[OPE-L:2085] Re: Jerry's quiz

Steve Keen (s.keen@uws.edu.au)
Sun, 5 May 1996 17:50:15 -0700

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Alan's quiz is a good one, and of course I have to reply! But I'm in two
minds as to how to do it: preface it with my analysis, or simply say where
my analysis has led me, and provide the analysis later. I'll opt for the
latter "in 'yer face" method, as a local school of comedy is known! But I'll
smatter the answers with some of my reasons:

>"(1) On the basis of assumptions to be found in Marx's own political
>economy, it has been proved that Marx's value reasoning is often
>internally inconsistent,

I agree. However, I would insert "some of the assumptions" into the first
phrase, because I believe that there are two sets of assumptions running
through Capital, one of which falls to Steedman's critique, the other of
which does not.

The set which does, in my opinion, is the one which starts from the premise
that labor is the only source of value, on the basis of the distinction
between the value of labor-power and labor itself. As a result, while I
prefer the dynamic basis of the TSS approach which Alan, Duncan and others
have developed and exposited here, I'm largely agnostic in the
TSS/Simultaneous Value debate, because I see them both as starting from an
incorrect premise.

The set which does not fall foul of Steedman, in my opinion, is that based
on the dialectic of the commodity: the distinction between use-value and

Marx, of course, acted as if the two sets of assumptions were
consistent--that the former (labor) explanation could be derived from the
latter (commodity) foundation. I argue that this is incorrect.

>"(2)completely failing to provide the explanations which Marx sought
>for certain central features of the capitalist economy.

I agree. There needs to be a distinction between features which are
central--such as the source of surplus value--and features which Marx
thought were central, but which may or may not be empirically valid--such as
the tendency for the rate of profit to fall. However, on both classes, I
agree that Marx's developed explanations--which were built using the
labor/labor-power analysis--fail.

>"(3)By contrast, these same features can be given a coherent explanation
>in terms which make no reference whatsoever to any value magnitude.

I disagree. My analysis still ends up with value as a crucial aspect of
capitalism, and it has strong reasons why price and value will not, in
general, be equivalent. These relate to the non-commodity aspects of
labor-power and their role in determining the wage, and the role of
subjective valuation in determining the prices of capital assets and money.

This aspect of my approach points out one of the deficiencies of Steedman's
Sraffian analysis--that it is entirely static.

>"(4)Marx's value reasoning - hardly a peripheral aspect of his work -
>must therefore be abandoned in the interest of developing a coherent
>materialist theory of capitalism"

I agree and disagree! The labor theory of value--meaning the presumption
that labor is the only source of surplus value--has to go. But I believe it
has to be replaced by a broader analysis of value, which in its own way
encompasses the valid work done by Sraffa (and extended past breaking-point
by some of his followers!).

>"(5)Some of the elements of such a theory are to be found within the
>Sraffa-based critique itself.

Agreed; but many are not, specifically those related to dynamics and capital
asset valuation (Sraffa, though not his followers, had a decent handle on

>"(6)It has been shown that the proximate determinants of the rate
>of profit, the rate of accumulation, the prices of production, the social
>allocation of labour, etc, are the physical conditions of production,
>the real wage and the capitalist drive to accumulate.

Partly agree. This is another timeless-slice statement. Accumulated debt,
past inflationary history, the stage of the trade cycle, the level of
unemployment, etc., are all omitted, and all matter in a properly dynamic
analysis of capitalism.

>"(7)The next step is then to investigate the social, economic,
>political, technical, etc determinants of those proximate determinants"

One of them, anyway; but they are not the only determinants, and Steedman is
ROPE '92 (or '93?) has not exactly been constructively disposed towards
those attempting an analysis of other determinants.

>"(8)That immense task will perhaps involve the study of, among
>other things, the historical conditions under which specific capitalist
>social formations developed, class relations (both at the point of
>production and at the level of politics), the role of the state, the
>development of scientific and technical knowledge (considered not
>as a deus ex machina but as an endogenous product of the society
>in question) and international relations
>"(9)Such study can no doubt draw on much of Marx's work, as
>one source amongst the many which will be needed.

Yes and yes.

>"(10)But it will involve no reference to Marx's value magnitudes

Yes and no; the labor theory of value magnitudes have to go; but
reconstituted value theory is still needed.

>"(11)Which are mere derivates of the things to be explained.


>"(12)It can scarcely be overemphasized that the project of
>providing a materialist account of capitalist societies is dependent
>on Marx's value magnitude analysis only in the negative sense
>that continued adherence to the latter is a major fetter on the
>development of the latter"

Yes and no again: My apologies to the feathers I have probably ruffled, but
I agree with Steedman on this re the LTV analysis, whether in simultaneist
or sequentialist form. But I am a strong supporter of a different kind of
value analysis.

Now back to lecture preparation!
Steve Keen
Senior Lecturer
Economics & Finance
University of Western Sydney
PO Box 555 Campbelltown NSW 2560
s.keen@uws.edu.au (046) 20-3016 Fax (046) 26-6683