Value and price: A critique of neo-Ricardian claims.

Author:Freeman, Alan


Michel Husson originally published this landmark article in French (Perez, 1980) under the name Manuel Perez, 35 years ago. This translation provides an Anglophone audience with a historic contribution to our understanding of Marx's theory of value. It offers a new generation of Marx scholars a resource which academic Marxism has rejected, except for a minority tradition in which this article played a foundational role: the opportunity to understand, and grapple with, Marx's own economics.

My aim in this introduction is to explain, to such new readers, the key role which Husson's article played. It appeared 9years after Paul Samuelson (1971) pronounced Marx's value theory a failure, and 3 years after English Marxist Ian Steedman (1977) formally endorsed this verdict. Husson set out one of the first and in many ways the most comprehensive concise rebuttal of these claims. (1)

Several authors, at the time working independently, came to similar conclusions and in 1995 joined together to formalize them. Andrew Kliman proposed the term Temporal Single System interpretation (TSSI) of Marx to describe this school of thought, using the term 'Simultaneous Dual-System' interpretation (SDSI) to describe the interpretation employed by Samuelson, Steedman and most academic Marxists.

Husson's work was known to most early TSSI scholars, in particular the authors of Marx, Ricardo, Sraffa (Mandel and Freeman 1984) and those who subsequently wrote Marx and Non-Equilibrium Economics (Freeman and Carchedi 1996), the first definitive collaborative statement of TSSI. We regularly exchanged material in French, Italian and Spanish and were familiar with Husson's article. Yet unlike the above works, Husson's article remained unavailable in English and virtually unknown outside this circle.

Husson's pioneering critique engages the standpoint then known as 'Neoricardian'. This view, which still dominates academic Marxism (Freeman, 2010), had led most of its supporters by 1980 to conclude that Marx's economic arguments do not stand up to critical examination. Their judgement however stemmed from a particular reading, or interpretation, of Marx--the SDSI.

The distinction between a theory and an interpretation is critical, yet poorly understood. The confusion begins with the work of Tugan Baranowsky (1905) proposing a stationary equilibrium method for calculating values and prices of production upon which Bortkiewicz ([1906-1907] 1952, [1907] 1949) offered what he termed a 'correction' of Marx. Marx's mistake, says Von Bortkiewicz, is to suppose that value and price are formed in a 'succession' of periods. Famously, 'output' prices and values at the end of each period constitute the 'input' prices of the next period. This corresponds to the normal relations of market exchange, since sellers then receive the same money that the buyers pay.

Bortkiewicz, however, argued that the 'output' price of every commodity, that is the price it possesses when production is over, should be set equal to its price at the beginning of the same period, that is, before being produced. If value is treated in the same way, this yields two sets of simultaneous equations from which values, prices and the rate of profit are 'mutually' instead of 'successively' determined:

Alfred Marshall said once of Ricardo: 'He does not state clearly, and in some cases he perhaps did not fully and clearly perceive how, in the problem of normal value, the various elements govern one another mutually, not successively, in a long chain of causation'. This description applies even more to Marx ... [who] held firmly to the view that the elements concerned must be regarded as a kind of causal chain, in which each link is determined, in its composition and its magnitude, only by the preceding links ... Modern economics is beginning to free itself gradually from the successivist prejudice, the chief merit being due to the mathematical school led by Leon Walras. (Von Bortkiewicz 1952: 23-24)

As Husson explains, this reformulation requires us to presuppose the economy to be in equilibrium, and this can only actually occur if prices and values are constant. 'Presuppose' is not an idle word. If we do not hold prices constant during each period, we cannot write down von Bortkiewicz's equations and can calculate neither the profit rate, nor prices, nor values. In short, we don't even know what they are. The assumption is not a simplification, a first approximation, or an option. If you don't make it, you have no theory.

As Husson explains, if Marx thought like Bortkiewicz, he would have had to presuppose the economy was in a stasis so perfect that nothing could disturb it: the classical formulation of general equilibrium theory. This flatly contradicts Marx's energetic, repeated and comprehensive rejection of any such idea. The very fact that Bortkiewicz terms it a 'correction' shows he understood Marx did not actually think this way.

The scene for 70 years of Marxist scholarship was however set by Paul Sweezy (1942), who in an influential endorsement of Bortkiewicz's work made a further change: he explicitly reinterpreted Marx as a general equilibrium theorist. He thus claimed that, actually, Marx did think in the way that...

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