The New Value Controversy and the Foundations of Economics Edited by Alan Freeman University of Greenwich, UK Andrew Kliman Pace University, USA Julian Wells The Open University, UK Edward Elgar Cheltenham, UK • Northampton, MA, USA ©Alan Freeman, Andrew Kliman, Julian Wells 2004 All rights reserved. No part of this publication may be reproduced, stored in a retrieval system or transmitted in any form or by any means, electronic, mechanical or photocopying, recording, or otherwise without the prior permission of the publisher. Published by Edward Elgar Publishing Limited Glensanda House Montpellier Parade Cheltenham Glos GL50 lUA UK Edward Elgar Publishing, Inc. 136 West Street Suite 202 Northampton Massachusetts 01060 USA A catalogue record for this book is available from the British Library Library of Congress Cataloguing in Publication Data The new value controversy and the foundations of economics I edited by Alan Freeman, Andrew Kliman, Julian Wells. p. em. Includes bibliographical references and index. 1. Labor theory of value. 2. Equilibrium (Economics) 3. Marxian economics. I. Freeman, Alan, 1946- II. Kliman, Andrew, 1955- III. Wells, Julian, 1950- HB206.N48 2004 335.4' 12-dc22 2003049380 ISBN 1 84064 560 1 Printed and bound in Great Britain by MPG Books Ltd, Bodmin, Cornwall Contents List of contributors vii Introduction ix 1. Rhetoric and Substance in Value Theory: an Appraisal of the New Orthodox Marxism David Laibman 2. Marx versus the '20th-Century Marxists': a Reply to Laibman 19 Andrew Kliman 3. The Return to Marx: Retreat or Advance 37 Fred Moseley 4. The Case for Simplicity: a Paradigm for the Political Economy of the 21st Century 55 Alan Freeman 5. Labour, Money, Labour-Saving Innovation and the Falling Rate clProfu 67 Alejandro Ramos Martinez 6. The Other Side of the Class Relation: Women, Money and Commodities in Capitalism 85 Ann Davis 7. Value, Abstract Labour and Exchange Equivalence 107 Bruce Roberts 8. The Duality of Labour 13 5 Ted McGlone and Andrew Kliman 9. On the Abstraction of Labour as a Social Determination 151 Mario L. Robles-Baez 10. Defining the Concreteness of the Abstract and its Measure: Notes on the Relation between Key Concepts in Marx's Theory of Capitalism 167 Massimo DeAngelis 11. Forms of Existence of Abstract Labour and Value-Form 181 Stavros D. Mavroudeas 12. Calculating Labour Values Empirically 199 Edward B. Chilcote v vi The New Value Controversy 13. Socialism and Value Categories in Early Soviet Doctrine: Lenin, Trotsky, Bukharin, Preobrazhensky 219 Paresh Chattopadhyay 14. Value's Law, Value's Metric 233 W Paul Cockshott and Allin F. Cottrell 15. Towards an Empirical Measurement of International Transfers of Value 241 Paul Cooney 16. Some Empirical Considerations for the Question of Transformation 261 Rebecca Kalmans 17. Devalorisation, Crises, and Capital Accumulation in the Late 19th Century US 275 Michael Perelman ] Appendix: IWGVT Scholarship Guidelines 287 Bibliography 29/ Index 309 Contributors Massimo DeAngelis is Senior Lecturer in Economics, University of East London, UK. Paresh Chattopadhyay teaches political economy at the University of Quebec at Montreal, Canada. Edward B. Chilcote works as a SAS programmer and analyst in New York City. W. Paul Cockshott is a Reader in the Department of Computer Science, University of Glasgow, UK. Paul Cooney works at the Center for the Biology of Natural Systems at Queens College, Flushing, NY, USA. Allin F. Cottrell is Professor of Economics at Wake Forest University, Winston-Salem, NC, USA. Ann Davis is on the economics faculty of Marist College, Poughkeepsie, NY, USA, and is the founding director of the Marist College Bureau of Economic Research. Alan Freeman is a Visiting Fellow in the economics department of the University of Greenwich, UK. Rebecca Kalmans is Associate Professor of Economics at the State Univer­ sity of New York, Old Westbury, NY, USA. Andrew Kliman is Associate Professor of Economics, Pace University, Pleasantville, NY, USA. David Laibman is Professor of Economics at City University of New York, vii viii The New Value Controversy NY, USA Ted McGlone is Associate Professor of Economics at Saint Joseph's College, Patchogue, NY, USA Stavros Mavroudeas is Associate Professor in the Department of Economic Studies, University of Macedonia, Thessaloniki, Greece. Fred Moseley is Professor of Economics at Mount Holyoke College, South Hadley, MA, USA. Michael Perelman is Professor of Economics at California State University, Chico, CA, USA Alejandro Ramos Martinez is a researcher with the Economic Commission for Latin America and the Caribbean, Santiago, Chile. Bruce Roberts is Professor of Economics at the University of Southern Maine, Portland, ME, USA. Mario L. Robles-Baez teaches economics and political economy at the Departmento de Producci6n Econ6mica, Universidad Aut6noma Metropolitana-Xochimilco, Mexico City, Mexico. Julian Wells is Associate Lecturer of Economics at The Open University, Milton Keynes, UK. Introduction The papers in this volume reflect a critical stage in the evolution of the modern reappraisal of Marx's value theory and critique of political economy. They represent the first response by Marxist scholars to the debate initiated by Marx 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 Tem­ poral Single-System Interpretation (TSSI) of Marx's value theory.' In the first part of this volume, comprising chapters 1-11, the key underly­ ing theoretical questions at issue are debated in depth. The second, more ex­ ploratory, section compirising chapters 12-18, is dedicated to a range of new or under-debated questions which, in the light of the TSSI and other new interpre­ tations of Marx's value theory, are recognised to be deserving of renewed schol­ arship. The TSS interpretation is controversial because it challenges a prior con­ sensus within Marxist scholarship. In Duncan Foley's (1997:493) words, it 'endorses Marx's treatment of the transformation problem', that is, the account of the transformation of commodity values into prices of production given in Chapter 9 of Capital, Vol. III. It also offers the first refutation of Okishio's (1961) famous theorem, which had supposedly disproved Marx's claim that cost-reducing technical change tends to lower the rate of profit. In both cases, it confirms the logical coherence of Marx's theoretical results without 'correct­ ing' or replacing Marx's own presentation of his own views. INCONSISTENCY AS JUSTIFICATION FOR CENSORSHIP By any objective standard, the significance of these findings is enormous. In the current historical context, they have an implication extending beyond the specialist study of value theory: they remove the only serious justification offered for the near-total exclusion of Marx's own ideas by mainstream eco­ nomics. Empirically, Marx's fundamental economic judgements, rediscovered by the press in every crisis, have stood the test of time in contrast to many once­ fashionable notions. Who today remembers the conventional wisdom of the sixties, that planners have successfully fine-tuned crisis out of the market ix X The New Value Controversy economy? Or the Nobel Prize-winning bull market gurus of the nineties who, as the Financial Times put it, 'festooned' the boards of today's ignominious stock market failures? In contrast, as Cassidy (1997) notes: Many of the contradictions that [Marx] saw in Victorian capitalism and that were subsequently addressed by reformist governments have begun re­ appearing in new guises, like mutant viruses .... He wrote riveting passages about globalisation, inequality, political corruption, monopolization, tech­ nical progress, the decline of high culture, and the enervating nature of modern existence- issues that economists are now confronting anew, some­ times without realizing that they are walking in Marx's footsteps. Nevertheless, the theory and concepts from which Marx's insights stem are deemed unmentionable in economics. It is insufficiently appreciated that eco­ nomics, which claims to be the most, if not the only, truly scientific discipline among the social sciences, treats Marx quite differently than its 'less scientific' sister disciplines. As Brewer ( 1995: 111) notes: By any normal standard, he should not be accorded a significant position in the history of economics at all. It is not just that his ideas are not to be found in modern textbooks, but that they were never seriously discussed by main­ stream economists, either during or after his lifetime. In standard undergraduate courses in virtually every liberal arts or social sci­ ence subject other than economics, Marx has a place. He is treated as a theorist whose views should at least be known, even if only to reject them. In econom­ ics he is not merely rejected: his ideas are simply not to be found. The mere word 'value' is received by everyone but tax collectors as a signifier of subver­ sive intent. 'Positive' economic science has purged itself of the concept. It thereby systematically excludes an entire theory from consideration. Any economist who seriously seeks to develop Marx's own ideas, in their original form, in however scholarly a manner, must recognise some basic facts. She is unlikely to be published in mainstream journals; she will not be promoted -at least on the strength of her Marxist scholarship; she is unlikely to secure ten­ ure; and she will not be allowed to incorporate her research into her teaching at least until graduate level, and then only in a few islands of liberalism. The charge of inconsistency is a central pivot of this suppression. Without it, no rational basis for excluding Marx remains. Of course, we are not foolish enough to claim that reason has great bearing on what economists choose to teach, study or fund. But Marx's spectre haunts them still. The anti-globalist movement questions a ceaseless thirst for profit masquerading as a natural order, and searches for a more comprehensible ex- Introduction xi planation of how capitalism really works.