Temporal single-system interpretation

The temporal single-system interpretation (TSSI) of Karl Marx's value theory emerged in the early 1980s in response to renewed allegations that his theory is "riven with internal inconsistencies," and that it must therefore be rejected or corrected. Since internally inconsistent theories cannot possibly be right, the allegations of inconsistency have served to legitimate the censorship of Marx's theories of value and the falling rate of profit and the suppression of current research based upon them.^[1] ^[2]

Proponents of the TSSI argue that the alleged inconsistencies are not present in Marx's original theory, but are produced by misinterpretation. When his theory is understood in accordance with the TSSI, they claim, all of the supposed inconsistencies in its quantitative dimension disappear.

In recent years, even critics of Marx and/or the TSSI have come to accept this claim, implicitly or explicitly. The TSSI continues to be controversial, but the fact that it eliminates the apparent inconsistencies in Marx's value theory is now accepted, implicitly or explictly, by specialists in the field.^[3]

Scope of TSSI Research

Among the main issues addressed by the TSSI are Marx's law of the tendency of the rate of profit to fall and the transformation of commodity values into prices of production––the so-called transformation problem––in Das Kapital Volume 3. TSSI authors have also challenged the "Fundamental Marxian theorem," which supposedly showed that Marx's value theory is unnecessary in order to arrive at his conclusion that exploitation of workers is the unique source of profit under capitalism.

Other research informed by the TSSI includes studies of the impact of European economic integration, theoretical and empirical analysis of economic crisis (see Crisis (economic)), critiques of the static equilibrium methodology widely employed in economics (mainstream as well as Sraffian and Marxian), and challenges to the statistical claim that industry-level values and prices are strongly correlated. Drawing on their experiences in the controversy over Marx's value theory, some proponents of the TSSI have also been active in the movement for pluralism in economics, and they have critiqued, and argued for the reform of, the interpretive methods employed in Marxian economics.

Proponents of the TSSI include, among others, Guglielmo Carchedi, John Ernst, Alan Freeman, Andrew Kliman, Eduardo Maldonado-Filho, Ted McGlone, Nick Potts, and Alejandro Ramos Martinez.

Criticism of the TSSI and Response

Critics of the TSSI have characterized it as an orthodoxy which asserts that "Marx made no errors." For instance, David Laibman charges that its proponents are "New Orthodox Marxists" who

"assert that Marx's formulations, in both the theory of value and the analysis of capitalist accumulation and crisis, are literally and completely correct; that Marx made no errors . . . ."^[4]

Roberto Veneziani similarly alleges that the TSSI upholds "the literal truth of all [of] Marx’s propositions."^[5]

These allegations, however, were not accompanied by supporting evidence.^[6]

Proponents of the TSSI contend that these allegations are false:

“We have never said that Marx’s contested insights are necessarily true . . . . We simply say the claims that his value theory is necessarily wrong, because it is logically invalid, are false.”^[7]

Similarly, Andrew Kliman distinguishes between internal consistency on the one hand, and truth or correctness on the other, at least nine different times. For instance, he writes that the TSSI's ability to eliminate the apparent inconsistencies in Marx's value theory does not imply

"that Marx’s theoretical conclusions are necessarily correct. It does imply, however, that empirical investigation is needed in order to determine whether they are correct or not. There is no justification for disqualifying his theories a priori, on logical grounds."^[8]

Significance of "Temporal" and "Single-system"

The words "temporal" and "single-system" in the title of the TSSI refer to the two key differences between it and the interpretation of Marx's value theory derived from Ladislaus von Bortkiewicz that at one time dominated academic Marxist economics.

According to the Bortkiewiczian interpretation, prices and values of inputs into the production process are, in Marx's theory, determined simultaneously with the prices and values of the outputs that later emerge from the production process. Thus, inputs' prices (or values) and outputs' prices (or values) are necessarily equal. In contrast, the TSSI is "temporal" or non-simultaneous, holding that prices (and values) of inputs and outputs in Marx's theory need not be (and generally are not) equal.

Second, according to the Bortkiewiczian interpretation of Marx's value theory, values and prices constitute two distinct and independent "systems." With respect to relative magnitudes, prices do not depend on values, and values do not depend on prices. Prices of outputs depend on the prices of the inputs used to produce them, while values of outputs depend on the values of the inputs used to produce them. In contrast, the TSSI is a "single-system" interpretation since it holds that, in Marx's theory, (a) prices of outputs depend in the aggregate on the so-called "value rate of profit" (the ratio of surplus-value to capital invested), while (b) businesses' investments of capital value, and thus the values of the outputs produced, depend partly on the prices of the inputs acquired by means of these investments. Value and price are therefore determined interdependently, though they remain distinct.

On the Alleged Proofs of Marx’s Alleged Inconsistencies

"Okishio's theorem," a result produced by the Japanese Marxian economist Nobuo Okishio in 1961, was widely regarded as having disproved Marx's law of the tendency of the rate of profit to fall, but TSSI authors have shown that Marx's rate of profit (as they interpret it) can fall in circumstances in which Okishio's theorem says that "the" rate of profit cannot fall. Thus, even Duncan K. Foley, a prominent critic of the TSSI, acknowledges that

"I understand [Alan] Freeman and [Andrew] Kliman to be arguing that Okishio’s theorem as literally stated is wrong because it is possible for the money and labor rates of profit to fall under the circumstances specified in its hypotheses. I accept their examples as establishing this possibility.”^[9]

In 1906-07, Ladislaus von Bortkiewicz claimed to prove that Marx's account of "the transformation of commodity values into prices of production" (i.e., prices that allow businesses to obtain an average rate of return on their capital investments) was internally inconsistent. "Correcting" the alleged inconsistency, Bortkiewicz produced results that seriously call into question Marx's theory that prices and profits are determined, in the aggregate, by the production of value and surplus-value: the "price rate of profit" no longer equals the "value rate of profit," and the sum of prices diverges from the sum of values. However, proponents of the TSSI claim to have disproved Bortkiewicz's alleged proof of inconsistency. Although no critic has successfully refuted this claim, first put forward in 1988, many Marxist economists still decline to accept it.^[10]

When Marx's theory is understood in accordance with the TSSI, rather than in accordance with Bortkiewicz's interpretation, moreover, the results of his transformation account re-emerge as internally consistent; price and value magnitudes are indeed equal in the aggregate. These equalities also re-emerge under other––atemporal––single-system interpretations. Yet under the atemporal interpretations, Marx's falling-rate-of-profit theory and other aspects of his value theory still appear to be internally inconsistent. In order for his theories to be fully acquitted of charges of inconsistency and error, he must be interpreted as having had a temporal conception of value and price determination.

Critique of Political Economy (journal)

One recent project related to the TSSI is the Critique of Political Economy, an online scholarly journal founded in 2006 by Alan Freeman and Andrew Kliman, together with a working editorial board of 50-plus Marxist and non-Marxist scholars in fields such as economics, philosophy, sociology, education, psychology, political science, and accounting. The journal's mission statement says that

"TSSI research ... establishes a basis for a new research program that, in contrast to mainstream Marxian and radical political economy, proceeds from Marx’s contributions rather than from the 'corrections' of his alleged errors.

"An indispensible aim of COPE is to create an institutional basis for continued research in the TSSI, and TSSI-informed theoretical and empirical work which, because of limited access to resources, does not currently exist. We hope that, by working collaboratively on and contributing to COPE, proponents of the TSSI will be able to turn it into an ongoing, self-sustaining, research program."^[11]

Footnotes

^ For instance, the connection between the inconsistency allegations and the lack of study of Marx’s theories was noted by John Cassidy ("The Return of Karl Marx," The New Yorker, Oct. 20 & 27, 1997, p. 252): "His mathematical model of the economy, which depended on the idea that labor is the source of all value, was riven with internal inconsistencies and is rarely studied these days."
^ Andrew Kliman states that "Marx’s value theory would be necessarily wrong if it were internally inconsistent. Internally inconsistent theories may be appealing, intuitively plausible and even obvious, and consistent with all available empirical evidence––but they cannot be right. It is necessary to reject them or correct them. Thus the alleged proofs of inconsistency trump all other considerations, disqualifying Marx’s theory at the starting gate. By doing so, they provide the principal justification for the suppression of this theory as well as the suppression of, and the denial of resources needed to carry out, present-day research based upon it. This greatly inhibits its further development. So does the very charge of inconsistency. What person of intellectual integrity would want to join a research program founded on (what she believes to be) a theory that is internally inconsistent and therefore false?" (Andrew Kliman, Reclaiming Marx's "Capital": A Refutation of the Myth of Inconsistency, Lanham, MD: Lexington Books, 2007, p. 3, emphasis in original)
^ See Andrew Kliman, Reclaiming Marx's "Capital", pp. 132-36, p. 152, pp. 165-68, pp. 206-08. He lists the following propositions, among others, on pp. 206-07: "The Okishio theorem does not disprove Marx’s law of the tendential fall in the rate of profit (LTFRP). Its conclusions hold true only when input and output prices are assumed a priori to be equal." "The LTFRP becomes logically valid once the a priori assumption that input and output prices are equal is jettisoned. If faster productivity growth tends to lower prices, the (temporally determined) rate of profit: (a) can fall under conditions in which the Okishio theorem says that it must rise; (b) necessarily tends to fall in relation to the theorem’s simultaneist-physicalist rate of profit; and (c) can fall forever even if the simultaneist-physicalist rate of profit rises forever." "Bortkiewicz did not prove that Marx’s account of the value-price transformation is internally contradictory; (simple) reproduction can occur when input and output prices differ. Hence, there was no logical need to correct Marx’s account ...." "When Marx is interpreted as a single-system theorist, all three of his [transformation account's] aggregate value-price equalities are obtained." Kliman then states that only one of these propositions (the one that begins "Bortkiewicz did not prove ...") remains actively disputed by a specialist in the field, and only by one author (Ernesto Screpanti). But "Screpanti’s ... rejection of [this proposition] fails to take account of [a 1988 paper by] Kliman and McGlone ... and subsequent works in which this point is demonstrated" (Kliman, Reclaiming Marx's "Capital", p. 212n1). Kliman then concludes: "Critics of Marx’s value theory and other critics of the TSSI have acknowledged, however grudgingly and implicitly, that [these and the other propositions he lists] are correct. Thus it has been acknowledged that the LTFRP and Marx’s account of the value-price transformation have not been shown to be logically invalid, ..." (p. 208).
^ David Laibman, "Rhetoric and Substance in Value Theory: An appraisal of the new orthodox Marxism." In Alan Freeman, Andrew Kliman, and Julian Wells, The New Value Controversy and the Foundations of Economics, (Cheltenham, UK: Edward Elgar, 2004, p. 1, emphases in original.
^ Roberto Veneziani, "The Temporal Single-System Interpretation of Marx’s Economics: A critical evaluation," Metroeconomica, Vol. 55, No. 1, 2004, p. 97, emphasis in original.
^ To verify the absence of supporting evidence in these works for the above claims, see the absence of supporting evidence in David Laibman, "Rhetoric and Substance in Value Theory: An appraisal of the new orthodox Marxism," and the absence of supporting evidence in Roberto Veneziani, "The Temporal Single-System Interpretation of Marx’s Economics: A critical evaluation."
^ Alan Freeman and Andrew Kliman, "Two Concepts of Value, Two Rates of Profit, Two Laws of Motion," Research in Political Economy Vol. 18, 2000, p. 260, emphasis in original.
^ Andrew Kliman, Reclaiming Marx's "Capital", p. xiii.
^ Duncan K. Foley, "Response to Freeman and Kliman," Research in Political Economy, Vol. 18, 2000, p. 282.
^ Only one critic of the TSSI, David Laibman, has addressed this issue in print. He acknowledges that TSSI theorists have shown that "reproduction equilibrium" can take place when input and output prices differ, which is precisely what Bortkiewicz had supposedly proved to be impossible. See David Laibman, "Rhetoric and Substance in Value Theory: An appraisal of the new orthodox Marxism," in Alan Freeman, Andrew Kliman, and Julian Wells (eds.), The New Value Controversy and the Foundations of Economics (Cheltenham, UK: Edward Elgar), 2000, p. 10; Andrew Kliman, Reclaiming Marx's "Capital," pp. 148-52." Kliman notes that no published work even attempts to refute the disproof of Bortkiewicz's alleged proof.
^ http://www.copejournal.org/mission-statement

References

Duncan Foley, "Review of Carchedi and Freeman (eds.), Marx and Non-Equilibrium Economics" [1]

Alan Freeman and Guglielmo Carchedi (eds.), Marx and Non-Equilibrium Economics. Cheltenham, UK: Edward Elgar, 1996. [2]

International Working Group on Value Theory website [3]

Andrew Kliman, Reclaiming Marx's Capital: A Refutation of the Myth of Inconsistency. Lanham, MD: Lexington Books, 2007. [4]

Andrew Kliman, writings on website [5]

Ernest Mandel and Alan Freeman (eds.), Ricardo, Marx, Sraffa: The Langston Memorial Volume. London: Verso, 1984.

Research in Political Economy, Vol. 17, 2000. [6]

Research in Political Economy, Vol. 18, 2000. [7]

[1] For instance, the connection between the inconsistency allegations and the lack of study of Marx’s theories was noted by John Cassidy ("The Return of Karl Marx," The New Yorker, Oct. 20 & 27, 1997, p. 252): "His mathematical model of the economy, which depended on the idea that labor is the source of all value, was riven with internal inconsistencies and is rarely studied these days."

[2] Andrew Kliman states that "Marx’s value theory would be necessarily wrong if it were internally inconsistent. Internally inconsistent theories may be appealing, intuitively plausible and even obvious, and consistent with all available empirical evidence––but they cannot be right. It is necessary to reject them or correct them. Thus the alleged proofs of inconsistency trump all other considerations, disqualifying Marx’s theory at the starting gate. By doing so, they provide the principal justification for the suppression of this theory as well as the suppression of, and the denial of resources needed to carry out, present-day research based upon it. This greatly inhibits its further development. So does the very charge of inconsistency. What person of intellectual integrity would want to join a research program founded on (what she believes to be) a theory that is internally inconsistent and therefore false?" (Andrew Kliman, Reclaiming Marx's "Capital": A Refutation of the Myth of Inconsistency, Lanham, MD: Lexington Books, 2007, p. 3, emphasis in original)

[3] See Andrew Kliman, Reclaiming Marx's "Capital", pp. 132-36, p. 152, pp. 165-68, pp. 206-08. He lists the following propositions, among others, on pp. 206-07: "The Okishio theorem does not disprove Marx’s law of the tendential fall in the rate of profit (LTFRP). Its conclusions hold true only when input and output prices are assumed a priori to be equal." "The LTFRP becomes logically valid once the a priori assumption that input and output prices are equal is jettisoned. If faster productivity growth tends to lower prices, the (temporally determined) rate of profit: (a) can fall under conditions in which the Okishio theorem says that it must rise; (b) necessarily tends to fall in relation to the theorem’s simultaneist-physicalist rate of profit; and (c) can fall forever even if the simultaneist-physicalist rate of profit rises forever." "Bortkiewicz did not prove that Marx’s account of the value-price transformation is internally contradictory; (simple) reproduction can occur when input and output prices differ. Hence, there was no logical need to correct Marx’s account ...." "When Marx is interpreted as a single-system theorist, all three of his [transformation account's] aggregate value-price equalities are obtained." Kliman then states that only one of these propositions (the one that begins "Bortkiewicz did not prove ...") remains actively disputed by a specialist in the field, and only by one author (Ernesto Screpanti). But "Screpanti’s ... rejection of [this proposition] fails to take account of [a 1988 paper by] Kliman and McGlone ... and subsequent works in which this point is demonstrated" (Kliman, Reclaiming Marx's "Capital", p. 212n1). Kliman then concludes: "Critics of Marx’s value theory and other critics of the TSSI have acknowledged, however grudgingly and implicitly, that [these and the other propositions he lists] are correct. Thus it has been acknowledged that the LTFRP and Marx’s account of the value-price transformation have not been shown to be logically invalid, ..." (p. 208).

[4] David Laibman, "Rhetoric and Substance in Value Theory: An appraisal of the new orthodox Marxism." In Alan Freeman, Andrew Kliman, and Julian Wells, The New Value Controversy and the Foundations of Economics, (Cheltenham, UK: Edward Elgar, 2004, p. 1, emphases in original.

[5] Roberto Veneziani, "The Temporal Single-System Interpretation of Marx’s Economics: A critical evaluation," Metroeconomica, Vol. 55, No. 1, 2004, p. 97, emphasis in original.

[6] To verify the absence of supporting evidence in these works for the above claims, see the absence of supporting evidence in David Laibman, "Rhetoric and Substance in Value Theory: An appraisal of the new orthodox Marxism," and the absence of supporting evidence in Roberto Veneziani, "The Temporal Single-System Interpretation of Marx’s Economics: A critical evaluation."

[7] Alan Freeman and Andrew Kliman, "Two Concepts of Value, Two Rates of Profit, Two Laws of Motion," Research in Political Economy Vol. 18, 2000, p. 260, emphasis in original.

[8] Andrew Kliman, Reclaiming Marx's "Capital", p. xiii.

[9] Duncan K. Foley, "Response to Freeman and Kliman," Research in Political Economy, Vol. 18, 2000, p. 282.

[10] Only one critic of the TSSI, David Laibman, has addressed this issue in print. He acknowledges that TSSI theorists have shown that "reproduction equilibrium" can take place when input and output prices differ, which is precisely what Bortkiewicz had supposedly proved to be impossible. See David Laibman, "Rhetoric and Substance in Value Theory: An appraisal of the new orthodox Marxism," in Alan Freeman, Andrew Kliman, and Julian Wells (eds.), The New Value Controversy and the Foundations of Economics (Cheltenham, UK: Edward Elgar), 2000, p. 10; Andrew Kliman, Reclaiming Marx's "Capital," pp. 148-52." Kliman notes that no published work even attempts to refute the disproof of Bortkiewicz's alleged proof.

[11] ttp://www.copejournal.org/mission-statement

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