‘Is Marx’s Theory of Profit Right? The Simultaneist-Temporalist Debate’ by Nick Potts (ed) reviewed by Anonymous

(ed)
Is Marx’s Theory of Profit Right? The Simultaneist-Temporalist Debate

Lexington Books, Lanham, MD, 2015. 194pp., $80.00 / £52.95 hb
ISBN 9780739196311

Reviewed by Anonymous

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For several decades now, proponents of the Temporal Single-System Interpretation (TSSI) have claimed that they have refuted an established “truth” that went essentially unchallenged for more than a century: the proof that Marx’s value theory, taken as he presented it, leads to logically inconsistent conclusions. The TSSI states, in short, that if Marx’s Capital is interpreted temporally (i.e. output unit values/prices are not considered equal to the unit values/prices of inputs needed to produce them) and in a single-system manner (i.e. the value transferred by inputs to outputs equals their prices, not their values), all of his disputed conclusions can be logically deduced from his presuppositions. By accepted exegetical standards, this would prove the superiority of TSSI authors’ reading of Marx. This claim directly contradicts the conventional interpretations of Marx, which TSSI proponents call simultaneist, that accept the proof of his inconsistency but claim to provide a viable correction to Marx’s supposed errors, contradicting some of his conclusions, but maintaining those that are (supposedly) essential to his world view.

Is Marx’s Theory of Profit Right provides a revealing insight into the way in which the debate between leading TSSI proponents and some of their principal critics has been conducted since the start of this century. Although the non-specialist will have to seriously refresh her or his math, the key issues and, perhaps even more essentially, the way in which proponents and critics have responded to each others arguments, are fairly accessible. The collection will most likely leave the reader quite impressed with the serious attitude of its TSSI-adherent editors, Nick Potts and Andrew Kliman, for republishing their opponents’ articles, allowing the reader to accurately form her or his own opinion. It is far from evident that they would have been granted the same courtesy. The introduction by Potts effectively summarizes the unscholarly methods with which critics have sought to suffocate the TSSI.

The issue that this collection focuses on is TSSI authors’ contention that “simultaneist” approaches confuse the coexistence of surplus labor and profit with the idea that surplus labor is a necessary and sufficient condition for profit. If we abide by the restrictive conditions adopted by simultaneist interpretations, profit does in fact always coexist with surplus labor. Proponents of these interpretations claimed that this coexistence proves that surplus labor is a necessary and sufficient condition for profit. However, as soon as the restrictions are loosened, this coexistence breaks down under certain circumstances. In particular, all simultaneist intepretations imply that profit can be negative even when surplus labor is positive. Hence, surplus labor is not a sufficient condition for profit. Whether the imposed restrictions are ever violated in the real world does not matter logically. Simultaneist approaches, therefore, cannot possibly be reconciled with Marx’s own value theory. Not even his essential conclusions, which the simultaneist approaches claim to rescue from inconsistency, survive this critique.

In their responses, Simon Mohun and Roberto Veneziani, critics of the TSSI, seem to be unable, or perhaps unwilling, to grasp the reasoning behind this argument. Instead of engaging in discussion to defend the claim that surplus labor is a necessary and sufficient condition for profit in simultaneist models, they initially launched a counterattack on the TSSI. Then, instead of challenging the logic behind the TSSI critique, they demanded mathematical proof that surplus labor and profit can ever fail to coexist in simultaneist models. Astonishingly, as soon as examples that satisfied this demand were provided by TSSI authors (Andrew Kliman and Alan Freeman), their critics made additional demands. They would accept that an example shows that surplus labor and profit can fail to coexist in simultaneist models only if the example is “economically meaningful” (45). The burden of proof was then raised two more times: the example had to be “empirically plausible” (64-65); finally it had to be “economically interesting” (111) as well. All this ignores the logic of necessary and sufficient conditions, which does not require any of these conditions to be met. Finally, Mohun and Veneziani ended up by completely ignoring the TSSI critiques and rejoinders.

Regardless of whether one upholds the TSSI or any other interpretation of Marx’s economic writings, the hostile attitude the TSSI authors were confronted with is quite striking. In that sense a separate discussion, in the second part of the collection, between philosopher Robert Paul Wolff and (mostly) Andrew Kliman, is quite a relief. Unfortunately, after a fairly healthy and honest debate, Wolff likewise seems to miss the point Kliman tries to make, causing him to unjustly regard Kliman’s insistence on settling the original debate as unwillingness to discuss Wolff’s alternative take on Marx.

For the non-specialist reader, Kliman’s Reclaiming Marx’s Capital (2007) most likely provides a more accessible insight into the essence of the debate, and the core differences between competing interpretations, than this new collection. However, Is Marx’s Theory of Profit Right serves two equally important purposes: not only does it allow the skeptical reader to verify with her or his own eyes the utter inability of the TSSI’s critics – thus far – to provide its proponents with an adequate response. It also stands as valuable evidence of the unscholarly and even unscientific methods of some, if not many, in the field of economics.

Personally, I stand by one of the closing remarks of Kliman and Freeman in their final article: the debate is over.

30 July 2016

7 comments

  1. The reviewer considers the debate around the TSSI is over, but unfortunately for him, the problem with debates is that it is not for the proponents of a particular point of view to decide when the matter is no longer up for discussion.

    There are, in fact, plenty of reasons to disagree with the TSSI. What the reviewer presents as mere matters of interpretation, are very much at odds with what Marx wrote and indeed Marx’s own transformation example, which precisely did consider that outputs prices were equal to input values. That was why Marx had a transformation procedure in the first place.

    Of course “interpreting” the example to remove the problem “solves” the problem in the sense that it interprets it away, but it does not solve the problem.

    This is why the “debate” is not closed by the TSSI.

  2. The concept of profit is one that doesn’t apply to our macroeconomics world. It is true that every business person in in business in order to make a profit, but when we analyze the 3 returns of production as specified by Adam Smith, namely the: ground-rent (for access to land), earnings (for use of labor) and interest or dividends (for access and use of durable goods), not one of them needs any profit to be included for them to work properly within the system.

    The term “profit” is an imagined gain, which everyone thinks he/she can get and benefit from, yet it is not a part of the return for participation in a production process. So any “theory of profit” is invalid because it takes into account a non-existing part of our economy. This is hard to see until you begin to think in macroeconomics terms, because profit is a microeconomics concept and Marx along with many others cannot quite escape from their subjective micro-economics concepts when trying to understand the Big Picture.

  3. David Harold Chester, you say that profit, as distinct from interest, rent, etc. is ” a non-existing part of our economy.” That’s simply false.

    For instance, the US government reports that, in the first quarter of this year, “net operating surplus” was divided as follows:

    corporate profits, 36%;

    proprietor’s income (profits of unincorporated businesses as well as incomes of small business-owners and the self-employed), 31%;

    rental income of persons, 15%;

    interest and miscellaneous payments; 15%;

    other, 3%.

    See Table 1.10 here: http://bea.gov/iTable/index_nipa.cfm.

  4. Thanks to Roel Van de Poel for his concise review. With respect to Bill Jefferies’ remarks above, I thank Van de Poel too for mentioning Kliman’s RECLAIMING MARX’S CAPITAL (2007), which includes two chapters (Chs. 8 & 9) on the so-called “transformation problem” that supposedly bedevils Marx’s explanation in Vol. 3 of CAPITAL of the transformation of values into prices of production. For the hermeneuts in the room, the problem appears in Ch. 9. How should we interpret the line, “…it is always possible to go wrong”: is it the admission of a mistake or a caution? (Marx, 1991, pp. 264-65; and see Kliman, 2007, p. 106). Kliman analyzes an array of rival interpretations (including Fred Moseley’s, whose most recent work has also recently been profiled here by Patrick Murray),, all of which share the feature of simultaneous valuation in common (from which, incidentally, Kliman demonstrates that a physicalist interpretation of Marx’s theory of value in general necessarily follows (the Sraffian reading that produces such artifacts as the Okishio Theorem, etc.). So in reply to Jefferies above, it is precisely “what Marx wrote and indeed Marx’s own transformation example” that is at issue, which he offers as the reason why Marx “had a transformation procedure in the first place.” What must be avoided, of course, is begging the question (second to which probably comes straw-person fallacies)–the sort of issue Van de Poel suggests in his review.

    Peace,

    Tom

  5. The problem is Andrew’s analysis too rests on the application of a “physicalist” interpretation that cannot be justified against any objective standard. Indeed his critique of Fred rested on a model which cannot exist in the real world and the assumptions of which fundamentally contradict the essential nature of production – as a process which transforms one set of physical inputs into a different – and incommensurate – set of physical outputs. There is no unit of measurement in a physical model and so any use of it is fundamentally at odds with a scientific method.

    Andrew justified this by asserting that his model was not based on the world, but an interpretation of the text. Well there are interpretations and “interpretations”.

  6. For the record, I did not at all mean that the debate on the TSSI is, or should be, over. Rather on the contrary. The opinion that *this specific* part of the debate is over is not even my main conclusion, only a closing remark.

    The book I reviewed only encompasses a portion of the debate, namely “TSSI authors’ contention that “simultaneist” approaches confuse the coexistence of surplus labor and profit with the idea that surplus labor is a necessary and sufficient condition for profit.” In fact, this is not even a direct debate on the TSSI itself but rather on a competing approach. The TSSI is simply not the issue under discussion, even if Mohun and Veneziani tried to make it so. My main conclusion is that Mohun and Veneziani were unable to respond to TSSI authors’ criticism in a scientific way, and ended up by resorting to unscholarly methods. Confronted with these methods, I think it is unwise and in any case useless to continue the debate.

  7. Fair enough, up to a point, but I am still interested how you justify the use of single commodity models in which outputs are identical to inputs. As these models fundamentally violate the purpose of production, there use proves nothing about the real world. How could a response to them be “scientific” when there use is anything but?

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