[OPE-L:4349] Re: Technical change and general truths

From: Steve Keen (s.keen@uws.edu.au)
Date: Sun Oct 29 2000 - 20:22:20 EST

Hi Julian,

Perhaps I put my point poorly. It was that the LTV needs to be a truth
which can sustain a range of *non-negative* rates of technical change
(amongst a range of other possible changing features). I don't think any
social system could sustain itself while these were negative--negative
rates of profit, for example, wouldn't be a condition that I would require
a coherent model of capitalism to be able to sustain.

The issue for me is that Marx "proved" that labour was the only source of
surplus-value under the supposition that everything was bought and sold at
its value. This then raises a conundrum about the relation between constant
rates of surplus-value and simultaneously (a tendency towards) constant
rates of profit across industry sectors when the capital to labour ratios

The TSS approach to this is to dismiss consideration of a state in which
rates of change equal zero, and provide numerical examples where the twin
propositions above cannot be contradicted.

My take on this is that, from a TSS point of view, the initial
proposition--that labour is the only source of surplus--is only sustainable
in a consistent way in the analysis of a multi-sectoral economy when these
rates of change are non-zero.

That, to me, effectively contradicts Marx's initial proposition that:

"To explain, therefore, the general nature of profits, you must start from
the theorem that, on the average, commodities are sold at their real
values, and that profits are derived by selling them at their values, that
is, in proportion to the quantity of labour realised in them. If you cannot
explain profit upon this supposition, you cannot explain it at all."( Marx

This appears to kiss the essence of the labour theory of value goodbye, in
the guise of defending it from unwarranted criticism.

At 06:02 PM 10/28/2000 +0100, you wrote:
>I hope I'm not being unfair in juxtaposing these two snippets from recent
>posts by Steve K and asking him to comment:
>to Andrew K [#4218]
>I don't per se object to open-dimensional analysis, by the way: strictly
>speaking, capitalism is open-dimensional because technical change keeps
>generating new products ... But I would object to it if it were undertaken
>solely to avoid the TP.
>on Rakesh [#4228]
>	It is possible to characterise the "simultaneist" analysis of the
>	transformation problem as a dynamic solution in which all rates of
>	are set to zero. The conclusion of all these analyses is that the
>	theory of value cannot be right. What you are alleging is that,
>	effectively, the labor theory of value is only correct for positive
>	of technical change, etc. If so, then it is not a general truth, and
>	approach to eliminating the transformation problem is as much a
>	of the labor theory of value as any simultaneist formulation. This
>is the
>	point I believe that Allin was trying to get through to you (and as
>	know, I believe it is untrue at any rate of change).
>To take the second except first -- Steve, would I be right in thinking that
>by "general truth" you do NOT mean a claim like "the square root of two
>cannot be expressed as the ratio of two integers"?
>But in that case, what *do* you mean: a statement true about capitalism in
>If so, then isn't the claim that the LTV is not a general truth about
>capitalism belied by your comment in the earlier post?
>Here I'd like to take you up on what you mean by a "positive rate of
>technical change" [second post]; I'd guess that you mean "one which keeps
>generating new products" (and deleting older ones?) [first post] -- in which
>case I suppose a *negative* rate of technical change would be one in which
>*old* products were revived (and newer ones deleted).
>The point is that while a negative rate of technical change in this sense is
>clearly logically conceivable (I've just done it), I simply can't accept
>that such a thing is compatible with the continued existence of capitalism.
>One of the most striking features of capitalism is that it is the first
>social system in which the ruling class has an indispensable need for
>continual technical innovation.
>I think I'd support a claim that this is not only because of the undoubted
>competitive motivation, but also because innovation helps legitimate the
>At all events, I'm sure that if society was to suffer technical regression,
>it would have to suffer social regression as well, e.g. revert to feudalism
>or slavery.
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
s.keen@uws.edu.au 61 2 4620-3016 Fax 61 2 4626-6683
Home 02 9558-8018 Mobile 0409 716 088
Home Page: http://bus.macarthur.uws.edu.au/steve-keen/

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