrew Kliman’s reply to my comment on his Part 7

    This result shows is that if you assume given physical quantities, then there is only one rate of profit that is consistent with these physical quantities. Adding “labor as a producer of value” to given physical quantities doesn’t change the basic logic. The given physical quantities still determine the rate of profit and will also determine the new value produced that is consistent with this rate of profit. I realize this point more clearly now.

    However, if one does not assume given physical quantities, but instead assumes given quantities of money capital and quantities of labor-time and the labor theory of value (as in my interpretation of Marx’s theory), then *the rate of profit is determined in a different way and the rate of profit determined is different.*

    This difference is most clearly seen in the case of full automation. If one assumes given physical quantities and that there is a physical surplus, then the rate of profit will be positive. However, if one assumes given quantities of money capital and labor-time and the LTV, and L = 0, then the rate of profit will be zero. These two different theories of the rate of profit clearly come to different conclusions.

    The difference between these two theories of the rate of profit is also seen in the effects of labor-saving technological change on the rate of profit (Okishio Theorem) and in the effects of luxury goods industries on the rate of profit, as I have argued in previous comments.

    These are two fundamentally different theories of the rate of profit (physical quantities vs. quantities of money capital, L, and the LTV) and they lead to different conclusions.

  28. Bill Jeffries makes an important point – that Kliman’s model in terms of physical quantities *assumes equal turnover times* in the the two sectors, and thus does not apply to my interpretation in terms of quantities of money capital which incorporates unequal turnover times. A similar point could be made about *fixed capital* – Kliman’s model assumes no fixed capital and my interpretation incorporates fixed capital. I mentioned these two points in my reply to Kliman’s Part 1:

    “In Kliman’s post, he attempts to prove that my interpretation of Marx’s theory of the rate of profit “arrives at physicalist results” with a numerical example and some algebra. Kliman’s model is a very simple two-sector model which assumes *no fixed capital* and *equal turnover times* in the two sectors. Therefore, whether or not Kliman’s conclusions follow from his simple model … they do not apply to my interpretation of Marx’s theory which assumes fixed capital and unequal turnover times.”

  29. Andrew’s latest response makes two mistakes;

    firstly; his example of Fred’s value model assumes the same rate of turnover as his physical model does. This is the reason why the rate of surplus value is the same, and the rate of profit is the same. But as the rate of turnover can be different between the two models (in the value model, value added by wages does not have to equal value advanced for wages, but in the physical model physical inputs consumed as wages are aggregated, so there is no distinction between the amount advanced and the amount consumed) so the rate of surplus value will be different from the physical model and so will the rate of profit.

    secondly; his physical example gives “values” to the fixed capital and variable capital stock. But this is a model without labour, so the values of these too must be zero, not just variable capital and surplus value. There is no price at all. In value terms every column is zero. Literally nothing happens. In a physical model however, there will be positive quantities (say of wood, bark and leaves) so it will be possible to establish a relationship of output to input., and it will be possible to establish a physical “rate of profit”.

    In both cases “simultaneous” determination is beside the point.

  30. A further more in depth response to Andrew’s latest post.

    Essentially what Andrew’s argument amounts to is that, assuming a fixed relationship and physical identity between inputs and outputs then A can be valued in terms of B or B can be valued in terms of A. This works with physical quantities of labour and some other physical commodity. As these combinations are fixed so they are invertible, an identity matrix can map A onto B or B onto A. In terms of the maths the priority of one over the other is indeterminate and so value can be physical or physical can be value.

    As, following Sraffa, physical value theorists use systems of simultaneous equations to establish commensurability as described above, so Andrew concludes that simultaneous valuation mean that value is physical or physical is value. To escape the invertability, he introduces a variation “temporality” into the value model. This means the value model is no longer invertible with the physical model and the identity matrix does not map the one model onto the other. Andrew effectively inverts the causation, as simultaneous valuation are a by product of the physical system not its cause.

    In his most recent example he says that good 1 produces good 2 and good 2 produces good 1. The egg produces the chicken and the chicken produces the egg. But are eggs and chickens the only inputs involved in producing chickens and eggs? No, indeed there are an essentially unlimited combination of physical inputs involved in producing chickens from eggs and eggs from chickens, which are by no means identical. Incubators, battery cages, corn, warm lighting, as well as sandwiches, cars consumed by workers in the wage fund etc. Consequently, the physical identity required for Andrew’s model (good 1 makes good 2 and good 2 makes good 1) does not exist, but has to be assumed, otherwise the identity matrix breaks down and labour is no longer interchangeable with physical output assuming simultaneous valuation.

    The requirements of this model also explain why turnover must be the same between them. Turnover means that there is an alternative route for ensuring that the value system is not the mirror of the physical one (even under the unrealistic assumptions described above). In the physical system the total of physical inputs is aggregated at the end of a production period and compared with the total of physical inputs. Consequently, the amount of physical inputs consumed by workers is the same as the amount of physical inputs advanced. The excess of physical output over physical input is the amount of “surplus” and the proportions between the two are the rate of surplus.

    In a value model, value advanced for wages is different from value added by wages. Capitalists receives back their amount of value they advanced after the first turnover. As a result the rate of surplus value and the rate of profit in the value system are different to and incompatible with the rate of surplus in the physical system.

    Finally the example of total automation. Consider an orchard. In the value system there is no labour expended, no wages advanced, no value added, no fixed capital consumed, no value or profits produced and so no price at all. But not so in the physical model.

    The orchard is now a forest, a tree (representing fixed capital), combines carbon dioxide, sunlight, water and nutrients from the earth (representing circulating capital) to produce leaves and flowers and apples (representing output). Bees consume pollen (representing variable capital) to fertilise other trees to produce blossom (representing output). If the tree is alive it is growing and so the change in wood, leaves, pollen, apples, and honey from one year to the next can be compared and a rate of “physical surplus” established. There are no humans in the model and so no human labour expended and so there is no value rate of profit, (an equation which has a rate of surplus value, that is a proportion of variable capital to surplus value for human workers will be zero and so the rate of surplus value of the physical model will be zero, but that is only as there are no humans in the model, to be consistent with the assumptions of the model the “wages” of bees must replace human workers) but there is physical production, the bees do consume pollen and as there is physical output, i.e. apples, leaves, honey and blossom, there can be a physical “rate of profit” even though there is no value or price.

  31. Fred,

    Please be serious. I’m very well aware that you and other physicalists will compute different rates of profit if you and they are dealing with DIFFERENT economies. The point is that your rate of profit is quantitatively identical to that of other physicalists if you and they are dealing with the SAME economy.

    Please do not refer to “Kliman’s model.” I have no model. First of all, what I employ are just examples that have the purpose of disproving your claims, not models. Secondly, they are your own examples, or examples that you have already accepted.

    In part 7 of “All Value-Form, No Value-Substance,” http://www.marxisthumanistinitiative.org/miscellaneous/all-value-form-no-value-substance-comments-on-moseleys-new-book-part-7.html, I called out your repeated attempts to rule out examples retroactively–after they have disproved your claims. You need to tell us-–exactly and in full detail––each and every assumption that you deem unacceptable in an example that demonstrates that your interpretation is physicalism in disguise. And you need to accept that any assumption that you does not rule out explicitly and in advance––that is, *before* being shown the example––may legitimately be employed in order to produce a disproof of your denial that your equilibrium rate of profit is quantitatively identical to the equilibrium rate of profit of the (other) physicalists.

  32. Sydney,

    I’ve tried to understand your comment of 31 Jul 2016 at 11:04am, but I can’t make heads or tails of what you’re really saying about interpretation.

    You seem to be suggesting that Marx was the first person who advocating testing of empirical claims, but that’s obviously wrong. So my initial presumption was that you meant something else, but I can’t think of anything else.

    You want to jettison interpretive disputes that haven’t yet been resolved by appealing to the following criterion: “whether any assertion or view corresponds to historical, social reality.” This doesn’t solve the problem, because it presumes that the interpretive dispute HAS already been resolved. That’s always a problem in principle with what you’re suggesting, but in the case of Marx’s theories of value and economic crisis, it’s also live, concrete problem. It’s impossible to get agreement on results of empirical tests of whether these theories “correspond[ ] to historical, social reality” (whatever that may mean), because there is no agreement about what the theories say. I know, I’ve been there.

    Also, what makes you think that empirical issues are going to be agreed upon more easily than interpretive ones (which are also empirical)? When it comes to Marx’s theories of value and economic crisis, that’s not the case. I know, I’ve been there, too.

    The fact that an interpretive or (other) empirical issue hasn’t yet been settled doesn’t mean that it is undecidable in principle, and it doesn’t even mean that there are any grounds for regarding it as an open question on an intellectual level. I don’t think you take sufficient account of ideology and material interests, for example when you write that my “opponents are unconvinced.” I’m not suggesting that they are unconvinced because of ideology and material interests; I’m saying that they’re playing a different “game” entirely because of ideology and material interests, a “game” in which intellectual terms like “unconvinced” are just inappropriate. So I gave up trying to “convince” opponents, and indeed everyone else, about 2 decades ago. What I’ve been focusing on is trying to change the subjectivist and careerist environment that permits and even encourages unscholarly behavior and, in so doing, makes progress in Marxist thought almost impossible. (See the recent review of “Is Marx’s Theory of Profit Right?” on this site, for discussion of this problem. The review is just the kind of thing that’s needed to combat it.

    On the other matter, the value-price of production transformation, I have to say that I don’t think you understand the issues. First, Sweezy did, clearly, “explain what problem he saw in the text of Volume 3.” On pp. 113-4 of “Theory of Capitalist Development,” he wrote:

    “If the procedure used in transforming values into prices is to be considered sat-isfactory, it must not result in a disruption of the conditions of Simple Reproduction. Going from value calculation to price calculation has no connection with the question [of] whether the economic system as a whole is stationary or expanding. It should be possible to make the transition without prejudicing this question one way or the other.”

    That’s the alleged “logical” problem you were referring to.

    Second, if I understand what you’re arguing (I’m not sure I am), it is that prices differ from values and Marx knew this and the difference isn’t a defect in his theory. If that’s what you’re saying, it’s very similar to what Moishe Postone said about the debate on the value-price relationship, and he simply didn’t understand the critique made by Bortkiewicz, Sweezy, and modern physicalists at all. Not at all. (I discussed this on pp. 146-8 of “Reclaiming Marx’s ‘Capital’: a refutation of the myth of inconsistency.” On pp. 148-52, I discussed the Bortkiewicz-Sweezy critique.)

    Finally, no one disagrees that “Whatever the capitalist may have paid for the raw materials, wages etc., may be re-assessed at the given market at that given time. In this important sense, the valuation, the realisation of the value, of the commodity is made at the time and place of sale and at no other time and place.” I certainly don’t. What I say is that, in reality and in Marx’s theory, this revaluation has no bearing on the amount of capital-value invested in the past. The amount of capital-value invested and the values of the things purchased with the capital are 2 different things. I also say that, in Marx’s theory, the value of a commodity when it is produced, prior to any sale, isn’t determined by subsequent events (such as prices at time of sale).

  33. Andrew’s latest postings get to the heart of the matter. He exclaims to Fred,

    “Please be serious. I’m very well aware that you and other physicalists will compute different rates of profit if you and they are dealing with DIFFERENT economies. The point is that your rate of profit is quantitatively identical to that of other physicalists if you and they are dealing with the SAME economy.”

    It is curious that Andrew did not notice the significance of this point before he wrote his latest reply. The point is that the assumptions made by Andrew in order to render the physical and value models the “SAME” destroy the logical necessity for the labour theory of value, by enabling value to represent physical or physical to represent value, as Andrew demonstrates through his identity matrix.

    The very reason that Ricardo abandoned his 1815 corn model and adopted the labour theory of value in his 1817 book was that inputs are not identical without outputs. Instead of a one good, two good or million good model (with identical inputs and outputs) Ricardo realised that inputs and outputs are *never* identical. This is why the physical production process has to be valued by another objective standard – labour time. This is why, In this value model, labour is a universal equivalent and standard for all other physical production. This rationale was adopted by Marx. But the rationale for this model *only* exists if physical inputs and outputs are incommensurate. If commensurability is assumed then physical can represent value, value can represent physical.

    So after having destroyed the rationale for the labour theory of value, Andrew attempts to save the unique role of “labour” through his temporal assumption that makes the two models, physical and value, “different”, but the damage has already been done.

    Even so, assuming there is a physical model, it has to be consistent with itself, which mean it produces different results from a value model. I explained that different rates of turnover, achieve the same effect as Andrew’s “temporal” assumptions.

  34. Andrew’s explanation – that he assumes physical models are the same as value models – and then proves the thing he has assumed, also solves the paradox of the unit, which is where this discussion began.

    At the outset of this debate I pointed out that the unit of a physical model was an ideal abstraction, a non-existent assumption that does not exist in the real world. It is therefore, incompatible with the unit of a value model socially necessary labour time, a real measure of actual effort expended by workers in the process of production.

    How then to equate the abstract ideal (physical) unit with the real (value) unit?

    Andrew insists that the unit is unimportant, as value could be physical or physical could be value, if prices are measured simultaneously. Hence Fred’s model simultaneous timing is “physicalist” – the time of the measurement has changed the unit.

    Andrew’s latest posting has clarified how this was possible. He simply assumes that value and physical units are the same. After assuming they are the same, he then proves they are the same algebraically. The timing is not the thing, the prior assumption is.

  35. Here is the URL to the just-published Part 9 of “All Value-Form, No Value-Substance,” my series of comments on Moseley’s book:

    http://www.marxisthumanistinitiative.org/uncategorized/all-value-form-no-value-substance-comments-on-moseleys-new-book-part-9.html

    It is a response to his reply to Part 8.

    “In Part 8 of this series of comments on Fred Moseley’s new book, I stated, hopefully, that ‘we may be seeing the first step of forward movement in the debate’ (Kliman 2016, p. 1). I should have remained without hope. Moseley’s (2016c) response to Part 8 takes several steps back. His arguments are getting more and more feeble, but he persists nonetheless. He seems determined to prove, once and for all, that Marxian economics means never having to say you’re sorry.”

    Comments welcome (but please see my comment of 15 Jul 2016 at 7:37am, above).

  36. The physical corn model cannot include living labour – the surplus product can change for reason. When living labour is included in the monetary/value corn models, the temporal and simultaneous ones will give the same results when the surplus change is due only to a change in the quantity of living labour. They differ of course when productivity changes.

    These are value ‘flow’ models. When it comes to calculating a rate of profit, you need a stock value for the advanced capital. As far as I can see, it comes down to the unit price of corn you use and everything follows from that? The temporal model uses the unit price of the corn at the beginning of the period – which is the same as the unit price at the end of the preceding period, i.e. the flow of conserved value. The simultaneous model uses the unit price of the new corn added by living labour during the period of production. And then, perhaps, the choice is which one best reflects the change in productivity.

  37. The difference between Andrew’s physical model and his value one is trivial. Andrew’s accepts and advocates all of the conditions for Sraffa’s model, identical inputs and outputs, the existence of a physical unit of price, that the physical model can equate to the value one, that inputs are not destroyed in producing outputs, etc. with one exception. He allows output prices to differ from input prices – simultaneous price determination is replaced with temporal price determination – hence the so called “temporal interpretation”. If a physical value theorist allowed this variation, then there would be no difference between Andrew’s model and the physical one at all. Perhaps its easiest to think of Andrew’s model is as the Temporal Interpretation of the Sraffian System (TISS).

    What Andrew needs to show is how temporal pricing creates a qualitative difference in the unit of measure, i.e. how it transforms a physical measure into a value one, that’s impossible, so he assumes they are the same, and then measures a quantitative difference. Consider a cheese factory, the time of the measure does make a difference, but not as a result of the time of the measure, but due to the nature of the process of production itself. The physical quantity of material (the weight of milk) declines between the beginning and end of the production process, as milk is transformed into whey and then into cheese. According to the physical measure the rate of surplus falls through the time of the production process (cheese production is value destroying activity in the physical model, except to the extent that cheese forms an input into other outputs, like cheese toasties, in which case the cheese toastie is value destroying) but in fact the amount of cheese has increased from nothing to some quantity, labour has been expended in its creation and so the value of the output has increased. What changes the nature of the thing is not the timing but the process – even though the timing of the process will yield different results.

    Andrew’s reasoning is circular as he assumes the thing that he has to prove. He assumes that economies (or units of measure) are the same, and then confuses a quantitative identity with a qualitative one or in his own words,

    “I’m very well aware that you and other physicalists will compute different rates of profit if you and they are dealing with DIFFERENT economies. The point is that your rate of profit is quantitatively identical to that of other physicalists if you and they are dealing with the SAME economy.”

  38. Here is the URL to the just-published Part 10 of “All Value-Form, No Value-Substance,” my series of comments on Moseley’s book:

    http://www.marxisthumanistinitiative.org/miscellaneous/all-value-form-no-value-substance-comments-on-moseleys-new-book-part-10.html

    It is a response to part of his reply to Part 9.

    “Fred Moseley is trying to have it both ways. I’m damned when I assume given physical quantities, and I’m damned when I don’t assume given physical quantities.

    “In Part 8 of this series of comments, I provided a demonstration, one of many, that his ‘macro-monetary’ equilibrium rate of profit is quantitatively identical to the rate of profit of the (other) physicalist economists. He attempted to dismiss this demonstration on the grounds that it supposedly *assumed given physical quantities*: …

    “Then, in Part 9, I produced another demonstration, this time proceeding in the opposite direction. I began with “monetary quantities that are *taken as given directly*,’ just as he stipulated. He has now tried to dismiss this demonstration as well, on the grounds that it *did not assume given physical quantities* ….”

    Comments welcome (but please see my comment of 15 Jul 2016 at 7:37am, above).

  39. There are several issues with Andrew’s reply to Fred, but what they actually amount to is Andrew’s demand that the physical model is interchangeable with the value one as “we’re considering the one and the same economy” (4).

    Andrew essentially accepts the physicalist argument that physical equals value and value equals physical. Andrew uses two good models, just like Sraffa. Andrew assumes one good produces the other good, just like Sraffa. That outputs are identical with inputs, just like Sraffa. That inputs are unchanged at the end of the production process, just like Sraffa. And most importantly, Andrew assumes a physical unit of production, just like Sraffa.

    Andrew’s only issue with the Sraffian model is the timing of the measurement, not what is being measured or the assumptions that underpin it.

    But Sraffa’s (and Andrew’s) models violate the essential purpose of production, which is to transform useless inputs into physically different useful outputs. This purpose provides the key rationale for the application of the labour theory of value, that outputs are incommensurate with inputs in every real system of production.

    Consequently, the premise for the labour theory of value, is that no physical unit of “value” or “price” can exist. None of the preconditions that are necessary for its existence, exist. In any real production system, outputs are never identical with inputs, physical proportions and types of inputs and outputs constantly change, most output does not re-enter into the production process again as inputs, but is destroyed in the act of consumption. As a result the amount and type of physical goods represented by the same unit of socially necessary labour time is constantly changing. This fluctuating uncertainty determines that physical output, cannot be measured against itself, but some other objective standard – socially necessary labour time.

    But Andrew exclaims,

    “Fred, please make up your mind!
    Do you want me to assume physical quantities and derive your monetary quantities from them?
    Or do you want me to assume monetary quantities and derive physical quantities from them? ” (3)

    This is unanswerable as physical quantities cannot be derived from monetary ones or vice versa. Monetary quantities represent a constantly changing quantity and type of physical outputs – even in the “same economy”.

  40. Here is the URL to the just-published Part 11 of “All Value-Form, No Value-Substance,” my series of comments on Moseley’s book:

    http://www.marxisthumanistinitiative.org/miscellaneous/all-value-form-no-value-substance-comments-on-moseleys-new-book-part-10.htmlhttp://www.marxisthumanistinitiative.org/miscellaneous/all-value-form-no-value-substance-comments-on-moseleys-new-book-part-11.html

    It is a response to his reply to Part 10.

    “Fred Moseley has just tacitly accepted the temporal single-system interpretation (TSSI) of Marx’s value theory. He now recognizes (more or less clearly) the contradiction between Marx’s theory and simultaneous valuation of inputs and outputs, and he takes a stand in favor of Marx’s theory. He doesn’t say this openly, and he is trying to wriggle out of the contradiction, but the handwriting is on the wall.”

  41. Andrew’s latest contribution takes a slightly different tack than formerly.

    Formerly, he denounced Fred as a “physicalist” applying the syllogism that as physicalists use simultaneous price determination, so simultaneous price determination is “physicalist”, Fred uses simultaneous price determination, so Fred is a physicalist.

    A carrot is orange, a orange is orange, a orange is a carrot.

    This logic is only possible at all on the proviso that the physical and value models are essentially identical apart from the issue of timing (an identity that ironically destroys the premise for the labour theory of value), or to put it another way, on the assumption that an orange is a carrot.

    Fred proved conclusively in previous instalments of this debate, that Andrew had proven his accusation of “physicalism” by simply by treating physical quantities as value ones and vice versa.
    Following this assumption a quantitative identity could be established between them, as the qualitative identity had already been assumed, the quantitative identity sufficed to confirm the already assumed assumption.

    The insurmountable problem that Andrew cannot address is the qualitative one, there is no physical unit and so the value terms cannot be measured in physical terms. Andrew needs Sraffa’s model to explain his model and so he appropriates and applies Sraffa’s assumptions to prove the identity between the two quite different and incompatible units of measure, even though none actually exists.

    So much for the review.

    In this contribution Andrew claims that as Fred “now recognizes (more or less clearly) the contradiction between Marx’s theory and simultaneous valuation of inputs and outputs, and he takes a stand in favor of Marx’s theory” and so Fred inadvertently vindicated Andrew’s theory, even when he advertently refuted it.

    The paradox is that Andrew’s proposed “solution” to von Bortkiewicz’s version of the Marx’s transformation procedure, is only necessary due to the prior assumption of the identity between physical and value measures. It is the qualitative identity which is the mistake, not the quantitative measurement of it.

    Andrew allows input prices to diverge from output prices in an attempt to maintain the identity of surplus value with profit and value with price within the framework of this identity between the value and physical models. Andrew thinks historical valuation resolves the “inconsistency” of value and price in Marx’s model, it doesn’t as this “inconsistency” needs no resolving, Marx’s model is not a physical one.

    Indeed, there are many ways of solving the transformation problem, including with simultaneous valuation, it’s just that Andrew hasn’t thought of them.

  42. I shall try and explain to Professor Kliman my previous comment.
    This discussion is certainly the longest-running discussion I have encountered in reading this list for many years. I will stick my neck out, repeatedly today, and I will predict that there will be no resolution of this dispute in this forum. Why not? Because IMHO the protagonists have different starting assumptions and so whatever the logic they will never agree.
    So, I said originally that yes, interpretation of a text is crucial and can be debated ad mortem [with apologies]. This current discussion has already been going on for years and it seems to me that no progress is being made, even if some or all the protagonists claim that progress is being made. What should people do in a circumstance like this? Professor Kliman seems to say that one must persist in this interpretive argument ad mortem. I disagree with this. IMHO, this would be useless and wasteful.
    Then what alternative do I suggest? Scientific materialism has an answer to hand. That answer is that one must appeal to material reality to arbitrate the dispute. I must agree with Professor Kliman that my proposal is limited; it will only reveal the truth of the matter. It will not directly, resolve the interpretive dispute.
    However, we can then conclude that since we have the truth of the matter, we can correctly say that if the truthful answer is consistent with the original text that initiated the dispute and that there is no other textual evidence that the author meant other than the truthful answer, then we ought in fairness attribute the truthful answer to the original author.
    I will again stick my neck out and say that the ultimate proof of any claimed fact lies ultimately in human, social practice based on the disputed claim.
    Finally, I would like to emphasise a point that has been made repeatedly in this discussion, but has not been central to the discussion. IMHO, the central fact about the investigation of the nature of [exchange] value is that value is NOT really a property of the commodity but it represents contemporary social relations between classes of people. Consider a kettle, it may be made of steel or of plastic. Now consider its [exchange] value. This is derived from the amount of socially necessary labour time required for its production. This latter is not a property of commodity, apart from obvious technical aspects of its production. The phrase says it explicitly; what matters is socially, necessary labour time, not technically necessary labour time. But the socially necessary labour time is not determined in any specific production unit. It is determined by the ensemble of relevant units, but mediated self-evidently, by active, transient, social relations of classes of people.
    Consider the following possibility. Tomorrow, a new financial crisis erupts which spreads widely. In such an event, the value [ the average price] of most commodities in the world will plummet. The commodities themselves have not changed one iota, but their [exchange] value has changed considerably. The conclusion is that [exchange] values and thus prices are reflections of social relations and are measures of social relations. IMHO, ANY discussion of human society, and especially in political economy, must be fundamentally a discussion of social relations. IMHO, the explanation of [exchange] value given by Marx is exactly just such an example.

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