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NEWS & LETTERS, March-April 2005Review Essay
Why Marx's
theory of value matters
by Tom More The New Value Controversy and the Foundations of
Economics, edited by Alan Freeman, Andrew Kliman, and Julian Wells, 2004,
Cheltenham, UK: Edward Elgar. 352 pp. $110. This collection of 17 papers and an
"Introduction" by the editors "represent[s] the first response by
Marxist scholars to the debate initiated by MARXISM AND NON-EQUILIBRIUM
ECONOMICS (Freeman and Carchedi, 1996), a work that presented, for the first
time in book form, what has become known as the Temporal Single-System
Interpretation (TSSI) of Marx’s value theory" (ix). The "new value
controversy" is the latest chapter of an old debate, going back to the
posthumous publication of Volume III of CAPITAL (1894) and its
misrepresentation, most prominently by Böhm-Bawerk and Bortkiewicz. What's important is the centrality of Marx’s value
theory to Marxism as a totality. If CAPITAL is the theoretical center of gravity
of Marx’s thought, then a correct interpretation of the categories and
concepts of what is standardly called Marx’s "labor theory of
value"--value; use-value and exchange-value; the commodity, money, and
capital forms of value; abstract and concrete labor; wage-labor; variable and
constant capital; and surplus value--will prove decisive for the understanding
of Marxism. However what counts as the right meaning of these categories and
concepts is as contested today as it was a century ago. Bypassing the technical issues raised by THE NEW VALUE
CONTROVERSY, which are certainly crucial to pursue for anyone interested in the
project of recovering Marx’s Marxism for our time, we can begin by reflecting
on the larger significance of the appearance of this collection at this
juncture. We might think of the big picture this way. A century ago, arguments
that seemed authoritative claimed to demonstrate that Marx’s theory of value
was internally inconsistent. The "mainstream" simply accepted this
conclusion at face value and adduced it as grounds to dismiss Marxist theory as
such as resting on a mistake. On the other side of the aisle, Marxian economists have
had to discern whether Bortkiewicz’s and other "corrections" of
Marx’s original theory count as progress within a "Marxist"
paradigm, or whether the project Bortkiewicz launched is really ANOTHER THEORY
of political economy that had too hastily concluded that Marx’s theory as it
stood was internally inconsistent. Unfortunately the "corrected"
versions of Marx's theory both violate the dialectical structure of CAPITAL and
mangle his most significant conclusions. The significant claim of TSSI is that
Marx’s own fundamental theoretical results can be shown to stand, that his
theory is coherent, and that the longstanding charge of internal inconsistency
has been refuted. Undoubtedly these are high stakes. As the editors argue,
"At stake is the nature of scientific endeavor" (xiii). If the
Bortkiewicz interpretation (about which I will say more below) is NOT the theory
of Marx, "this matters," because "the exclusion of Marx is one of
the cardinal implicit tenets, one of the principal ideological pillars, of
modern economics....[The] standard basis for this exclusion is precisely and
only the assertion that his body of work is inconsistent. The implications of
TSSI therefore reach beyond Marxist economists to call into question the
foundations of neoclassical economics as a whole" (xiii). The most worthwhile aspect of the volume is its
demonstration of the merits of a new return to the ORIGINAL presentation of
Marx’s theory, on its own terms, within the framework of the three volumes of
CAPITAL (as well as the GRUNDRISSE, THEORIES OF SURPLUS VALUE, and Marx’s
other far-flung manuscripts). I will not be able to discuss several of the
papers in this collection, which are eclectic and cannot be said to share a
unified theoretical perspective. But in their totality, they make it plain that
the return to the text of Marx is charged with explosive potential in the
academy and beyond it. SCIENTIFIC THEORY--'EASIER AND RIGHT' Perhaps Alan Freeman draws the most significant
conclusion for Marxist-Humanists. In contrast to what Andrew Kliman calls
"the ‘Whig interpretation’ of the history of economics" (20)--the
view that predecessor scientific theories are routinely superceded by successor
theories "in a unilinear progressive movement of theory"--Freeman
begins his paper with a meditation on the Copernican Revolution: Copernicus
achieved his basic conception from an older, even archaic source, Aristarchus of
Samos (55). What this demonstrates is that the scientific progress achieved by
Copernicus and Galileo "did not come through a forward development of [the]
dazzling system [of Eudoxus, Aristotle, and Ptolemy]. It arose in a return to an
earlier system of thought with two, and only two, features to recommend it. It
was easier, and it was right" (55). Freeman invites us at least to consider a second example
of this more complex account of what constitutes scientific advance than the
simple-minded "Whig interpretation." He goes on to show not only that
Marx’s original theory has the features of elegance and explanatory power that
typically make for superior scientific theories, but also, on the precedent of
Aristarchus, the fact that Marx wrote in the 19th century is more or less
irrelevant to the contemporary mandate to find our way again to a theory that
can explain, among other things, "the outstanding phenomena of the modern
global market: mass world poverty in the midst of technical progress and
recurrent crisis" (65). If TSSI can achieve the fertile results several of these
papers demonstrate, then Freeman is surely right to conclude "that the time
is right to begin work in a new empirical framework, to relaunch Marx’s
original project and the purpose of his enquiry: to discover the law of motion
of the modern economy" (65). I would only add that this discovery is
crucial to projecting a genuinely post-capitalist alternative to the vicious
present of capitalist society. For a century now, the controversy in value theory has
been so oriented by Bortkiewicz’s classic criticisms of Marx’s system that
the historical reference is still an indispensable starting point. Bortkiewicz
had argued that Marx was guilty of self-contradiction in his solution to the
notorious "transformation problem." If he were right, then Marx’s
theory (in its "uncorrected" version) would run aground on the shoals
of internal inconsistency. Marxists rightly deplore the exclusion of value theory
from mainstream economics as unscientific and ideological (a principal concern
of the editors’ lucid "Introduction," ix-xx), but on the other hand,
Bortkiewicz’s "correction" of Marx has had the ironic fate of
supplying a rationale and a justification for censorship at the same time it
furnishes a prominent school of Marxian economics with its scientific
self-understanding. If Bortkiewicz had successfully demonstrated that Marx’s
solution is internally inconsistent, then the theory of value would lapse into
the incoherence and absurdity its detractors have long insisted upon. Yet to the
extent that Bortkiewicz also advanced a "correction" of Marx’s
"error," it has been taken by major Marxist economists, represented in
this volume by David Laibman, to signpost a supposedly royal road to a
"20th century Marxism" (Laibman, 4), that is, the "Bortkiewicz-Sraffa-Dobb-Seton
simultaneous equations, towards which," Laibman argues, "all
roads...apparently lead!" (12). Contrary to Laibman's assertion that Marx
himself was the first "20th century Marxist," this rewriting of Marx
has occurred to the detriment of Marx's own method of presentation. NEW ERA, OLD ERROR To this list of names could be added Sweezy, Meek,
Okishio, Morishima, Shaikh, Steedman, and others including Laibman himself,
establishing a canon of "20th century Marxism," post-Bortkiewicz,
through which alone, Laibman argues, lies the "one path leading from the
19th to the 21st [century]" (16). The other side to the new value
controversy, represented in this volume, includes Freeman, Kliman, Ted McGlone,
Fred Moseley, Bruce Roberts, Alejandro Ramos Martinez, Massimo De Angelis, and
Stavros D. Mavroudeas, whom Laibman calls the "new orthodox Marxists,"
or "NOMists" (1). Collectively, they dispute what could be called the
"standard" or "20th-century Marxist" view. They question whether the solutions to the
transformation problem (among other issues) through the system of simultaneous
equations inspired by Bortkiewicz count as "corrections" of (and
therefore implicitly improvements upon) Marx’s own theory; or whether, as the
editors put it, although it is "almost invariably portrayed within Marxian
economics as ‘Marx’s theory of value’, [it] is actually a distinct theory
in its own right" (xi). Arrayed against this "distinct theory," the
so-called NOMists defend two broad alternatives they claim to represent as
Marx’s theory in CAPITAL and other major texts: TSSI, and a simultaneist,
single-system interpretation (SSSI), defended in this volume by Fred Moseley and
Bruce Roberts. Leaving SSSI to one side, Andrew Kliman, in "Marx versus the
‘20th Century Marxists’: a Reply to Laibman" (19-35), summarizes what
is fundamentally at issue for TSSI: TSSI "diverges from the standard
[interpretation] in two simple but crucial ways. Whereas the ‘20th century
Marxists’ represent values and prices as two separate, timelessly determined,
equation systems, the TSS interpretation argues that Marx conceived of values
and prices as magnitudes determined WITHIN HISTORICAL TIME and INTERDEPENDENTLY.
‘Interdependently’ means that the ‘value’ rate of profit, s/(c+v) enters
into the determination of (output) prices, while the sums of value advanced to
production, constant and variable capital, depend partly on (input) prices"
(22). For readers interested in coming to a bottom line,
Kliman’s Table 2.1 (23) is concise and illuminating. This table records how
many of "Marx’s Theoretical Results" each of the alternatives is
able to replicate. The three alternatives are "standard, simultaneous
dual-system" interpretation (represented by Laibman), SSSI (represented by
Moseley and Roberts), and TSSI (represented by Kliman, McGlone, Freeman, and
others). Of 12 results--grouped into five "equalities and
inequalities" (notably including Marx’s total price = total value and
total profit = total surplus value) and seven "relations of
determination" (notably including the thesis that "mechanization
itself can reduce [the] profit rate," contrary to Okishio’s 1961 theorem
purporting to refute Marx’s law of the tendential fall in the profit rate; and
also that "variations in living labor performed affect [the] profit
rate")--Kliman shows that the "standard, simultaneous
dual-system" interpretation replicates only two of Marx’s theoretical
results, negating fully ten of them; that the SSSI successfully replicates the
five equalities and inequalities, but none of the relations of determination;
and that only TSSI fully replicates all twelve of Marx’s theoretical results. WITHOUT 'LABOR-TIME' Obviously, much more is at stake than a mere tabulation.
Kliman points to at least the following conclusions: TSSI is able to account for
the conclusions that Marx deemed to be the most important and central to his
value theory; it is able to account for these conclusions in a way that
demonstrates the internal consistency and coherence of that theory, contra
Bortkiewicz and his progeny, so that it no longer stands in need of the
time-honored "correction"; and it therefore also shows that the
exclusion of Marx’s theory from the canon of mainstream (neoclassical)
economics is baseless, since Marx’s value theory is neither internally
inconsistent nor incoherent under the TSSI interpretation. The contrary charge
had constituted the grounds upon which the mainstream concluded (or
rationalized) that Marxian economics did not deserve serious intellectual and
scientific engagement. Finally, Kliman concludes: "The source of the
problem is simultaneous valuation itself. When one stipulates that the magnitude
of a commodity’s value is identical at two different moments in time, no
matter how much the labour-time needed to produce it has changed, one has
stipulated that labour-time is irrelevant to the determination of its
value" (28; emphasis in the original). The key to mutual or simultaneous
valuation is the equalization of inputs with outputs (whether prices or values).
This is the principled atemporalism that Bortkiewicz and his successors
theorized as a requirement of the transformation of values into prices of
production (concerning the controversial ninth chapter of the third volume of
CAPITAL, "Formation of a General Rate of Profit (Average Rate of Profit),
and Transformation of Commodity Values into Prices of Production").
Kliman’s point here is that a theory that entailed the conclusion that "labour-time
is irrelevant to the determination of [a commodity’s] value," whatever
other sort of theory it might be, is NOT MARX'S THEORY OF VALUE. The technical issues in play in THE NEW VALUE
CONTROVERSY would require a lengthier exposition than can be offered in this
review. Suffice it to say that our lexicon and argument would be organized on
the basis of three related terms of opposition: "simultaneism" versus
"temporalism" (what Bortkiewicz originally called "successivism");
the dual-system interpretation of values and prices as separate, tenseless
equation systems, versus the single-system interpretation; and the Sraffa-inspired
view, which we can all "physicalism"--the reduction of the value
composition of capital to its technical composition alone--VERSUS the view
defended in this volume by McGlone and Kliman ("The Duality of Labour,"
135-50), the punch line of which is this:
In contrast, Sraffian physicalism has no way of
accounting for "the specific social character of the process of
production," specifically in the capitalist mode of production (the
production process as the valorization process). MARX'S INDISPENSABLE METHOD The physicalism (as it is being labeled here) of the
"standard" interpretation goes hand-in-glove with simultaneous rather
than temporal valuation, and also a dual-system interpretation as opposed to a
single-system one. As Moseley puts it, Sraffa-inspired readings of Marx’s
theory take "the fundamental givens in Marx’s theory [to be] the physical
quantities of the technical conditions of production and real wage" (44).
But this physicalist substitution of "technical conditions plus real
wages" for Marx’s own value categories (crucially including
"abstract labor") renders the theory of value redundant (as Paul
Samuelson famously argued in 1971). What is at issue, therefore, is the status and role of
Marx’s value categories, against the claim that Marx-like results can just as
well be derived directly from the physical data without recourse to the specific
social character of the capitalist mode of production (the milieu in which the
value categories not only make sense but also explain the capitalist social
relations that otherwise fall through the nets). THE NEW VALUE CONTROVERSY AND THE FOUNDATIONS OF ECONOMICS does us the favor of projecting new life into a theory cast by too many too hastily into the dustbin of history. Moreover if we want an alternative to capitalist society, we need to know what capital is. Nothing is more indispensable to this aim than the right interpretation of Marx’s theory of value, as Marx himself insisted on occasions too numerous to count. |
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