An Examination of TSS Concept of Value: 1

S Chatterjee schatterjee2001 at yahoo.com
Thu Mar 14 12:37:53 MST 2002


AN EXAMINATION OF THE TSS CONCEPT OF VALUE

In this article, which is meant for the general reader, we will submit the
TSS concept of value to a critical examination. Some of the proponents of
the TSS concept are Alan Freeman, Andrew Kliman, Alejandro Ramos, and
others. Sometime ago, I read some of the papers of Freeman  and other
authors of the TSS school and thought that their temporal concept of value
was a remarkable and powerful one that basically transformed the famous
transformation problem into a non-problem. But after some more reflection
and thought, I have revised my previous views and have come to a
conclusion that this ‘temporal’ concept of value, while alluring, has some
fatal conceptual problems. 

But first, a brief preamble. In the physical sciences, often before a
dynamic problem is solved, the related equilibrium problem is first posed,
examined, and a solution obtained (both theoretically and in the
laboratory). Only after this is accomplished, is the corresponding dynamic
(nonequilibrium) problem posed. For example, in order to understand
multiphase unsteady diffusion of matter, one has first to understand
steady-state diffusion, and in order to understand steady-state diffusion,
it is imperative to understand the equilibrium situation (of no net
diffusion between phases); i.e., phase equilibrium thermodynamics. This is
because the equilibrium solution provides a baseline or reference point
around which the unsteady solution varies.  

Thus, the concept of non-equilibrium is invariably linked to that of
equilibrium, i.e., the two of them are dialectical twins, and one cannot
exist without the other. However, the TSS approach treats non-equilibrium
as absolute, it does not seem to be interested in the question,
“non-equilibrium behavior around what?” and it artificially separates
those, which cannot be separated from each other.

TSS says that the value of a commodity is an ever changing, dynamic
quantity. Since value is socially necessary labor time (SNLT), as the
social productivity rises due to the constant development of the
productive forces, the value of a commodity will generally fall with time.
But what about the hypothetical case of an unchanging economy (simple
reproduction, constant technical conditions of production) if we consider
such an economy as a thought experiment? For such an economy, our physical
sense tells us that the value of the commodity being produced should not
change with time since the SNLT remains the same from production cycle to
cycle (e.g., year to year). But the TSS approach, as the simple example
below will show, still gives a varying number for the SNLT, which
practically converges to a fixed quantity after a number of years (or
iterations). Theoretically, the iterations converge only after an infinite
number of years. 

EXAMPLE:

Consider a farmer producing rice with his own labor. Every year, he plants
20 kg rice (constant capital), works 20 hrs in the field and produces 40
kg rice at the end of the year. Of these 40 kg, he consumes 20 kg as food
during the next year, plants 20 kg again, works 20 hrs, produces 40 kg,
and continues like this from year to year. For simplicity, we assume that
his instrument of production consists of only an iron shovel for digging
his field; the wear and tear (depreciation) of which is negligible. Thus,
his constant capital consumed during a year is only 20 kg of rice that he
plants.  The question we ask is what is the value (hr/kg) of the rice?

The most simple procedure (TSS calls it the ‘simultaneist’ approach and
criticizes it severely) is as follows. Since technical conditions of
production remain the same from year to year, the SNLT required to produce
1 kg of rice will not change from year to year, and thus the value of rice
will not change from year to year. Let V then be the unknown value of rice
(hours of labor embodied in a kg of rice). We set up a simple equation,
which accounts for the conservation of value during a year, i.e.,

20 (kg rice) * V (hr/kg rice) + 20 (hr labor) = 40 kg rice * V (hr/kg
rice)

which, on solving, gives V = 1 hr/kg. Note that this remains the same from
year to year.

However, TSS says that this is a wrong interpretation of Marx. Instead
they propose a dynamically changing value of the rice from year to year
even though our physical sense tells us that the value should not change
from year to year because the SNLT remains the same due to the unchanging
technical conditions of production. TSS proposes the following set of
calculations which requires an ‘initial’ condition.

Let V0 = 1.5 kg/hr be the initial value of rice at the beginning of year
1. For concreteness, let us assume that this corresponds to the previously
backward technical conditions of production prevailing in society before
year 1 when the farmer had used a less efficient shovel. From year 1
onwards, the farmer uses new production technology (a better shovel),
which thereafter does not change for say the next 10 years. TSS then sets
up the following calculation procedure:

YEAR 1:

	20*V0 + 20 = 40*V1

where V1 is the value of rice at the end of year 1. Substituting V0 = 1.5
kg/hr into the above equation and solving for V1 gives

	V1 = 1.25 kg/hr

YEAR 2:

	20*V1 + 20 = 40*V2

where V2 is the value of rice at the end of year 2. Substituting V1 = 1.25
kg/hr into the above equation and solving for V2 gives

	V2 = 1.125 kg/hr

Similarly, V3 = 1.0625 kg/hr, V4 = 1.03125 kg/hr, etc., and the iterations
gradually converge to 1 kg/hr, which was the ‘simultaneous’ solution.

Note that even for the unchanging economy examined above, the TSS value of
the rice changes from year to year. The question then becomes: Is this
possible? In our opinion, no, it is physically impossible.

Let us change the initial condition to V0 = 10 kg/hr. Then the
calculations give V1 = 5.5, V2 = 3.25, V3 = 2.125, V4 = 1.5625, V5 =
1.28125, V6 = 1.140625, etc. For V0 = 100 kg/hr, we get V1 = 50.5, V2 =
25.75, V3 = 13.375, V4 = 7.1875, V5 = 4.09375, V6 = 2.546875, etc.

The TSS iterations converge to 1 kg/hr but the more drastic the change in
technology between the period prior to year 1 and that after year 1, the
more years it takes for the value of the rice to ‘settle down’ or
converge. 

The TSS method of calculation is what is called ‘fixed point’ iteration
for solving equations in numerical analysis. There, the initial iterations
are discarded as being unrealistic (since the intermediate solutions do
not satisfy the equation) and only the final converged solution is
adopted. TSS does not have this escape route of discarding the
intermediate values since they assert that the value of a commodity which
appears both as input as output in a production process changes *during*
the production process. This assumption is then built into their
calculation procedure as we saw above. But even for an unchanging economy,
which would imply an unchanging SNLT, their procedure gives a perennially
changing value. This is physically untenable. 

The TSS concept of value also conflicts with the viewpoint of Marx. TSS
needs an initial value, V0, to start their calculation procedure. V0
enters into the determination of next year’s value, V1, and V1 determines
V2, and so on. That is V0, V1, V2, etc form a historical sequence with the
value in any particular year depending upon that of the previous years.
The values in the different production cycles are all coupled to one
another. But what will happen when the technology changes as it did in our
example in the beginning of year 1? Unlike in the ‘simultaneous’
procedure, we saw that in TSS, V0 still enters into the calculation of V1.
This is a massive error, and we quote Marx here from Capital I [From
Chapter VIII, ‘Constant Capital and Variable Capital’] to substantiate our
point:

“The definition of constant capital given above by no means excludes the
possibility of a change of value in its elements. Suppose the price of
cotton to be one day sixpence a pound, and the next day, in consequence of
a failure of the cotton crop, a shilling a pound. Each pound of the cotton
bought at sixpence, and worked up after the rise in value, transfers to
the product a value of one shilling; and the cotton already spun before
the rise, and perhaps circulating in the market as yarn, likewise
transfers to the product twice its, original value…….. The change of value
in the case we have been considering, originates, not in the process in
which the cotton plays the part of a means of production, and in which it
therefore functions as constant capital, but in the process in which the
cotton itself is produced. The value of a commodity, it. is true, is
determined by the quantity of labour contained in it, but this quantity is
itself limited by social conditions. If the time socially necessary for
the production of any commodity alters — and a given weight of cotton
represents, after a bad harvest, more labour than after a good one — all
previously existing commodities of the same class are affected, because
they are, as it were, only individuals of the species, and their value at
any given time is measured by the labour socially necessary, i.e., by the
labour necessary for their production under the then existing social
conditions. 

As the value of the raw material may change, so, too, may that of the
instruments of labour, of the machinery, &c., employed in the process; and
consequently that portion of the value of the product transferred to it
from them, may also change. If in consequence of a new invention,
machinery of a particular kind can be produced by a diminished expenditure
of labour, the old machinery becomes depreciated more or less, and
consequently transfers so much less value to the product. “ 
>From the above, it is absolutely clear that Marx ‘s concept of value does
not involve a historical sequence. The value of a commodity is the SNLT
(expressed as a sum of money) under current technical conditions, not past
technology.  

(To be continued)



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