# [OPE-L:3984] Re: Re: Re: Surplus value or surplus argument?

From: Steve Keen (s.keen@uws.edu.au)
Date: Fri Oct 06 2000 - 20:49:40 EDT

```Ajit is correct, of course.

S is proportional to Ls as Fred defines it, via

S=m.Ls

but his Ls includes m as an argument. Taking this "out of hiding", as my
final expression did, yields

S= m.L - V

My original point was that a linear relationship is only always and
everywhere proportional if it "passes through the origin". In this case,
that again requires V=0 for Fred's equations to give strict
proportionality. This is, of course, one condition under which a
transformation problem will not apply even where capital to labor ratios
differ between industries--the other being that profits equal zero.
Anywhere in between--non-zero wages and non-zero profits--and you have a
transformation problem.

Cheers,
Steve
At 11:27 AM 10/6/2000 +0530, you wrote:
>
>
>Steve Keen wrote:
>
>> Thanks Fred,
>>
>> Yes it is proportionality in the strict sense of the word, but it is no
>> longer Marx's theory in the strict sense of the word.
>
>_________________
>
>No it is not proportional Setve! Fred is entirely wrong. And he is wrong
because
>he does his mathematics upside down. He first "defines"
>
>S = m.Ls (here m is supposed to be "given" but unknown, and Ls is
definitely an
>unknown, otherwise he will not need his other two equations. And from this he
>keeps claiming that his S is proportional to Ls with the proportionality
factor
>m). Now since his Ls is unknown, he defines Ls as
>
>Ls = (L - Ln), now in this equation L is supposed to be known but Ln is still
>unknown. Therefore, he goes for his third equation where Ln is defined as
>
>Ln = V/m, where V is supposed to be known and m is the "given unknown". So
>ultimately what his S turns out to be?
>
>S = (m.L - V), as you have correctly put in your later part of the post as
>"Surplus is an unobservable number times L, minus workers' wages?"
>
>Therefore, contrary to Fred's claim S is not proportional to anything with
the
>proportionality factor m. Cheers, ajit sinha
>
>>
>>
>> This is where I believe the divide arises between myself, Ajit, Gil et al
>> on one broadly defined side of this debate (possibly including Allin & Paul
>> on this issue), and yourself. Both sides are saying that Marx's theory as
>> he wrote it can't be sustained, in that strict proportionality between
>> surplus value and necessary labor can't be correct.
>>
>> The side I'm on in various ways says that therefore the labor theory of
>> value must be erroneous--myself by saying that it's contradicted by Marx's
>> own logic, Ajit & Gil by supporting Sraffa's input-output critique, Allin &
>> Paul by saying that as an empirical issue, there's a reasonable but not
>> strict correspondence and that's OK for research.
>>
>> You are saying that so long as we bring in an unobservable modifier m, then
>> we can make S proportional to V when this modifier is part of the equation.
>> Well, mathematically, perhaps; but what does this do to the simple Marxian
>> clarion call that all surplus arises from labor (with which I don't agree,
>> of course, but it's a very large part of why people are initially attracted
>> to Marx)? Surplus is an unobservable number times L, minus workers' wages?
>>
>> Any potential recruits who heard that argument at a first meeting with the
>> IS would wobble out of the meeting hall and go looking for a less confusing
>> belief system.
>>
>> This of itself doesn't concern me too greatly, but it's a sign of the
>> divide which exists between the simple message which recruits people to an
>> initial interest in Marx, and the complex footwork needed to sustain a
>> comparable message once you look very closely at the argument.
>>
>> The point which does concern me is that, because of this logical conundrum,
>> Marxian economics hasn't even got out of the starting blocks yet 130 years
>> after Charlie first penned Das Kapital. We may be about to enter
>> capitalism's biggest crisis since the Great Depression, and yet rather than
>> debating this, the premiere minds in Marxian economics are still debating
>> how to derive prices from values.
>>
>> Rather than being a tool which can "lay bare the workings of the capitalist
>> system", this looks more like a poorly designed tool which has turned its
>> advocates into a religious sect a la Life of Brian, rather than, as Marx
>> and Engels saw themselves, intellectual leaders of the working class.
>>
>> Cheers,
>> Steve
>> At 12:21 PM 10/5/2000 -0400, you wrote:
>> >
>> >This is a response to Steve K's (938).  Steve, thanks for your several
>> >recent posts, which I have read and thought about and hope to have the
>> >time to reply soon.
>> >
>> >
>> >On Tue, 3 Oct 2000, Steve Keen wrote:
>> >
>> >> At the risk of insulting Fred, might I suggest that one reason for the
>> >> impasse with Ajit is over Fred's use of the word "proportional" to
>> >> characterise the relationship between S and L in the formula:
>> >>
>> >> S = (m.L - V)
>> >>
>> >> which (correct me if I'mn wrong, but...) Fred agrees characterises his
>> theory?
>> >>
>> >> Strictly speaking, this formula can only be "proportional" if V=0. If
so,
>> >> then for example, if m=2, S= 2*L for all values of S and L. If, however,
>> >> V>0, then the "proportionality" this formula gives varies as S and L
vary.
>> >> For example, if m=2 and V=2 then S/L=0 for L=1, S/L=1 for L=1.5,
S/L=2 for
>> >> L=2, and so on.
>> >>
>> >> That is not proportionality in the strict meaning of the word.
>> >>
>> >> Cheers,
>> >> Steve
>> >
>> >
>> >Steve, I think you misunderstand what I am saying.  I am not saying that
>> >"S is proportional to L". Rather, I am saying that "S is proportional to
>> >Ls" (S = m Ls), where Ls = (L - Ln), and Ln = V/m.
>> >
>> >On the basis of these definitions, and using your example, S is indeed
>> >proportional to Ls, with m as the factor of proportionality.  This can be
>> >seen from the following table, using your example:
>> >
>> >m      L       V       S       Ln      Ls      S/Ls
>> >
>> >2      1.5     2       1       1       0.5       2
>> >
>> >2      2       2       2       1       1         2
>> >
>> >
>> >Is not this proportionality "in the strict meaning of the word"?
>> >
>> >
>> >Fred
>> >
>> >
>> >P.S.  By the way, why do you think that I would be insulted by your
>> >post?  You present a clear logical criticism, without gratuitous
>> >insults.  I appreciate your post.
>> >
>> >
>> Dr. Steve Keen
>> Senior Lecturer
>> Economics & Finance
>> University of Western Sydney Macarthur
>> Building 11 Room 30,
>> Goldsmith Avenue, Campbelltown
>> PO Box 555 Campbelltown NSW 2560
>> Australia
>> s.keen@uws.edu.au 61 2 4620-3016 Fax 61 2 4626-6683
>> Home 02 9558-8018 Mobile 0409 716 088
>
>
>
Dr. Steve Keen
Senior Lecturer
Economics & Finance
University of Western Sydney Macarthur
Building 11 Room 30,
Goldsmith Avenue, Campbelltown
PO Box 555 Campbelltown NSW 2560
Australia
s.keen@uws.edu.au 61 2 4620-3016 Fax 61 2 4626-6683
Home 02 9558-8018 Mobile 0409 716 088