[OPE-L:4008] Re: Re: Re: Re: m in Marx's theory

From: Fred B. Moseley (fmoseley@mtholyoke.edu)
Date: Sun Oct 08 2000 - 00:03:46 EDT

Gil, thanks for your interesting post (3939 on Monday).  
Two replies below.

On Mon, 2 Oct 2000, Gil Skillman wrote:

> There is no problem flowing simply from the fact that a given theoretical
> entity, in this case m, is unobservable.  For example, 
> the notion that capitalist firms act to maximize profit is central to
> neoclassical theory, even though profits are not perfectly measurable
> because of imputed costs and other difficulties.  However--and this is the
> key point--the testable hypotheses of the theory do not depend on measuring
> profit.  Based on the assumption of profit maximization, you can derive
> unambiguous predictions about relationships between strictly observable
> variables, such as firm output and market price, without attempting to
> measure profit.  Whether or not one believes in neoclassical theory, it,
> like other real economic theories, generates hypothetical relationships
> among potentially observable variables, even if it includes theoretical
> elements which are not themselves observable.  So in the present case,
> Fred's assertion of the existence of m would be theoretically innocuous if
> doing so leads to testable hypotheses about economic relationships among
> strictly observable variables.  

I am glad that you (unlike Ajit) agree that it is at least conditionally
legitimate to assume unobservable givens, on the condition that the theory
derives some "unambiguous predictions", which can be empirically tested.  

I argue that Marx's theory does indeed derive "unambiguous
predictions" about important phenomena in capitalist economies, which can
be empirically tested.  These "unambiguous predictions" are that
capitalist economies will be characterized by: (1) conflicts over the
length of the working day; (2) conflicts over the intensity of labor; and
inherent technological change.  All these important phenomena are derived
as logical deductions from the basic assumptions of a given L and a given
m.  These initial givens are unobservable, but they are used to derive
important "unambiguous predictions" about observable phenomena.  

It is obvious that these "unambiguous predictions" of Marx's theory are
strongly supported by the history of all capitalist economies over the
last several centuries.  

Therefore, Marx's theory satisfies Gil's condition of "unambiguous
predictions" that can be empirically tested.  In which case, Marx's
assumption of the unobservable givens of L and m would seem to be
justified, right Gil?

> In any case, I assume it's settled that in the expression S = mL- V, S
> *cannot* be said to be determined "up to a factor of proportionality,"
> contrary to Fred's previous claim.  

No, Gil, this is not "settled".  I argued in (3922) that surplus-value is
UNIQUELY determined, not just determined up to a factor of
proportionality, because m is taken as given as a unique value.  Marx's
theory assumes that there is an actual m in the economy, with a definite
magnitude; i.e. that each hour of abstract labor produces a definite
quantity m of money new-value.  It is this actual m, with a definite
magnitude, that is taken as given in Marx's theory of surplus-value.    If
surplus-value is uniquely determined, then it is certainly determined up
to a factor of proportionality.

As I explained in (3922), my earlier argument in (3831) - that s is
determined only up to a factor of proportionality - was based on an
erroneous assumption that, because m is not theoretically determined, m
could be any value.  But I now realize more clearly this is not
true.  Even though m is not theoretically determined, m cannot have any
value.   At a given point in time, m has a unique value, the actual m in
the economy.  

If m could have any value, then you would be right - S would not be
determined up to a factor of proportionality.  But m cannot have any
value.  m is taken as given as a definite magnitude, as the actual m that
is assumed to exist in the real capitalist economy.  As a result, S is
uniquely determined, not just up to a factor of proportionality.  

Again I ask: why is it not permissible to take as given this unique,
actual m?


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