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This paper replies to Cheol-Soo Park's critique of the temporal single-system .... misinterpretations look to him like potential analytical problems, and elimi-.
MARXISM 21 Article

A Reply to Professor Park’s Critique*1)

Andrew Kliman**2)

This paper replies to Cheol-Soo Park’s critique of the temporal single-system interpretation (TSSI) of Marx’s value theory. It argues that his negative evaluation of the TSSI largely stems from his failure to understand its purpose. He treats the TSSI as a distinct theory or “approach,” but it is actually an exegetical interpretation, and it must therefore be evaluated according to different criteria than those which he employs. Next, the paper argues that, contrary to what Park claims, the TSSI does not hold that commodities sell at their prices of production in each period, so his critique of that notion is inapplicable. Finally, the paper examines the case in which, according to the TSSI, surplus-value increases because the prices of non-wage goods rises. Park contends that this is an arbitrary and anomalous result, but the paper argues that the increase in surplus-value reflects a real phenomenon: workers are made relatively worse off by a rise in the prices of non-wage goods.

Key words: Marx’s value theory, non-wage goods, the temporal single-system interpretation (TSSI), surplus-value, rate of exploitation.

* 이 글의 한글 번역은 사회실천연구소의 ≪실천≫ 2009년 5월호(통권 30호)에 실 릴 예정이다. ** Professor of Pace University, Department of Economics, [email protected].

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1. Introduction I believe that Professor Cheol-Soo Park’s (2009) general evaluation of the temporal single-system interpretation (TSSI) of Karl Marx’s value theory (and, to some extent, his specific criticisms) stems from his failure to understand this interpretation’s purpose. I shall therefore begin by clarifying what its purpose actually is. I shall then turn to Park’s specific criticisms of the TSSI. In the second section of his paper, he discusses this interpretation in great detail, and in a very technical and mathematical manner. This might lead the reader to expect that the next section of Park’s paper contains many particular criticisms of the TSSI, and that my response will have to be similarly technical and mathematical. However, I have been able to identify only two particular criticisms ― one pertaining to pricesof production and the general rate of profit, the other pertaining to surplus-value ― and my responses to them shall not be especially technical or mathematical.

2. The Purpose of the TSSI As its name indicates, the temporal single-system interpretation is an interpretation of Marx’s value theory. Specifically, it is an exegetical interpretation. The purpose of any exegetical interpretation is to make a text or set of texts make sense (if that is possible). It therefore needs to be evaluated according to how well it succeeds in making the texts make sense (see Kliman, 2007: esp. Chap. 4). Hence, if the TSSI has succeeded in making Marx’s value theory make sense ― as I believe it hasand I believe its proponents have demonstrated ― it has fulfilled its purpose, its only purpose. It is a successful exegetical interpretation. That is the case whether or not Marx’s

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theory is empirically correct or fruitful. Precisely because what Marx wrote is not necessarily correct, getting Marx right and getting empirical reality right are simply two different matters. The TSSI is therefore not an economic theory in its own right. But neither is it an antiquarian pursuit of historical interest only. Proponents of the TSSI are concerned with getting Marx right because of the false allegations, which have prevailed for more than a century, that his value theory has been proven internally inconsistent. Actually, the inconsistencies are created by misinterpretations that construe the theory as an atemporal one, and generally as one in which values and prices constitute two separate systems. The inconsistencies disappear when Marx is understood in accordance with the TSSI. The reason this issue is crucially important is that internally inconsistent arguments are always invalid.1) A theory founded upon internally inconsistent arguments must therefore be rejected on that basis alone. No matter how fruitful it seems at first and no matter how well it seems to fit the facts, its explanations of events cannot be correct, since they are inconsistent. Thus, when TSSI authors demonstrate that Marx’s value theory can be understood in a manner that renders it internally consistent, we are not proposing a theory of our own, but neither are we engaged in an antiquarian exercise. These demonstrations are a needed precondition in order to reclaim and develop Marx’s value theory and his theory of economic crisis that is based upon it. However, Park wrongly treats the TSSI as a theory or “approach” in its own right. He therefore evaluates it in an improper manner, pronouncing it unsuccessful because it fails to provide the kinds of explanations that an economic theory should provide. For instance, he complains that “the TSS ap1) The conclusion of an internally inconsistent argument may happen, by accident, to be true. But even in this case, the argument is invalid, since it does not correctly explain why the conclusion is true.

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proach does not explain equation (8) by means of the mechanism of the capitalist market or the behavior of capitalists,” and the concluding sentence of his paper reads: “I believe [that] supporters of the TSS must present more persuasive, economic explanations of their arguments in order for the TSS approach to be eligible for a valid interpretation of [the] Marxian value system.” This statement confuses theory with interpretation. A theory should of course offer persuasive explanations and accurate accounts of phenomena. But it is not the job of the interpreter to provide them; her job is simply and only to make the theory make sense. Thus if Marx’s theory (understood in a manner in which it makes sense, i.e. is free of internal inconsistency) is unpersuasive or inaccurate, that is a real problem. But it is Marx’s problem, not the TSSI’s. Yet notice that Park does not claim that Marx failed to provide the needed explanations. He does not even ask whether Marx provided them or not. Wrongly treating the TSSI as a distinct theory, he demands that its proponents provide the needed explanations, without even stopping to consider whether we would be “reinventing the wheel” by doing so. For example, Park wants to know “why the uniform rate of profit, if feasible, must be equal to aggregate surplus value divided by aggregate total cost in each period” (emphasis in original). But Marx himself provided an answer, partly in Chapter 9 of Capital, vol. III, and partly in Chapter 5 of vol. I, when he showed that the sale of commodities at prices that deviate from their values cannot cause value to be gained or lost in the aggregate.2) This answer may or may not be correct, and it may or may not satisfy Park, but if he finds it incorrect or unsatisfactory, he should criticize Marx, not the TSSI. Park also complains that TSSI authors pursue a “strategy” of “(re)defin[ing] economic categories” in order to “dodge potential analytical

2) See Kliman (2007: Section 8.2) for further discussion of this issue.

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problems.” He says that this “strategy does not correspond to the scientific research practice that Marx tried to maintain in his critique of political economy.” This complaint, too, stems from his failure to appreciate the fact that the TSSI is an exegetical interpretation of Marx’s value theory, not a distinct approach or theory. As an interpretation, the task of the TSSI is to make Marx’s value theory make sense. It accomplishes this task by (re)interpreting the theory’s categories in a way that eliminates the logical inconsistencies that are created by atemporal and dual-system misinterpretations of the theory. Yet because Park confuses and conflates theory with interpretation, (re)interpretation looks to him like (re)definition, logical inconsistencies created by misinterpretations look to him like potential analytical problems, and elimination of these inconsistencies looks to him like an underhanded and unscientific attempt to dodge the issues. But it is not. The interpretive methods employed by proponents of the TSSI are standard and widely accepted. As I have shown and argued elsewhere, “analogous tenets are regularly employed in various scholarly disciplines and in daily life. The widespread employment of these principles, especially their employment in daily life, is evidence that they are principles of responsible interpretation that have withstood the test of time, if indeed they are not inevitable”(Kliman, 2007: 68).

3. Prices of Production and the General Rate of Profit Park’s first specific criticism of the TSSI has to do with its understanding of how prices of production and the associated general (or average) rate of profit are determined in Marx’s theory. He complains that “the TSS approach does

not

explain

equation

(8)

[a

TSSI

price-of-production/gen-

eral-rate-of-profit equation] by means of the mechanism of the capitalist

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market or the behavior of capitalists.” Instead, “The TSS approach …… simply assumes that a (new) uniform rate of profit is established in each period.” In part, this criticism is based on a simple misinterpretation of what the TSSI holds. When Park refers to a uniform rate of profit being “established in each period,” he is claiming that proponents of the TSSI contend that “capitalists sell their products at [their prices of production] in each period”(emphasis added) and that capitalists in each industry therefore actually obtain the same, average rate of profit. But he cites no textual evidence in support of this claim, and it is not correct. In Marx’s theory, it is indeed the case that a hypothetical uniform rate of profit and hypothetical prices of production are established in each period. In other words, in every period there exists a certain set of prices (prices of production) such that, if all industries obtained these prices for their products, they would all realize a rate of profit equal to the period’s economy-wide average rate of profit. However, Marx emphasized that products are actually sold at these prices of production only rarely, and only by accident; thus he

certainly denied that rates of profit are actually uniform in each period.3) Accordingly, I do not hold ― and, to my knowledge, no proponent of the TSSI holds ― that “capitalists sell their products at [their prices of production] in each period” or that rates of profit are actually equal in each period. Park’s mistaken claim seems to be based upon some examples I constructed that do assume that a uniform rate of profit is achieved in every period. Because he wrongly construes the TSSI as an economic theory rather than an interpretation, he evidently misinterprets these examples as models 3) “In actual fact, demand and supply never coincide, or, if they do so, it is only by chance, and not to be taken into account for scientific purposes; it should be considered as not having happened”(Marx, 1991: 291). If demand and supply fail to coincide, then actual prices differ from prices of production.

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of real-world capitalism, thereby confusing an example’s assumptions with what an author assumes to be the case in reality. But the examples in question are counter-examples, not models. Their purpose is not to capture the real-world dynamics of capitalism, but to refute alleged proofs that one or another of Marx’s theories is internally inconsistent. For this particular purpose, it is perfectly legitimate to construct counter-examples that assume a uniform rate of profit. First of all, my particular counter-examples have to assume a uniform rate of profit, because that is what was assumed in the alleged proofs they refute.4) Secondly, these alleged proofs were intended to hold true universally ― i.e., without exception

― so any counter-example which shows there to be an exception is sufficient to overturn them. In other words, because the proofs were not intended to apply only to realistic cases, a counter-example does not have to employ realistic assumptions in order to overturn them. Its assumptions need only be logically possible, and a uniform rate of profit is certainly logically possible. Park seems not to understand this. He concedes that I “rebut Okishio’s theorem …… [by] show[ing] that, if we use equation (9) [a TSSI price-of-production/general-rate-of-profit equation], the rate of profit can fall when technology …… and output …… constantly change.” However, he 4) One set of counter-examples(see., e.g., Kliman, 2007: Section 8.5) refutes Bortkiewicz’s attempt to show that Marx’s account of the transformation of values into prices of production is internally inconsistent. Since Bortkiewicz tried to prove that purchases and sales at Marx’s prices of production would result in a spurious breakdown of the economy, my counter-examples have to assume that purchases and sales take place at Marx’s prices of production. The other set of counter-examples(see, e.g., Kliman and McGlone, 1999: Section 5.3) refutes Okishio’s theorem, which had supposedly disproved Marx’s law of the tendential fall in the rate of profit on logical grounds. The theorem assumes that the rate of profit is equalized following each technical change. Since my counter-examples consider technical changes that occur in each period, they have to assume that rates of profit are equalized in each period.

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then objects that “Kliman does not show what kind of economic mechanism guarantees that prices of production (with a uniform rate of profit) are formed in each period.” There is no such guarantee; commodities almost never sell at their prices of production. But this is irrelevant. The Okishio theorem says that it is impossible for a “viable” technical change to cause a fall in the uniform rate of profit. However, my counter-example proves that such a fall is possible if ― but not only if! ― a uniform rate of profit is established at the end of the period in which the technical change occurs. Hence the counter-example disproves the theorem.5) To sum up: Park’s complaint that TSSI authors fail to explain how prices of production are “established in each period,” “by means of the mechanism of the capitalist market or the behavior of capitalists,” seems to rest upon several misinterpretations. As I stressed in the prior section, he wrongly takes the TSSI to be a theory or approach, and therefore demands that it provide theoretical explanations when its actual purpose is interpretive. Relatedly, he seems to misinterpret logical counter-examples by construing them as economic models. And he seems to misinterpret the notion that (hypothetical) prices of production and anaverage rate of profit exist in each period as a claim that commodities actually sell at these prices of production and that the rate of profit is actually uniform.

4. Surplus-Value

5) Park is not the only one who has difficulty with the point that any logically possible counter-example is sufficient to disprove a theorem that is intended to hold true universally. Several other critics of the TSSI have also evidently been unable to understand this elementary logical point(see Freeman and Kliman, 2000, 2008, and Kliman and Freeman, 2006).

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At the end of Section III of his paper, Park exhibits what he believes to be an “anomaly” that results from the TSSI. His example assumes that technology, the amount of labor performed by workers, levels of output, the amount of wage goods received by workers, and the prices of these wage goods do not change. However, thereare two different sets of prices of non-wage goods. In the case in which their prices are higher, the monetary expression of labor-time (MELT) is greater, and thus the same amount of labor creates a greater amount of value as measured in terms of money. Thus, even though the variable capital in money terms is the same in both cases, variable capital as measured in terms of labor-time is smaller when the MELT is greater. As a result, surplus-value (also measured in terms of labor-time) is greater in the case in which the prices of non-wage goods is higher. According to Park, this increase in surplus-value is “arbitrary.” “We may wonder,” he writes, “what kind of role the surplus value defined [in this manner] could play in understanding the capitalist economy when it changes arbitrarily, even though there is no change in technology, labor time, scale of output and the amount of wage goods received by laborers.” This is a fair challenge to pose to Marx’s theory, but it fails as a critique of the TSSI. To repeat the point one more time, it is not the job of the TSSI to provide economic explanations of the kind that Park finds persuasive. As an exegetical interpretation of Marx’s value theory, its only job is to make the theory make sense. It does so, in part, by “defining” (i.e., interpreting Marx’s concept of) surplus-value in the manner to which Park objects. No other existing interpretation is fully able to make the theory make sense, because they all imply that the theory is internally inconsistent. The proposition that surplus-labor is the exclusive source of profit was one of Marx’s main conclusions, but these interpretations all imply that the premises of his theory actually lead to the contrary conclusion. However, the TSSI succeeds in deducing Marx’s conclusion from his premises, and it does so precisely be-

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cause it employs different interpretations of his concepts of surplus-value, profit, and surplus labor. Park himself concedes that this is the case. “Kliman …… fabricates an economy showingnegative physical surpluses in some sectors in some periods but being reproducible over a longer time span. Then he shows the FMT[Fundamental Marxian Theorem, i.e., the conclusion that surplus-labor

is the exclusive source of profit] can be applicable to this economy only under the TSS-based value system” (emphases added). So it seems that the TSSI does

the interpretive job it is supposed to do, and that Park’s complaint about arbitrariness and lack of economic significance is therefore actually a complaint about Marx’s theory (when it is understood in a manner in which it makes sense). In any case, I have difficulty understanding Park’s complaint. I do not thinkthe change in surplus-value that troubles him is arbitrary or devoid of economic significance. To understand the issue better, let us consider the simplest possible example (see Table 1). There is one wage good, bread, and one non-wage good, wine. Both are produced without any constant capital. Workers’ wages are just sufficient to purchase the entire amount of bread that is produced. And in keeping with Park’s premises, there are two cases. Although the price of wine is different in the two cases, technology, output levels, the amount of labor performed, wages, and the price of bread are the same. In Case 1, the price of wine is relatively low. In Case 2, it is three times as great. Consequently, the total price of output is greater and, because the variable capital (in money terms) is unchanged, surplus-value and the rate of exploitation (also in money terms) are greater than in Case 1. As I will discuss below, this implies that variable capital measured in terms of labor-time is less, while surplus-value measured in terms of labor-time is greater. The workers are therefore more exploited when, and because, the price of wine, a

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Table 1.

Case 1 Bread

Wine

Total Value = Total Price

$300

$300

$600

labor-time equivalent= 300 hrs price/MELT

300 hrs

600 hrs

no. of units

300 loaves

60 bottles

price per unit

$1 per loaf

$5per bottle

price

surplus-value (s) $300 = 300 hrs = 300 loaves of bread = 60bottles of wine variable capital (v) $300 = 300 hrs = 300 loaves of bread = 60 bottles of wine rate of exploitation 100% (s/v)

Case 2 Bread

Wine

Total Value = Total Price

$300

$900

$1200

labor-time equivalent 150 hrs = price/MELT

450 hrs

600 hrs

no. of units

300 loaves

60 bottles

price per unit

$1 per loaf

$15 per bottle

price

surplus-value (s) $900 = 450 hrs = 900 loaves of bread = 60 bottles of wine variable capital (v) $300 = 150 hrs = 300 loaves of bread = 20 bottles of wine rate of exploitation 300% (s/v) Note: surplus-value (profit) equals total value minus variable capital (the total wage bill). The rate of exploitation (rate of surplus-value) is the ratio of surplus-value to variable capital. 600 hrs of labor are performed in each period. The MELT (monetary expression of labor-time) is the ratio of the economy-wide total price of output to the total labor performed.

non-wage good, is higher. For reasons he does not bother to explain, this result troubles Park.6) Yet I

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think it is hard to avoid the conclusion that the workers are indeed more exploited in Case 2. Their wages are equal to only one-fourth, rather than one-half, of the total price of output. Given the usual method of adjusting for inflation, the workers’ real (inflation-adjusted) wages are only half as great in Case 2, since their money wages are unchanged while prices of consumer goods, bread and wine, are twice as high on average. Although the workers’ labor results in a total profit three times as great, their wages are no higher, and they cannot buy any more bread than in Case 1. Even worse, whereas a worker in Case 1 could consume five fewer loaves of bread in order to buy a bottle of wine, in Case 2 she must forego fifteen loaves of bread.7) Finally, let us consider the matter in terms of labor-time. If the total price of output is the monetary expression of the total labor needed to produce the output, as Marx held, then each dollar of output represents one hour of labor in Case 1 but only one-half hour in Case 2. Thus the wages of $300 in Case 2 represent only half as much labor as the wages of $300 in Case 1. It follows that, while the workers in Case 1 replace the sum of value they receive

6) His reference to the fact that surplus-value is greater even though there is “no change in …… labor time …… and the amount of wage goods received by laborers” seems to suggest that, in his view, workers are not more exploited if they do not perform more work or suffer a drop in their physical standard of living. If that is the case, what he actually finds objectionable is not just a particular “anomaly” that results from the TSSI, but Marx’s whole analysis of relative surplus-value, to which he devoted hundreds of pages in Capital, vol. I. When relative surplus value is produced, the degree of exploitation increases because the value of the wages that workers receive declines, even if the working day and their consumption levels remain constant. 7) If Park wishes to argue that this is irrelevant, since workers cannot consume non-wage goods like wine in any case, I would like him to explain what kind of role such a notion could play in understanding the capitalist economy. Is there a wine store anywhere that would refuse to let workers buy wine with their wages on the grounds that wine is a non-wage good?

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as wages during the first 300 hours of work, in Case 2 that sum of value is replaced during the first 150 hours of work. In other words, the necessary labor they perform falls from 300 to 150 hours, and so the surplus labor they perform during the rest of the time they are made to work increases from 300 hours to 450 hours. Relative surplus-value has been produced.8) It seems to me that the above analysis suffices to answer Park’s suggestions that the TSSI’s “definition” of surplus-value ― i.e., Marx’s concept of surplus-value, interpreted in a way that frees it of internal inconsistency ― is arbitrary and that it can play no role in understanding capitalist economies. The TSSI “definition” of surplus-value plays a role in understanding capitalist economies in part because it allows one to understand that the workers are relatively worse off in Case 2, not just in terms of the share of total income they receive or the amount of bread they would have to give up in order to buy a bottle of wine, but in terms of how long they must work above and beyond the period during which they create a sum of new value that replaces the value of their wages. And this “definition” of surplus-value is far from arbitrary, since it is simply a fact that the workers are relatively worse off in Case 2 than in Case 1. In other words, this result is not produced by some arbitrary definition of surplus-value. Other ways of comparing the workers’situation in the two cases arrive at the same result. As Table 1 makes clear, whether we measure the rate of exploitation in terms of money, or labor-time, or bread, or wine, the rate of exploitation is 100% in Case 1 but 300% in Case 2.9) 8) Although Marx identified technical progress as the main cause of relative surplus-value, his definition of relative surplus-value does not refer to technical progress: “I call that surplus-value which arises from the curtailment of the necessary labour-time, and from the corresponding alteration in the respective lengths of the two components of the working day, relative surplus-value”(Marx, 1990: p. 432, emphasis in original). Thus, according to this definition, the rise in the price of wine results in the production of relative surplus-value.

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(received 26 Dec 2008, revised 14 Jan 2009, accepted 20 Jan 2009)

󰋫 References Freeman, A and A. Kliman. 2000. ‘Two Concepts of Value, Two Rates of Profit, Two Laws of Motion.’ Research in Political Economy, 18, 243–67. Freeman, A and A. Kliman. 2008. ‘Simultaneous Valuation vs. the Exploitation Theory of Profit: A summing up.’ Capital & Class, 94, 107–117. Kliman, A. 2007. Reclaiming Marx’s “Capital”: A refutation of the myth of inconsistency, Lanham, MD: Lexington Books. Kliman, A and A. Freeman. 2006. ‘Replicating Marx: A reply to Mohun.’ Capital & Class, 88, 117–26. Kliman, A and T. McGlone. 1999. ‘A Temporal Single-System Interpretation of Marx’s Value Theory.’ Review of Political Economy, 11:1, 33–59. Marx, K. 1990. Capital: A critique of political economy, Vol. I. London: Penguin. Marx, K. 1991. Capital: A critique of political economy, Vol. III. London: Penguin. Park, Cheol-Soo. 2009. ‘The Temporal Single System: A retrospective critique.’ Marxism 21, vol. 6, no.1.

9) For instance, $900/$300 = (450 hrs)/(150 hrs) = (900 loaves of bread)/(300 loaves of bread) = (60 bottles of wine)/(20 bottles of wine) = 300%.

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󰋫 국문초록 박철수 교수의 비판에 대한 답변 앤드류 클리만

이 글은 마르크스 가치론의 시점 간 단일체계 해석(TSSI)에 대한 박철수 교수 의 비판에 답변하는 것이다. 이 글에서 나는 TSSI에 대한 그의 부정적인 평가가 대체로 TSSI를 제대로 이해하지 못한 것 때문이라고 주장한다. 그는 TSSI를 하 나의 별개의 이론 또는 “접근 방법”으로 다루고 있지만 사실 TSSI는 하나의 해 석일 뿐이며, 따라서 그가 제시하는 기준이 아닌 다른 것에 따라 평가돼야 한 다. 그 다음으로 박철수 교수가 주장하는 것과는 달리, 이 논문에서 나는 TSSI 가 상품들은 각 시기에 생산가격으로 팔린다는 것을 함축하고 있지 않다는 주 장을 하고 있다. 따라서 이 개념에 대한 그의 비판은 부적절하다. 마지막으로 이 논문에서 나는, TSSI에 따라 비임금재 가격이 증가하기 때문에 잉여가치가 증가하는 경우를 검토하고 있다. 박철수 교수는 이것이 자의적이고 예외적인 결과라고 반박하지만, 나는 잉여가치의 증대는 실질적인 현상, 즉 비임금재의 가격 상승으로 노동자들의 사정이 상대적으로 더 나빠지는 현상을 반영한다고 주장한다. 주요 용어 : 마르크스의 가치론, 비임금재, 시점 간 단일체계 해석(TSSI), 잉여 가치, 착취율.

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