Thursday, August 28, 2014

The Temporal Single System Interpretation and Marx's History of Political Economy

I associate the Temporal Single System Interpretation (TSSI) of Marx's Capital most notably with Alan Freeman and Andrew Kliman. The TSSI must be addressed today by those grappling with the mathematics of the Transformation Problem, with how prices and labor values are related. But I think the TSSI makes much of Marx's work incomprehensible.

Whatever else Marx was, he was very well read. And he had many comments on the political economy of his predecessors and contemporaries. You can see this most obviously in Theories of Surplus Value, the so-called fourth volume of Capital. But, really, you can find such comments throughout Marx's work, extending back even to the Economic and Philosophical Manuscripts of 1844.

Arguably, Marx was not trying to create a scientific theory of capitalist economies1, although he did extend classical political economy along these lines. Rather Marx thought that even the best work of British political economy - that is, David Ricardo - took too much for granted. How does capitalism create the illusion that labor is a commodity, freely bought and sold on the market like any other commodity? Why do so many come to believe that profits are a return to capitalists for the contribution of capital to production? How did the institutions of capitalist economies emerge from a feudal past? These are central questions for Marx. He addressed them through a process of immanent criticism.

I am not sure that Marx was always fair to Smith and Ricardo. He often castigates them for not recognizing distinctions that Marx himself created. (On the other hand, I can see the point of arguing that Ricardo was not clear on the difference between relative natural prices and a notion of absolute value that he was struggling to develop.) Marx's unfairness, if that is what it is, strengthens my point. Does he argue that Ricardo should have been developing the sort of supposedly dynamic concepts essential to the TSSI? Or does he accept that Ricardo has adopted an approach consistent with TSSI, with his difficulties being located elsewhere? On the other hand, a dual system interpretation, in some formulation or other, has no problem with understanding the differences between market and natural prices and Smith's idea, for example, that natural prices act as centers of gravitational attraction for market prices.

One can find many proponents of the TSSI writing in a style drawing on Hegel, whether on his head or right-side up. But I am not aware of any detailed work by such proponents exploring Marx's comments on, say, William Petty, Francois Quesnay, Adam Smith, Ricardo, with an emphasis on if or how they disagreed with the TSSI.

  1. I recognize a tension here with the empirical work I have been presenting in the last couple of weeks.


Blissex said...

«understanding the differences between market and natural prices and Smith's idea, for example, that natural prices act as centers of gravitational attraction for market prices.»

Oh well, I'll take the opportunity to drop here my speculation (inspired by other people's reflections on similar themes) on improving the theory of labor-value and of the difference between market and natural prices. Especially as you seem to have some background :-) in engineering.

I was talking to a friend about my insight that self-powered (carrying their own motive power) machines were the dominant feature of our current and recent history, pointing out that a bulldozer or a combine harvester and a single operator can do the work that used to take dozens of men with shovels or scythes.

Then I added that this productivity boost is nearly entirely because of the fuel, rather than the bulldozer or the combine harvester. He told me that actually the machine does the job, and I pointed out that if the fuel tank is empty, it is not a machine, it is useless; also fuel is needed to build the machine, from extracting ores to making them into into a machine shape.

The equivalent story for older economies was that serfs were the motive power or "fuel" of shovels and scythes: without their motive power the shovel and scythe are essentially useless, and could not be constructed.

So the labor-content theory of value really should be considered the fuel/energy content theory of value, because all value-adding involves "transformation" and that is only possible by means of the application of powered tools by consuming energy. Whether transformation is powered by human labor. animal labor, or by fuel or both is not important, what matters is the energy expended.

A rich person is not so much one who owns "productive capital", but one that can command a large amount of human or animal labor or fuel to power a profitable (value adding) transformation.

The value of that "productive capital" *as such* is in essence the embodiment of the the energy used in building it.

Therefore surplus is produced entirely by energy/fuel, whether it be by labor or chemical, and the "natural price" is the quantity of energy necessary to produce across all stages of production a good or services, while the market price is that paid by those who don't have ready access to the energy required for that, and thus have to pay "retail". The difference between natural and market price is then essentially, for industrial goods and services, the outcome of arbitrage between wholesale and retail energy price.

Put another way what matters is not the labor time content of goods and services, but the energy content; the labor time is just a special case based on assuming an average power output per worker per time unit, and in an economy where most transformations are powered by human-labor instead of some other energy.

This line of reasoning vindicates the notion that productive capital does not produce any surplus/value-added/profit, only "labor time" that is energy invested does: because "productive capital" is entirely the outcome of the application of energy, and only has value inasmuch it can be fueled by labor, petrol, or other source of energy.

But is also suggests that surplus belong with the supplier of energy, which is not necessarily a laborer, it can be the owners of any supply of fuel.

Blissex said...

BTW in my previous comment I am essentially making a distinction between laborers as "people" that is as "souls" :-), and their *bodies* as sources of motive power.

Which led me to amusedly think of the "The Matrix" as a movie an allegory about pre-oil economies, where from the point of view of big property owners the main role of most people, the serfs/slaves/proles was as energy-producing bodies, "batteries" used to power shovels, scythes, hoes, trowels, ...

Blissex said...

And to add to my second comment, the distinction between laborers as "people", that is "souls", and their bodies as source of motive power seems to me the basis of the story about alienation.

And then the people sleeping in the pods and dreaming in virtual reality in "The Matrix" are indeed the ultimately alienated laborers, because their only real activity is as "batteries".

Unlearningecon said...

I'm no expert here, but to me the ultimate issue with the TSSI is not how 'right' it looks within the context of Marx's works, but how well it works as a foundation for some of his major conclusions: notably, the TRPTF. It seems to me that by interpreting the LTV from the TSSI standpoint, we avoid a lot of the confusion over the transformation problem and the dual system, and generate empirically verifiable predictions.

In other words, the TSSI stands on its own as a theory of capitalism, even if Marx himself was inconsistent/confused about the matter. Although on the surface Andrew Kliman spends a lot of time interpreting Marx's original texts, his overall project seems closer to an attempt to build such a theory than one of mere history of thought

Blissex said...

Continuing my thoughts on reinterpreting the labor theory of value as being a special case of the more generally applicable energy theory of value...

The latter also help understand why randian and marxian theory are so fundamentally similar.

For Marx laborers become brutalized by alienation into being beasts who only supply motive power, as "human batteries" that power the machines owned by capitalists for mere subsistence wages, designed just to allow them to "recharge" their motive power, thus exploited by the capitalist who confiscates all the surplus created with that motive power.

For Rand laborers *are* beasts who can at most supply only motive power being at best "human batteries", and if they earn anything above subsistence wages who allow them to recharge their motive power it is because they brutalize capitalists extorting the surplus only the capitalists produce, because the laborer's motive power does not create anything new.

Blissex said...

Can't stop :-)

In "The Matrix" the role of capitalists is that of the AIs who keep humanity in a state of complete alienation as batteries for their immense factories.

But there is a fundamental difference between AIs and people, constantly repeated in the movies, and missed by most viewers: the life of the AIs is driven by "purpose" (the necessity of capitalist system), the life of the people is driven by "choice".

The war between AIs and people ends when the AIs and the people start coming together thanks to Neo, who is of both phyla, and the example is in the final scene of the trilogy the little "indian girl" AI who learns the ability to escape "purpose" by exercising "choice" because she is the fruit of "love".

Thus was social democracy born :-).

Robert Vienneau said...

Blissex, there's something called the Energy Return On Energy Investment (EROEI). And I believe that somewhere there is literature empirically comparing and contrasting labor and oil values. I do not intend to pursue such work with my data.

I find that I have been repetitive on the subject of the TSSI.

Emil Bakkum said...

The study of the TSSI is a worthy cause, provided that someone is willing to pay for it. But it seems unfair to attribute the parts 2 and 3 of Das Kapital to Marx, since he refused to write them. This implies that Marx does not advocate the value transformation, based on the average profit rate. Engels is responsible for that. By the way, the TSSI is probably much older than Kliman supposes. I guess that many marxist publications at the start of the twentieth century use the TSSI. For instance, Sam de Wolff (somewhat famous for his theory of long economic cycles, which he used to predict the crisis of 1929) assumes in his book "Het economisch getij" (the economic tide) that the labor productivity rises DURING the production process (i.e. temporal). In his opinion this causes the excess production, because the enterprises keep investing the same sum of money, even though this enlarges the supply. They neglect to take into account the rising production, and so create the crisis.