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Is Marx's Theory of Profit Right?

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Is Marx's Theory of Profit Right? 1 Is Marx’s Theory of Profit Right? The Simultaneist–Temporalist Debate Edited by Nick Potts and Andrew Kliman LEXINGTON BOOKS Lanham • Boulder • New York • London 2 Contents Editors’ Note Acknowledgments Abbreviations 1 A Sad Story: An Introduction to and Commentary on the Debate Nick Potts PART I: THE SIMULTANEIST–TEMPORALIST DEBATE 2 Simultaneous Valuation vs. the Exploitation Theory of Profit Andrew J. Kliman 3 On the TSSI and the Exploitation Theory of Profit Simon Mohun 4 Deriving a Negative PNP Andrew Kliman 5 Exploitation, Profits, and Time Roberto Veneziani 6 Replicating Marx: A Reply to Mohun Andrew Kliman and Alan Freeman 7 The Incoherence of the TSSI: A Reply to Kliman and Freeman Simon Mohun and Roberto Veneziani 8 Simultaneous Valuation vs. the Exploitation Theory of Profit: A Summing Up Alan Freeman and Andrew Kliman 9 The Truthiness of Veneziani’s Critique of Marx and the TSSI Andrew Kliman and Alan Freeman 10 The Temporal Single-System Interpretation: Underdetermination and Inconsistency Simon Mohun and Roberto Veneziani 11 No Longer a Question of Truth? The Knell of Scientific Bourgeois Marxian Economics and a Positive Alternative Alan Freeman and Andrew Kliman PART II: EXCHANGE BETWEEN ROBERT PAUL WOLFF AND PROPONENTS OF THE TSSI 12 Once More unto the Breach, Dear Friends, Once More Robert Paul Wolff 3 13 Physicalism and the Exploitation Theory of Profit are Incompatible: A Response to Robert Paul Wolff Chris Byron, Alan Freeman, and Andrew Kliman 14 Response to Professors Freeman and Kliman and Mr. Byron Robert Paul Wolff 15 Subsequent Dialogue between Kliman and Wolff Andrew Kliman and Robert Paul Wolff Bibliography Index About the Editors 4 Acknowledgments The editors wish to thank: The Conference of Socialist Economists, for providing funding that made the publication of this volume possible. The Institute for Social Sciences of Gyeongsang National University (South Korea), for permission to republish the following articles, which originally appeared in Marxism 21: Kliman, Andrew, and Alan Freeman. 2009. “The Truthiness of Veneziani’s Critique of Marx and the TSSI,” Marxism 21, vol. 6, no. 2, 335–66. Mohun, Simon, and Roberto Veneziani. 2009. “The Temporal Single-System Interpretation: Underdetermination and Inconsistency,” Marxism 21, vol. 6, no. 3, 277–301. Freeman, Alan, and Andrew Kliman. 2009. “No Longer a Question of Truth? The Knell of Scientific Bourgeois Marxian Economics and a Positive Alternative,” Marxism 21, vol. 6, no. 3, 302–17. John Wiley & Sons, for permission to republish section 3 (pp. 104–7) of Veneziani, Roberto. 2004. “The Temporal Single-System Interpretation of Marx’s Economics: A Critical Evaluation,” Metroeconomica, vol. 55, no. 1, 96–114. © Blackwell Publishing Ltd 2004. Marxist-Humanist Initiative, for permission to republish Byron, Chris, Alan Freeman, and Andrew Kliman, “Physicalism and the Exploitation Theory of Profit are Incompatible: A Response to Robert Paul Wolff,” which was first published in its web journal With Sober Senses (www.marxisthumanistinitiative.org/our-publication) on May 9, 2014. Sage Publications, for permission to republish the following articles, which originally appeared in Capital & Class: Kliman, Andrew. 2001. “Simultaneous Valuation vs. the Exploitation Theory of Profit,” Capital & Class, Spring, vol. 25, no. 1, 97–112. Mohun, Simon. 2003. “On the TSSI and the Exploitation Theory of Profit,” Capital & Class, Autumn, vol. 27, no. 3, 85–102. Kliman, Andrew, and Freeman, Alan. 2006. “Replicating Marx: A Reply to Mohun,” Capital & Class, Spring, vol. 30, no. 1, 117–26. Mohun, Simon, and Veneziani, Roberto. 2007. “The Incoherence of the TSSI: A Reply to Kliman and Freeman,” Capital & Class, Summer, vol. 31, no. 2, 139–45. Kliman, Andrew, and Freeman, Alan. 2008. “Simultaneous Valuation vs. the Exploitation Theory of Profit: A Summing Up,” Capital & Class, Spring, vol. 32, no. 1, 107–17. Robert Paul Wolff, for permission to republish his blog posts and e-mail messages that appear here. The blog posts were first published on The Philosopher’s Stone www.robertpaulwolff.blogspot.com/, on May 4, 10, 11, 12, and 14, 2014. 5 Abbreviations BVWW Botox-value of workers’ wages CSE Conference of Socialist Economists FMT Fundamental Marxian Theorem FMST Fundamental Magic Stick Theorem MELT monetary expression of labor-time NI New Interpretation PNP price of the net product SSSI simultaneous single-system interpretations TSS temporal single-system TSSI temporal single-system interpretation 6 Chapter 1 A Sad Story An Introduction to and Commentary on the Debate Nick Potts Karl Marx argued that exploitation of workers is the exclusive source of capitalists’ profit. The first of the two debates contained in this volume—between Andrew Kliman and Alan Freeman on one hand, and Simon Mohun and Roberto Veneziani on the other—initially focused on a logical issue: is it possible to deduce Marx’s conclusion in a logically valid way? Which, if any, of the different interpretations of his value theory succeeds in doing so? In the course of the debate, however, issues of pluralism, truth, and scientificity increasingly assumed center stage. As I shall document below, behavior that I regard as suppressive and contrary to scientific norms was engaged in with some frequency, and I personally suffered from it. Let me make clear from the outset that I was not personally engaged in this debate. For that reason, and because I have set aside my theoretical commitments as much as possible when drawing conclusions about the debate, this introduction to it is reasonably objective. Although some of my conclusions may unfortunately seem a bit harsh, I think other disinterested but knowledgeable parties would draw similar conclusions, and I certainly do not mean to be disrespectful of any individual. This introduction criticizes certain practices and texts, not authors as persons. MARX’S THEORY OF PROFIT A main purpose of volume 1 of Marx’s Capital is to reveal the shocking secret of where profit (surplus-value) comes from. Although he thought that the classical economists Adam Smith and David Ricardo had come close to having solved the problem, Marx regarded their efforts as ultimately unsuccessful. He first argued that—in the economy as a whole—profit cannot be the result of cheating, buying things for less than they are worth or selling them for more than they are worth. Particular capitalists can get profit in this way, but only at the expense of other capitalists. One’s gain is the other’s loss. “The capitalist class of a given country, taken as a whole, cannot defraud itself” (Marx 1990a: 266). However, the classical economists’ proposition that commodities’ values are determined by the amount of labor needed to produce them seems to make it impossible for profit to arise in the absence of cheating. Consider a worker who sells her labor on the market for $500 per 7 week, and assume that this sum is the full value of her labor; she is not being cheated. If commodities’ values are determined by the amount of labor needed to produce them, then $500 is also the amount of value her labor adds to the products she produces during the week. Now, if the capitalist sells the products at their value—so that the buyers are also not being cheated—he merely recoups the $500 he paid the worker. There is no profit. We therefore seem to have an insoluble dilemma: [Profit] cannot therefore arise from circulation, and it is equally impossible for it to arise apart from circulation. It must have its origin both in circulation and not in circulation.1 We therefore have a double result. The transformation of money into capital has to be developed on the basis of the immanent laws of the exchange of commodities, in such a way that the starting-point is the exchange of equivalents. The money-owner, who is as yet only a capitalist in larval form, must buy his commodities at their value, sell them at their value, and yet at the end of the process withdraw more value from circulation than he threw into it at the beginning. His emergence as a butterfly must, and yet must not, take place in the sphere of circulation. These are the conditions of the problem. Hic Rhodus, hic salta!2 Yet, Marx argued, there is indeed a solution. Contrary to what the classical economists assumed, workers’ labor is not a commodity bought in the “labor market.” Labor is the activity that workers engage in. What capitalists buy when they hire workers is instead their labor-power, or ability to work. The worker we introduced above was hired to be at work for a week, but how much actual work she did during the week is another matter. Thus, profit arises because the worker’s labor creates more value than the value of her labor-power. Although the $500 the worker was paid is the full value of her labor-power, the amount of new value created during a week’s worth of her labor will be greater, say $1,000. During the first half of the week, the worker creates the first $500 of new value, which replaces the amount of value she was paid. At this point, the capitalist has recouped the money he paid out in wages. However, the worker is compelled to work beyond this point—to perform surplus labor. She did, after all, contract to work for a whole week. Her labor during the remaining half-week creates an additional $500 of new value—surplus- value. It does not replace anything; the capitalist obtains it for free. This is the source of the profit and, according to Marx (1991a: 270), it is “the exclusive source of [the] profit.” Marx (1990a: 731) stressed that no cheating, and no violation of property rights, are involved in this process: If .
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