[OPE-L:7252] Re: hermeneutics (was: fundamentalism)

From: Rakesh Bhandari (rakeshb@stanford.edu)
Date: Fri May 24 2002 - 11:52:50 EDT

Jerry writes in 7245:

>Let's say that  there is a set of  theories that claim that Marx's theory is
>internally  consistent  called X and that your theory is G which is a part
>of the X set. Suppose,  *for the sake of argument*,  that we accept G
>or any  other member of  X (but not more than one).  Now where are
>we?   The  *most* that could then be claimed is that  Marx's theory
>because it is  internally consistent is logically *plausible*.   It does not
>mean that it  is  'right'.  It does not mean that it has been shown to be
>valid historically or empirically.  Do you agree?
>For example, even if  we accept G, how does that answer the claims of
>Allin and Paul C in "Testing Marx"?   How does it answer the claims of
>Geert and Mike W  that their perspective in _VFS_, while largely based
>on Marx,  is superior to Marx's perspective?   How does it answer a claim
>by surplus approach theorists that due to Occum's Razor, their theory is
>preferable?  How does it come to terms with the criticisms made by many
>social scientists that Marx's theory is out-of-date and no longer relevant
>to  contemporary capitalism?   In  other words, all it establishes is that
>Marx's theory is one theory among many theories that is plausible.  Is
>this such a great accomplishment?  For whom?
>This  'debate on internal consistency'   has been almost completely removed
>from the real struggles of workers.  How many workers in a thousand do
>you think have heard of the 'transformation problem'?  My guess is that it
>is less than one in one thousand.  If you were to tell them that Marx's
>theory  has been shown to be logically consistent what would that mean to
>them, their struggles, and their understanding of the world?

The TSS challenge to the monetary macro (M) or new solution 
interpretation (N) is simple: because both maintain the assumption of 
input=output prices they cannot reproduce Marx's results in regards 
to the source of surplus value and the falling rate of profit. That 
is, the TSS school maintains that X (set of those interpretations 
which demonstrate logical coherence of Marx) has any member but G 
(the TSS interpretation). Now Fred thinks G is not a member of X 
because G has prices of production changing for reasons which Marx 
does not allow. Allin and I don't think monetary macro (M) and TSS 
(N) are valid interpretations of Marx because neither allow for 
double divergence.

Fred also critiques N because it only goes half way towards what was 
Marx's fundamentally monetary theory; that is where Fred sees a 
transformation from M-C' to M-M' and Bortkiewicz called incomplete 
Marx's transformation from C-C' to C-M',  Fred argues that N has a 
"inconsistent" transformation from C+M-M' to M-M'.

  I agree with Fred and Alejandro that Marx's own transformation is 
best read as M-C' to M-M'--so the inputs don't have to be transformed 
from values or simple prices or value prices to prices of production 
as 100 years of criticism has maintained--but I argue that Marx's own 
transformation was wrong because he equated the value transferred 
from the means of production with their flow price. And I maintain 
that Marx knew he was wrong. Fred dubbed my interpretation an inverse 
transformation which had already been raised by Seton.

Well, here we are talking about the transformation problem again. And 
there is no reason for that because the TSS school is not focused on 
the transformation but the falling rate of profit, which has again 
violently asserted itself in Japan over the last decade and in the US 
since 97, however it was covered up by an explosion of fictitious 

The TSS school faults both the monetary macro and new interpretation 
solutions because they will not allow the rate of profit to fall from 
on going technical change itself--TSS believes that Marx can only be 
vindicated on these grounds if the comparative static assumption of 
input=output prices is dropped. TSS does not consider a theoretical 
reconstruction of FROP on the basis of rising real wages a 
vindication of Marx. Obviously for theoretical, empirical and 
political reasons. Laibman and Foley think this is silly because to 
have a falling profit rate, the real wage need not increase such that 
the rate of exploitation is not increasing. Hence, they can show that 
the rate of profit can fall despite rising productivity and despite a 
rising rate of exploitation. They think this is enough to vindicate 
Marx's explanation over the causes of falling profitability over say 
Ricardo's. TSS thinks not. Again for theoretical, empirical and 
political reasons reasons. This is a real debate, and I wish as 
moderator you would not pooh pooh the contributions by one side to it.

  As for TSS not testing its empirical results, that's a bogus claim. 
Alan F and Carchedi are quite interested in empirical tests of their 
claims (see the exchange over Brenner in Historical Materialism). 
Andrew himself uses his results to comment on current events; and of 
course Andrew himself leans on empirical work by Freeman.

So I think you are quite wrong to snootily dismiss these debates as 
so much scholasticism.

At any rate, the TSS debate (Freeman and Kliman) with Laibman and 
Foley underlines Kliman's primary research interest is not in the 
transformation problem but the methodological removal of comparative 
static assumptions from logical analyses of the coherence of Marx's 
vision of the falling rate of profit.

By the way, let it be noted that Marx got his undertanding of the 
importance of constant capital from Jones' discovery of the 
importance of auxilliary capital. Marx's understanding of the 
distinction between the mass and rate of profit--which Grossmann 
later showed was the pivot of his crisis theory--also comes from 


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