# Vulgar Economy-TSS (PART 7)

Xxxx Xxxxxx xxxxxxxxxx at xxxxxxxxxxxxx.xxx
Thu Mar 1 20:07:17 MST 2001

```Vulgar Economy-TSS (PART 7)

? = c + v + s = c + l,
(1)
where ?, c, v, s and l are row vectors of the sectoral magnitudes  ,  ,
,  and  .
Market prices may deviate from values owing to the gain or loss of value
in exchange. Denoting this gain or loss in sector i by  , we have:
p = c + v + s +
g,

(2)
where p is the vector of market prices and g is the vector of the
sectoral gains and losses of value in the course of exchange.    Profits
are given by the difference between price and costs:

.
(3)
Secoral profit rates are given in value terms by  , and in price terms
by  .
The differentials that comprise g are determined by the mechanism that
equalizes sectoral profit rates: the elements of g adjust to ensure that
the profit ratios   are identical.   Kliman and McGlone take Marx's
assertion that value cannot be created in exchange to mean that the sum
of the elements of g, weighted by the outputs of the sectors to which
they correspond, must be zero: gx = 0, where x is the column vector of
gross outputs, taken as parametric.  From the supposition that gx = 0 it
follows trivially (since p is defined to equal s + g) that px = sx: the
sum of profits equals the sum of surplus-values.

Let A = [ ] be an n-dimensional square matrix of unit input
coefficients.  In standard formulations the vector of labor-values is
given by the solution to the system ? = ?A + l; that is,  .  However, in
line with the Temporal Single System view that prices and values
determine one another sequentially over time, Kliman and McGlone make
values in period t+1 depend upon input prices of the preceding period:
,                                                             (4)
where the elements of   correspond to the per-unit amounts of constant
capital advanced to each sector; in Marxian notation we may write  .
Similarly, prices in period t+1 are determined by period-t costs,
adjusted by the monetary value gained or lost in exchange during period
t:
.                                                             (5)
Multiplying the latter expression by the output vector, and recalling
that gx = 0 by assumption in each time period, we have  .  Kliman and
Mcglone interpret this last result as a demonstration that "Marx's
argument implies that … the sole source of value added in price terms in
any period is … the living labor performed in the capitalist production
process" (1999: 38); that is, prices depend upon values.

Within the Temporal Single System framework the price equations may
also be written as:
,                                                     (6)
where the column vector b gives the standard wage-basket, or the amount
of each commodity consumed per unit of labor performed.  Thus, the
elements of   represent the per-unit amounts of variable capital
advanced to each sector.  Period-t prices are parametric: they are "the
output prices of the preceding period" and hence constitute the given
"initial conditions" of the price determination problem (Kliman and
McGlone 1999: 50-51).    Kliman and McGlone close the system by fixing
the profit rate, uniform across sectors owing to competition, as
follows:
.                                                         (7)
Thus, in accordance with Marx's claims, "The level of the profit rate
depends only on the degree to which capital succeeds in pumping out
surplus labor.  It is therefore determinable upon the completion of the
production process, before commodities go to market.  Competition merely
effects the equalization of profit rates at this previously determined
level" (McGlone and Kliman 1996: 37).  Kliman and McGlone conclude that
Marx's value theory, if interpreted in terms of Equations (1)-(7), is
immune to the criticisms that have been leveled against it.

What are we to make of all this?  The model we have just sketched
hardly provides the basis for a persuasive defense of Marx's value
theory, as Kliman and McGlone contend.  The problems begin with their
definitions of Marx's c and v as quantities of money advanced.  Their
observation that Marx reckoned his value magnitudes in money terms is
unobjectionable.  What is problematic is the assertion that the money
values that measure c and v do not coincide with the labor-values of the
means of production and the wage goods consumed by workers.

--
Xxxx Xxxxx Xxxxxx
Ph.D Student
Department of Political Science
SUNY at Albany
Nelson A. Rockefeller College
135 Western Ave.; Milne 102
Albany, NY 12222

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