By Andrew Kliman Published in With Sober Senses, Oct. 7, 2021 at https://www.marxisthumanistinitiative.org/economics/henryk-grossmanns-breakdown-model-on-the-real-cause-of-the-fictitious-breakdown-tendency.html, together with interactive spreadsheet file. There is much about Henryk Grossmann’s 1929 book on capitalist accumulation, breakdown, and crisis (Grossmann 1992) that I appreciate and even admire. He offered an alternative to the underconsumptionist and disproportionality theories of crisis that dominated Marxist discourse. He succeeded in refocusing attention on Marx’s law of the tendential fall in the rate of profit at a propitious moment, the eve of the Great Depression. The book offers many insights into the issues it addresses, as well as trenchant criticisms of Grossmann’s theoretical opponents. And his willingness to patiently and doggedly compute the evolution of his model’s variables, year after year for 36 years, without the aid of a spreadsheet or even an electronic calculator, was no mean feat either. Despite my sympathies, I think I have an intellectual obligation, and a political obligation, to be a messenger of truth regarding the core of the book––its model of capitalism’s breakdown and the theory of breakdown based on the model. In this article, I aim to demonstrate that the model and the theory are fatally flawed. Grossmann characterized the alleged problem of breakdown in terms of a mass (i.e., amount) of profit that does not grow fast enough to allow capital accumulation to continue at its current rate. Generations of his devotees, as well as critics, have also focused their attention on the alleged insufficiency of the mass of profit. This is at best a misleading, superficial, and unhelpful way of understanding why capitalist production inevitable breaks down (in Grossmann’s model). I shall show that the real cause of breakdown (in the model) is a physical imbalance: the total supply of physical output does not grow fast enough to allow productive demand in physical terms (demand for means of production plus goods for workers’ consumption) to keep growing at the postulated rate. I shall also show that such a physical imbalance is neither inevitable nor plausible. The tendency of capitalism to head inevitably toward breakdown, which Grossmann claimed to have revealed, is therefore simply fictitious. Breakdown as a result of the physical imbalance in question is an artifact of the model’s untenable assumptions. Because the physical imbalance is neither inevitable nor plausible in reality, neither is a breakdown resulting from it. In the next section of this article, section 2, I discuss the …
MHI · Dialogue with Patrick Murray on the Value-Form Paradigm, Part 2 — Ep. 26 Brendan and Andrew continue their dialogue with Patrick Murray, the noted value-form theorist. (The value-form paradigm is a Marx-inspired strand of political economy that focuses on the market.) Patrick responds to Andrew’s arguments that Marx’s views on the origin of profit, intra-firm trade, and the quantity theory of money presuppose that commodities’ prices are determined before they are sold. And, as in Part 1, much of the discussion focuses on whether, in Marx’s theory, a commodity’s value is only potential before it is sold; whether “co-constitutive” value-form theory collapses into a more extreme version; and whether Marx held that the magnitude of a commodity’s value is determined exclusively by the amount of labor that is socially necessary to produce it. Throughout the discussion, frequent reference is made to: a published symposium on the value-form paradigm, in which Andrew and others criticized the paradigm, while Patrick responded to them; Part 1 and Part 2 of the recent RFH discussion of “The Value-Form Paradigm vs. Marx’s ‘Capital’”; and Marx’s Capital, especially chapter 1 and chapter 3 of volume 1. Plus: current-events segment on our attitudes to the Democratic Party and Jill-Stein voters, in response to a listener’s comments. Radio Free Humanity is a podcast covering news, politics and philosophy from a Marxist-Humanist perspective. It is co-hosted by Brendan Cooney and Andrew Kliman. We intend to release new episodes every two weeks. Radio Free Humanity is sponsored by MHI, but the views expressed by the co-hosts and guests of Radio Free Humanity are their own. They do not necessarily reflect the views and positions of MHI. We welcome and encourage listeners’ comments, posted on this episode’s page. Please visit MHI’s online print publication, With Sober Senses, for further news, commentary, and analysis. Click here for more episodes.
MHI · Dialogue with Patrick Murray on the Value-Form Paradigm, Part 1 — Ep. 25 Brendan and Andrew welcome Patrick Murray, the noted value-form theorist, onto the podcast. (The value-form paradigm is a Marx-inspired strand of political economy that focuses on the market.) Patrick responds to the recent, two-episode RFH discussion––“The Value-Form Paradigm vs. Marx’s ‘Capital’”––and enters into extended dialogue with the co-hosts. Much of the discussion focuses on whether, in Marx’s theory, a commodity’s value is only potential before it is sold; whether “co-constitutive” value-form theory collapses into a more extreme version in which actual values are ultimately determined only in exchange; and whether Marx held that the magnitude of a commodity’s value is determined exclusively by the amount of labor that is socially necessary to produce it. (Part 2 of this discussion will be released in the near future.) Throughout the discussion, frequent reference is made to: a published symposium on the value-form paradigm, in which Andrew and others criticized the paradigm, while Patrick responded to them; Part 1 and Part 2 of the recent RFH discussion, in which Andrew replied to Patrick; and Marx’s Capital, especially chapter 1 and chapter 3 of volume 1. Plus: current-events segment on the Republican and Democratic national conventions—or, perhaps, infomercials. Radio Free Humanity is a podcast covering news, politics and philosophy from a Marxist-Humanist perspective. It is co-hosted by Brendan Cooney and Andrew Kliman. We intend to release new episodes every two weeks. Radio Free Humanity is sponsored by MHI, but the views expressed by the co-hosts and guests of Radio Free Humanity are their own. They do not necessarily reflect the views and positions of MHI. We welcome and encourage listeners’ comments, posted on this episode’s page. Please visit MHI’s online print publication, With Sober Senses, for further news, commentary, and analysis. Click here for more episodes.
The second half of a two-part interview on the “value-form paradigm”—a Marx-inspired and market-focused strand of political economy. Some years ago, the noted value-form theorist Patrick Murray responded to criticisms of the paradigm, leveled by Andrew and others in a published symposium. In this episode––guided by Brendan’s questioning, and for the first time anywhere––Andrew continues his reply to Murray. The co-hosts discuss the source of profits, the quantity theory of money, and intra-firm trade. The discussion focuses on Andrew’s argument that the implications of the value-form paradigm contradict what Marx wrote about these issues, and on Murray’s attempts to explain away the apparent contradictions. Andrew explains why he finds Murray’s rebuttals to be unsuccessful. The segment includes references to chapter 3 and chapter 5 of Capital, volume 1, and to Marx’s draft chapter, “Results of the Direct Production Process.” In the current-events segment, the co-hosts respond to a recent “anti-neoliberal left” piece in Salon, in which Varsha Gandikota-Nellutla once again puts the political interests of “the left” ahead of the life-and-death struggle against Trumpist reaction. Radio Free Humanity is a podcast covering news, politics and philosophy from a Marxist-Humanist perspective. It is co-hosted by Brendan Cooney and Andrew Kliman. We intend to release new episodes every two weeks. Radio Free Humanity is sponsored by MHI, but the views expressed by the co-hosts and guests of Radio Free Humanity are their own. They do not necessarily reflect the views and positions of MHI. We welcome and encourage listeners’ comments, posted on this episode’s page. Please visit MHI’s online print publication, With Sober Senses, for further news, commentary, and analysis. Click here for more episodes.
Some years ago, Andrew participated in a published symposium on the “value-form paradigm”—a Marx-inspired and market-focused strand of political economy. Andrew and others criticized the value-form paradigm, and the noted value-form theorist Patrick Murray responded to them. In this episode (and a future one), Andrew replies to Murray’s paper—for the first time anywhere. He and Brendan discuss differences between Marx and value-form theory regarding how commodities’ values are determined and whether capitalism is essentially a monetary system. They also engage in a broader dialogue on the general features of the value-form paradigm and its political implications; some of that discussion focuses on how Marx’s critique of Proudhonism is relevant to the value-form paradigm. The segment includes references to Marx’s Capital—chapter 1, chapter 2, and chapter 7 of volume 1, and chapter 1 of volume 2—and to Paul A. Samuelson’s famous paper, “Understanding the Marxian Notion of Exploitation.” The current-events segment focuses again on the COVID-19 pandemic––especially Lysol Don’s latest epidemiological wisdom and Nazis storming Michigan’s Capitol building. Are there really “good people on both sides” of this lunacy? Radio Free Humanity is a podcast covering news, politics and philosophy from a Marxist-Humanist perspective. It is co-hosted by Brendan Cooney and Andrew Kliman. We intend to release new episodes every two weeks. Radio Free Humanity is sponsored by MHI, but the views expressed by the co-hosts and guests of Radio Free Humanity are their own. They do not necessarily reflect the views and positions of MHI. We welcome and encourage listeners’ comments, posted on this episode’s page. Please visit MHI’s online print publication, With Sober Senses, for further news, commentary, and analysis. Click here for more episodes.
Abstract These comments on Fred Moseley’s book Money and Totality: A Macro-Monetary Interpretation of Marx’s Logic in Capital and the End of the ‘Transformation Problem’ address the fundamental issue of exchange consistency: when are things bought, when are they sold, and when are their prices established? This simple question defines the difference between two paradigms that divide the whole of economics including Marx studies: temporalism and simultaneism. I will show – in the probably vain hope of convincing him – that Fred’s theory is incompatible with Marx’s concept of money. It is likewise incompatible with any concept of money that recognizes its most fundamental property, as a means of purchase. This is because, in Fred’s simultaneist (that is to say, general equilibrium) interpretation of Marx, the money paid by sellers is different from the money received by purchasers. Actually, therefore, Fred’s is a price, not a monetary, interpretation of Marx. It therefore has more in common with the value theories of Ricardo, Walras, von Bortkiewicz, and Sraffa, than with Marx’s theory. All these theories manifest the same contradiction, which arises from the identification of money with price, that is to say, a denial of the independent and real function of money, reducing it to a measure and a standard. But the primary function of money is to buy things, as Marx understood, and Fred does not. Download
Download This spreadsheet contains a long-run dataset on GDP, from a variety of sources and by a range of different measures, for nations in the ‘North’ – the advanced or industrialised countries, as the IMF calls them. It is an extract from a much larger database on macroeconimic history that is under construction as part of the work of the Data research group of the Geopolitical Economy Research Group (GERG). Unlike the IMF’s World Economic Outlook database which only provides historic data from 1980, the GERG dataset provides data stretching back at least to 1950 for the most common indicators, and even earlier for a subset of measures and countries. Our aim is that eventually this should become a public resource for research into long-term trends in the world economy. This spreadsheet illustrates a vital aspect of postwar economic history, namely the long-term trend in the growth rates of the Advanced economies. It strikingly demonstrates that the trend of growth rates has unambiguously downward since the mid-1950s, supporting the hypothesis that the present difficulties of the these economies – and by contagion, the world – is not an immediate or short-term phenomenon, nor is it the result of a short-terrm process (in historical terms) such as neoliberalism or financialisation. The trend lasts over 60 years and as a result, average growth rates have more than halved in the postwar period. This relentless decline includes all Northern countries and is not confined to one or two, such as the UK or the US. Moreover it shows on a very wide range of possible measures of ‘aggregate’ or average growth, including the IMF’s own averaging method, PPP measure of GDP, and normal ‘Constant Local Currency’ measures. The evidence that this is part of a profound historical trend is thus extremely strong, and we are making this part of the final dataset available at an early stage, because of the significance of the results. Further study is needed before the data can be considered authoritative, so researchers are advised not to cite it at this point. However the datasources on which it draws are all in the public domain, and it merely curates these sources without modification. The results are therefore fully reproducible, and researchers are welcome to draw their own conclusions from the original data. Comments and corrections are of course welcome and will be acknowledged. By Alan Freeman Geopolitical Economy Research …
Abstract This landmark article was first published in French in 1980 as Manuel Pérez, “Valeur et prix : un essai de critique des propositions néo-ricardiennes” in Critiques de l’économie politique (nouvelle série) n°10, Janvier-Mars 1980, which may be accessed at http://hussonet.free.fr/perez.pdf and was one of the earliest statements of what has become the TSS Interpretation of Marx’s theory of value. The article should be cited as “Freeman, A. 2018. Introduction to Michel Husson’s ‘Value and price: A critique of neo-Ricardian claims’, Capital and Class Vol 42, Issue 3, 2018< https://journals.sagepub.com/toc/cnca/42/3>” and the published version may be accessed at https://journals.sagepub.com/eprint/JxBvEhnhndM6ka3EudT6/full. Download Michel Husson’s ‘Value and price: a critique of neo-Ricardian claims’ Abstract This landmark article was first published in French in 1980 as Manuel Pérez, “Valeur et prix : un essai de critique des propositions néo-ricardiennes” in Critiques de l’économie politique (nouvelle série) n°10, Janvier-Mars 1980, which may be accessed at http://hussonet.free.fr/perez.pdf and was one of the earliest statements of what has become the TSS Interpretation of Marx’s theory of value. The article should be cited as “Husson, M. 2018. ‘Value and price: A critique of neo-Ricardian claims’, Capital and Class Vol 42, Issue 3, 2018 ” and the published version may be accessed at https://journals.sagepub.com/eprint/JxBvEhnhndM6ka3EudT6/full Download
Abstract This article explores some aspects of Marx’s method for calculating the value of commodities in simple dynamic situations. His method is considered «temporalist» because it pays careful attention to the temporal sequence in which social labor-time is spent in the production sphere. This contrasts with the interpretation of Marx’s calculation proposed by Bródy, Morishima and others for whom value is determined by means of simultaneous equations. For these authors, constant capital is equal to the «replacement cost» of the inputs, instead of being the monetary representation of the «past labor» spent in a previous stage of production. It is argued that simultaneism disregards the set of conditions that Marx actually takes into account in his calculation, specially the existence of stocks of both inputs and outputs as well as ongoing production processes. In addition, simultaneism neglects the continuity of the reproduction process, the existence of capital in its three forms—as money, productive and commodity capital— and the correlative intertwining of the three circuits of capital. Textual evidence concerning this issue is discussed and a numerical example contrasting both methods is presented. Abstracto Este artículo investiga algunos aspectos del método utilizado por Marx para calcular el valor de las mercancías en situaciones dinámicas simples. Se considera que ese método es «temporalista» porque presta atención a la secuencia temporal en que se gasta el trabajo social en la producción. Esto difiere de la interpretación propuesta por Bródy, Morishima y otros autores para quienes el valor se determina mediante un sistema de ecuaciones simultáneas. Para esos autores, el capital constante corresponde al «costo de reposición» de los insumos, en lugar de ser la representación monetaria del «trabajo pasado» gastado en una etapa previa de la producción. Se argumenta que el método simultáneo pasa por alto las condiciones que Marx considera explícitamente en su cálculo, en especial la existencia de inventarios de insumos y productos y de un proceso de producción en marcha. Además, ese método no toma en cuenta la continuidad del proceso de reproducción ni la existencia del capital en sus tres formas—capital dinero, capital productivo y capital mercancía— y, por consiguiente, no puede capturar la interrelación entre los tres circuitos del capital. Se discute evidencia textual y se presenta un ejemplo numérico en que se contrastan los resultados de ambos métodos. Originally appeared in Política y Sociedad, 2003, Vol. 40 Núm. 2: 231-252. Download
Abstract Marx’s solution to the “transformation of the values of commodities into prices of production” has been criticized by the neoRicardians because “even if inputs prices are transformed, Marx’s ‘solution’ is internally inconsistent”. Steedman argues that Marx’s procedure is inconsistent because he “assumes that S/(C+V) is the rate of profit but then derives the result that prices diverge from values, which means precisely, in general, that S/(C+V) is not the rate of profit”. Steedman goes on and states that “adherents to Marx’s ‘solution’ never attempt a direct reply to the above criticism. The reason is simple; the criticism is sound and cannot be answered”. Download
Abstract In this paper we analyze, from the TSS perspective, the effects of price changes on the profit rate of a given industrial capital. Firstly, we argue that the analysis of the effects of prices change must be done utilizing the concept of the circuit of industrial capital. Secondly, we show that from the standpoint of industrial capital prices changes not only affect the profit rate but it also affect – through the phenomena of revaluation/devaluation and release/tying-up of capital, and their reciprocal interrelationship – the amount of total capital advanced to the reproduction process. Download
Originally published in With Sober Senses on February 9, 2018. Republished with permission of Marxist-Humanist Initiative. Andrew Kliman responds to a plagiarized “critique” of the TSSI and Marx’s value theory that has been circulating on the internet. “Caveat Non Emptor!” by Andrew Kliman An online “critique” of the temporal single-system interpretation (TSSI) of Marx’s value theory has been floating around the internet for a couple of years.[1] I guess people read it and circulate it, instead of decent stuff, because it is free. But we live in a capitalist society. In such a society, you get what you pay for. Thus, readers of this “critique” have literally gotten nothing. It is simply a quickly-slapped-together piece of plagiarism, based on claims that were disproven long ago and that certainly don’t merit being resuscitated by means of plagiarism. And it also fails to inform readers of the fact that these arguments were long ago challenged, much less that they were disproven. Caveat Non Emptor! I have gotten numerous inquiries about that “critique.” I am publishing this response so that I can refer interested people to it instead of repeating myself each time I get an inquiry, and in order to warn people: don’t pay attention to that piece of garbage. The “critique”—published without an author’s name in some versions, and by “Ice_Koll” in at least one version—gives every indication of being a term paper slapped together in a couple of hours through the magic of plagiarism. The term-paper part is speculation, but there is no doubt about the plagiarism part. The author has lifted his/her arguments nearly verbatim from essays by Simon Mohun and Roberto Veneziani, which appeared in various journals and have been republished in a collection entitled Is Marx’s Theory of Profit Right?: The Simultaneist–Temporalist Debate (2015), edited by Nick Potts and me. Mohun and Veneziani’s objections to the TSSI are not well-founded, as responses by Alan Freeman, Nick Potts, and me—which are included in the same collection—have shown time and again. As Freeman and I noted at the end of the long debate, This reply to Simon Mohun and Roberto Veneziani … points out that they have not addressed, much less overturned, our refutations of Veneziani’s celebrated criticisms of Marx and the temporal single-system interpretation (TSSI) of Marx’s value theory. Instead, they have filled their “response” with non-responsive irrelevancies. We argue that they do so in order to try …