All Value-Form, No Value-Substance: Comments on Moseley’s New Book, Part 10

by Andrew Kliman

Here is the tenth installment of “All Value-Form, No Value-Substance,” the series of comments I’m writing on Fred Moseley’s new book, Money and Totality: A Macro-Monetary Interpretation of Marx’s Logic in Capital and the End of the “Transformation Problem.” It responds to part of Moseley’s reply to the ninth installment.

Please see the ninth installment for links to the first eight installments.


  1. Thanks for making this series and debate available. Fascinating stuff.

    My opinion on who is correct is neither here nor there, though FWIW I am convinced by the TSSI. I do, however, appreciate the macro aspects in Marx that come through in Moseley’s work and that also seem to show clearly in the TSSI.

    This comment may be a bit beside the point, but it strikes me in the various numerical examples discussed how easily the rate of profit is discerned when following either the TSSI’s or Moseley’s (or Marx’s) procedure rather than the Sraffian one. This causes me to ponder whether value theory can really be dismissed as redundant even in what is (from the TSSI perspective) a special case where input and output prices happen to equalize, permitting the rate of profit to be deduced (in just this one case) from physical quantities. Is it really value that is redundant, even in this case, or is it the physical quantities?

    What I mean is, even in simple two-sector examples, the Sraffian calculation of the profit rate requires solving a somewhat involved equation. For n sectors, the task requires a computer. Yet, even for n sectors, calculating the rate of profit through Marx’s macro relations (as both the TSSI and Moseley do) can be done on the back of an envelope (or even in one’s head) in the sense that all we need are a few aggregate monetary (or equivalent labor-time) magnitudes.

    If we think that causation runs from the macro (i.e. macro determination of the average rate of profit) to the micro (determination of relative prices), rather than the other way round, it seems to me that we might rather say it is the physical quantities that are redundant. (?)

  2. Hi Peter,

    I don’t think ease of calculation is the issue in re “redundancy” of value. At least, your use of the phrase in that way is new to me. The usual meaning (stemming, I think, from Samuelson’s famous 1971 JEL article against Marx) is that input-output and real-wage coefficients are the only (proximate) determinants of relative prices and the equalized rate of profit.

    So it’s an issue of determination rather than computation (especially ease of computation).

    In any case, I would say that Marx’s value theory isn’t redundant even in the special case of a static equilibrium (i.e., when input and output prices happen to be equal). That’s because it provides an explanation of why the rate of profit and the prices have the magnitudes they have instead of different ones.

    The fact that simultaneist-physicalist theory happens to give the same numerical answers in this special case doesn’t mean that it is right in this special case–either right *in addition* to Marx’s theory being right or right *instead* of it being right.

    It’s like two clocks, one of which is broken. They both tell the right time twice a day. But one is better because it tells the right time in general AND because it tells the right time for a good reason, not just by happenstance. And even at these two moments each day, there is a clear difference between the clocks despite the fact that they happen to be telling the same time.

    (Note of the above implies that Marx’s theory is correct. It just implies that the hypothetical existence of a static equilibrium in which Marx and physicalism come up with the same answers has no bearing on whether or not it is correct.)

  3. I followed the debate with Fred Moseley regarding his book “Money and Totality” over the last few months.

    And I have to say that this discussion is very insightful for me – “Fascinating stuff” as Peter was already written.
    While I agree with almost everything Andrew wrote, I strongly disagree with this (from the beginning of part 1):

    > … I think that this response will prove to be a waste of time and effort.
    > In truth, my efforts to engage with the Marxian economists during the last three decades have consistently been a waste of time and effort.

    I don’t think so – because this discussion with Moseley and RMC helped me (and I think others like Peter as well) to understand Marx economic theory a great deal better.
    (By now, I would even say that — without knowing the TSSI — it’s impossible to do so.)

    So, Andrew, thanks your efforts – they are not in vain.

    I have three comments about the debate.

    First, I came to this understanding of the realationship between physical quantities, I/O coefficients and Fred’s macro montary values:

    * Physical quantities (optionally scaled by a factor) can be easily converted to Input/Output coefficients.
    * From this Input/Output coefficients – by using simultaneous valuation or simultaneously determining prices – the relative prices and the physical rate of profit can be calculated.
    * But also – because Fred’s interpretation uses simultaneous valuation, i.e. input values/prices equals output prices/prices – Fred’s macro montary values are determined (optionally scaled by a factor) by them.
    * So, simultaneous valuation or simultaneously determined prices does the “trick” back and forth (as Andrew has demonstrated).

    Second, there are the comments from Bill Jefferies on
    I strongly disagree with most of what he writes, but in one point there seems to be a grain of truth in his talks about the qualitative differences between inputs and outputs etc.:
    If we have as inputs As and Bs but as the outputs we have Cs and Ds which are — by definition — incommensurable to the inputs (this seems to be the gist of Bill Jefferies comments) then it’s not possible to calculate a physical rate of profit, because we are not allowed to equate the prices of A and C or B and D.
    And so the essence of physicalism — that is simultaneous valuation — de facto has been unwittingly abandoned, albeit in a confused and ambiguous way…

    Third, it’s no doubt tedious for Andrew to demonstrate again and again, example by example, where Fred makes an error.
    But, it’s nevertheless insightful because it highlights the issue from different angles.

  4. Comment on Kliman’s Part 10

    Full Automation

    I would revise my “permissible to assume a fully automated economy with a physical surplus” as follows:

    1. It is permissible to assume that a fully automated economy with a physical surplus is *technically feasible*.

    2. According the Sraffian theory, the *rate of profit would be positive* in such a fully automated economy with a physical surplus and thus is *viable* in a capitalist economy (e.g. Dmitriev, Bortkiewicz, Steedman).

    3. According to my interpretation of Marx’s theory, the *rate of profit would be zero* in such an economy because there is no surplus labor, in spite of the physical surplus; and thus such an economy is *not viable* in capitalism (see also Mandel, Late Capitalism, Chapter 6, “The Third Technological Revolution”). (Steedman’s 1985 NLR paper was a criticism of a defender of Mandel’s conclusion (Morris-Suzuki) in a 1984 NLR paper; both papers were entitled “Robots and Capitalism”.)

    4. Therefore, my interpretation of Marx’s theory of the rate of profit is clearly different from Sraffian theory and comes to the opposite conclusion regarding the viability of a full automation in a capitalist economy.

    In Part 10, Kliman repeated an example from Part 7 of a fully automated economy with a physical surplus. He first calculated the rate of profit by the physical coefficients (= 0.77).

    He then claimed to calculate the rate of profit according my interpretation of Marx’s theory. However, the method he used to calculate “my” rate of profit is not an accurate representation of my interpretation of Marx’s theory of the rate of profit because it is derived from *price of production equations*. This derivation is not obvious from the excerpt quoted by Kliman (“using the same procedure as above”), but it is clear in his Part 7. The “same procedure as above” was/is to determine the rate of profit from prices of production equations.

    However, as I explained in my comment on Part 7, the rate of profit in my interpretation of Marx’s theory is *not determined by price of production equations.* The rate of profit in my interpretation of Marx’s theory is instead determined *prior to* and *independently of* these price of production equations by the aggregate ratio of S/(C+V) and S = m SL, and then this predetermined rate of profit is *taken as exogenously given* in these price of production equations. The unknowns in Marx’s prices of production equations are the prices of production (P1 and P2 in Kliman’s examples), not the rate of profit (see more below).

    Therefore, the conclusions drawn by Kliman on pp. 2-3 regarding the rate of profit *do not apply* to my interpretation of Marx’s theory of the rate of profit because these conclusions are derived from price of production equations.

    On top of p. 4, Kliman presents a different argument:

    “There is a physical surplus, as you stipulate. And the per-unit input and output prices are equal, as you also stipulate. Therefore, unless both prices are zero (so that the rate of profit is undefined), there must be monetary profit in the economy as a whole; total profit is π = P1 + P2 – C1 – C2 = 10p1 +10p2 − 4p1 − 8p2 = 6p1 + 2p2 . And your “price rate of profit” π / (C1+ C2) must therefore be positive as well.”

    However, once again this is a misrepresentation of my interpretation of Marx’s theory. There are *not two rates of profit* in my interpretation of Marx’s theory, but only one rate of profit, the price rate of profit which is determined in Volumes 1 and 2 and *presupposed* in Volume 3, and in particular in the determination of prices of production in Part 2 of Volume 3. This “prior determination of the total surplus-value” is one of the two main features of my “macro-monetary” interpretation of Marx’s theory (the macro feature). Chapter 3 of my book presents 80 pages of textual evidence to support this macro interpretation of Marx’s theory (e.g. the rate of profit *presupposed* in the determination of prices of production).

    The total profit in Volume 3 is by assumed to be *identically equal* to the predetermined total surplus-value (π ≡ S and S = m SL). Marx said that profit is just “another name” for surplus-value – the same quantity is viewed in relation to the total capital (C + V) rather than just in relation to variable capital (the true source of profit according to Marx’s theory).

    Thus, according to my interpretation of Marx’s theory, the total profit is *not derived from given physical quantities* (and simultaneously with unit prices) as in Kliman’s equation above (π = 10p1 +10p2 − 4p1 − 8p2). That is a Sraffian theory of profit (derived from given physical quantities), not my interpretation of Marx’s theory of profit.

    According to my interpretation of Marx’s theory, the price rate of profit (PRP) is instead determined by the ratio of the predetermined total surplus-value (or profit) to the total capital:

    PRP = S / (C + V) ≡ π / (C + V).

    According to my interpretation, prices of production are then determined by:

    Pi = (Ci + Vi) (1 + PRP)

    This is what I meant above when I said that the rate of profit is an *exogenous given* in Marx’s theory of prices of production, as determined by the prior theory of the total surplus-value.

    In the case of full automation, S = 0, and hence π = 0 and the PRP = 0.

    Therefore, it follows from my interpretation of Marx’s theory that full automation is *not viable* in a capitalist economy. Since this economy cannot exist, the question of whether or not input prices = output prices does not arise. If there is positive profit in an economy with labor, as determined by π ≡ S = m(SL), then there would be a tendency toward equal rates of profit and long-run equilibrium, which would result in input prices = output prices. However, if profit is zero in a fully automated economy, as determined by π ≡ S = m(SL), then production would not take place and there would be no profit to equalize and input prices and output prices would not exist.

    Therefore, Kliman’s different argument on p. 4 *also does not apply* to my interpretation of Marx’s theory. If the rate of profit is determined by physical quantities and determined simultaneously with unit prices, as in Kliman’s example and Sraffian theory, then the rate of profit in a fully automated economy would be positive. On the other hand, if the rate of profit is determined by aggregate quantities of surplus labor and money capital, as in my “macro-monetary” interpretation of Marx’s theory, then the rate of profit would be zero.

    In Kliman’s misrepresentation of my interpretation of Marx’s theory, the prior determination of the total surplus-value in Volumes 1 and 2 is simply ignored and plays no role in the determination of the rate of profit and prices of production in Volume 3. Instead, Kliman’s equation starts over again from scratch and assumes given physical quantities and derives profit and the “price rate of profit” from these given physical quantities. But this is not my interpretation of Marx’s theory; this is a Sraffian interpretation of Marx’s theory in terms of given physical quantities.

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