Reclaiming Marx?s Capital: A Refutation of the Myth of Inconsistency
Published by EH.NET (September 2008)
Andrew Kliman, Reclaiming Marx?s Capital: A Refutation of the Myth of Inconsistency. Lanham, MD: Rowman and Littlefield, 2007. xvii + 231 pp. $65 (hardcover), ISBN: 978-0-7391-1852-8.
Reviewed for EH.NET by David Kristjanson-Gural, Department of Economics, Bucknell University.
In Reclaiming Marx?s Capital, Andrew Kliman, Professor of Economics at Pace University, sets out to do what his title suggests; his approach, however, is somewhat unexpected. Kliman does not attempt to defend Marx?s value theory by claiming it is correct, or by arguing that it is superior to other theories. Instead he attempts to show that the widely accepted claim that Marx?s value theory is inconsistent is incorrect. By revisiting how value is defined, Kliman attempts to show that Marx?s value theory, properly specified, does not encounter logical difficulties; the belief that Marx?s value theory is inconsistent is a myth. In defending his claim, Kliman provides an impressive contribution to the ongoing debate concerning how best to interpret and develop Marx?s theory of value, one that deserves careful consideration and response not just from those who are actively working in this area, but from those who continue to accept the conventional view that Marx?s theory is logically flawed without subjecting that view to sufficient scrutiny.
According to Kliman, the myth of inconsistency arises from two errors of interpretation shared by both Marx?s advocates and his critics. First, value is understood to occupy a separate system from that of prices and as a result a system of values (in units of labor) needs to be transformed into a system of prices (in units of currency). Kliman contends that values and prices, in fact, constitute two expressions of a single system, a system that may be denominated in labor units and in money units with the monetary expression of labor-time acting to convert values from labor units to money units and vice versa. This approach, which Kliman shares with several contemporary theorists, interprets the labor value of the constant capital component of a commodity?s value as being defined by the exchange-value of the means of production and not by its value. Second, the constant capital is valued simultaneously with the commodity itself and not, as Kliman argues should be done, according to the exchange-value of the means of production in the previous period (not however at its historical cost).
The crux of Kliman?s thesis is that the myth of inconsistency arises because theorists incorrectly interpret Marx?s concept of value as occupying a separate system from prices and have wrongly calculated its magnitude using the value of constant capital from the current period as opposed to the prior period. These errors lead to the conclusion that Marx?s value theory is inconsistent and also imply that value is redundant since prices are determined physically by the matrix of physical coefficients and the real wage. However, Kliman argues that a temporal, single system interpretation of value does not encounter inconsistencies ? it is possible therefore to interpret Marx?s value theory in a way that creates consistency between his definitions and premises on the one hand and his results on the other. The failure to replicate Marx?s results is not therefore evidence of logical error on Marx?s part but a failure on the part of his critics to properly interpret Marx?s text.
To defend his claim, Kliman introduces Stigler?s (1965) ?principle of scientific exegesis? ? a criterion for resolving disputes concerning contending interpretations of a text. He argues, quite convincingly, that unless one is willing to ?specify conditions under which one would be willing to concede that one?s interpretation is incorrect,? (p. 61) one is simply asserting, dogmatically, that one?s own interpretation is superior. Kliman argues that it is not sufficient simply to find textual references which support one?s interpretation since this in analogous to choosing data that supports one?s empirical claim. Instead, the principle of scientific exegesis holds that an interpretation ought to be preferred if it is able to establish coherence between definitions and premises on the one hand and conclusions on the other. Kliman argues that contributors to the debate either do not recognize the existence of alternative interpretations of the text or do not provide criteria for evaluating the merits of their interpretation over others.
Kliman then sets out to demonstrate that while simultaneous interpretations are unable to establish coherence between their interpretation of Marx?s definitions and premises on the one hand and his conclusions on the other, his temporal, single system approach can. He introduces a number of simple corn models to demonstrate both the determination of value and prices and the effects of changes in technology on the rate of profit and he compares the results of a simultaneous dual system interpretation with his own. In the case of the transformation problem he argues that simultaneous valuation dual system approaches such as those by Bortkiewicz and Winternitz imply that the profit rate is physically determined and that the dual equality of total prices and total profit and total surplus value and total profit can not hold simultaneously. Single system approaches, because they value constant capital according to its exchange-value, do not encounter these inconsistencies. In the case of the tendency of the rate of profit to fall, Kliman argues that the Okishio theorem relies on simultaneous valuation of input and output; once this is replaced by temporal valuation the rate of profit falls on the introduction of productivity enhancing technological change.
The strength of Kliman?s contribution lies in his commitment to engaging in scholarly debate. Kliman shows the historical lineage of various approaches, clearly defines his criteria for preferring one interpretation to another, clearly states and provides arguments in defense of the temporal single system interpretation and effectively identifies the main areas of disagreement. If his arguments withstand scrutiny, he will have accomplished a significant feat. For these reasons, Reclaiming Marx?s Capital provides a significant contribution to the literature.
Kliman?s work could benefit from an elaboration of certain points and a reconsideration of others. A more systematic integration of the monetary expression of labor-time would certainly help. His critique of Okishio relies crucially on the monetary expression of labor-time but he doesn?t provide readers with sufficient analytics to support his assumptions concerning how and why the monetary expression of labor-time changes.
Kliman also does not support his claim that all simultaneous approaches are physicalist. He distinguishes single system and dual system approaches but often uses dual system analyses to show results and then claims these apply to simultaneous single system approaches. He critiques two of these latter (Loranger and Moseley) but omits others (Roberts, Kristjanson-Gural) which specifically contradict his claims.
His own commodity corn models abstract from both the redistribution of value among industries and the role money plays in storing value between periods. His claim that value must be determined temporally because otherwise ?value appears or disappears? is not adequately substantiated as a result. Kliman?s thesis could be strengthened if he reconsidered his wholesale rejection of simultaneous valuation in favor of a position which defends a single system approach as consistently reproducing Marx?s results while at the same time challenging those who favor a single system simultaneous approach to develop a consistent explanation of changes in values and exchange values that refute Okishio.
Kliman?s book succeeds not in spite of these criticisms but rather because of them. By carefully identifying and systematically critiquing key elements of the received wisdom concerning Marx?s value theory, Kliman permits a more thorough analysis of controversies concerning how best to interpret Marx?s value theory and opens new terrain in the ongoing efforts to finish the work that Marx initiated.
David Kristjanson-Gural is Associate Professor of Economics at Bucknell University. His recent published research examines the role of demand in the determination of value and prices in Marxian value theory and the effect of changes in demand on the monetary expression of value.