Re: Freeman, Kliman, Wells eds. _The New Value Controversy

From: Jurriaan Bendien (andromeda246@HETNET.NL)
Date: Sun May 16 2004 - 04:05:30 EDT

Hi Rakesh,

> Yes, I have a library copy. I still don't agree with how TSS attempts
> to dissolve dualism (Bruce Roberts' Althusserian interpretations are
> however very stimulating) and how TSS disarticulates the value from
> (what they call) the material rate of profit.

Which "dualism" do you have in mind ? The necessary deviation of prices from
labor-values, which implies that labor-values can only be estimated
retrospectively, is a kind of  "dualism". But this dualism seems more like a
contradiction, namely that assets and labor are used to produce output
values in advance of knowing exactly what they are worth in the current
market, to which continual adjustments must be made by producers.

The other day I was skimming through Marx's mathematical manuscript in MEGA
II (in preparation for Capital Vol. 3) which is devoted to the quantitative
relationships between the rate and mass of surplus-value, and the rate and
mass of profit. It's clear here that Marx was really exploring the
parameters of competition as a dynamic process, i.e. Marx was advancing a
value theory about the movements of rate and mass of profit in price terms.
This is quite legitimate, and I still don't quite understand why there's
been so much fuss about it, given that in calculating internal rates of
return and suchlike, accountants and businesspeople themselves have to
confront temporal discrepancies in valuation and theoretical price
comparisons all the time, and freely talk about "values" and "theoretical
prices" (prices which they think "would" apply "if" goods or services were
sold). That is, there has to be some agreement about how to value assets and
goods, which is based on accepting specific relations between the prices of
specific quantities of specific assets and goods, at a specific currency
exchange rate, as the basis for valuation.

Marx himself explicitly acknowledged in Capital Vol. 3 that the accounting
identity of total prices=total values, which he assumes in his models on the
basis that he thinks the quantitative deviations between them cannot be so
great, does not really apply in reality, given continual shifts in the
relationships between socially necessary labour-time and market demand
during any one accounting period. This being the case, it's remarkable how
many economists nevertheless interpret the accounting identity used for
modelling purposes as an ontological identity.

I think a satisfactory solution of the transformation problem is more
likely, if we inquire more into the ontology of prices, i.e. distinguish
appropriately between actual market prices and theoretical (hypothetical,
potential) prices. If we do so, it's clear that in any aggregation of prices
or comparison of price aggregates, some value-theoretic principle must be
assumed. In fact, notions of "price signals" or "economic depreciation" etc.
imply value-relations.

When post-Marxists argue that the dynamics of capitalism can be quite
satisfactorily explained in price terms only, they still have to use
unobservable "theoretical prices" or "accounting prices" and not just actual
observable market prices, but these unobservable "theoretical prices" are in
substance just economic values, which relate prices in the medium of time on
the assumption that specific prices, specific price relations and specific
temporal intervals are relevant to valuation.

The most basic reason for the existence and utility of objective economic
values in economics, quite apart from prices, resides in the fact that at
any point in time the majority of assets or goods, owned by producers,
distributors and consumers, are withdrawn from the market and not offered
for sale. They do have values - nobody says they don't have objective
economic value, because they could be sold - but not actual market prices,
only theoretical (or hypothetical, potential) prices. For me this fact was
made very clear when I was a Phd student - at that time, the New Zealand
government decided to sell off a lot of state-owned forest, a lot of it
planted by unemployed workers in the 1930s depression. The problem they had
was, that they didn't have a clue about what that forest was worth, they had
never calculated a price for it, only for cut timber, and they had to get
consultants in to estimate a realistic market value for the forests.
However, once the forests had been given a price, then there was no problem
anymore, they could be sold and that price could then rise or fall in
accordance with pulp and timber prices, land rents and so forth.


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