ONE MORE GO ROUND

By now, probably, most of you have decamped for a more interesting blog, but since at least one person -- Matt D -- seems to be enjoying the back and forth between Professor Kliman and myself, I am going to continue for one more go round.  As Chris has pointed out, Professor Kliman has posted a reply to my reply here, and I am simply going to assume that Matt D and anyone else still with us has taken the time to follow the link and read it.  Please do.  It is not fair to Professor Kliman for you to rely on my redaction of what he has said.

The first thing I must do is definitively clear up a confusion.  I am afraid that I have managed to completely mislead Professor Kliman, although I confess that when I re-read what I wrote it seemed clear to me.  [Isn't that always the way?  I am perpetually telling students that what matters is not whether what you have written is clear to you!  What matters is whether it is clear to your readers.]  So let me say it again:  I have intended all along to be talking about single product linear reproduction systems in which at least as much is produced of each commodity in each cycle of production as is required by the inputs into the system as a whole, and in addition in at least one line of production an actual excess is produced over what is required by the inputs into the system as a whole.  To put the same thing another way, the vector of outputs net of required inputs is semi-positive [i.e., each element of the vector is either zero or greater than zero and at least one element is greater than zero.]

Now, I would have thought that Professor Kliman would be familiar with this stipulation, since it is the standard stipulation made by all the "Sraffians" against whom he has been arguing for many years, and with whom he conflates me.  But if I failed to make myself clear before, I apologize.  I hope I have done so now. 

So we come to the real meat of Professor Kliman's reply, his apples and broccoli example.  [I do wish he had made it an apples and oranges example.  Then I could have made some jokes about how he is talking about apples and oranges.  Oh well.  Another time.]

I must confess that when my eye caught Table 1 on page 3, I skipped the intervening text and went straight for the numbers, which puzzled me considerably, because I could not see that any apples or broccoli inputs were specified.  But then I went back and read what Professor Kliman had written [always a good idea, by the way], and there it was in black and white.  "Apples (good A) and broccoli (good B) grow on their own."  Whoa! I said to myself.  This is very strange indeed.

Let me break into my response to explain something to my readers.  Professor Kliman knows all about what I am going to say, being a professional economist, but my readership [such of it as is still with me] consists of philosophers and artists and Lord knows whom else, so this may be news to them.

The discipline of economics as we now know it got its start in the eighteenth century with the work of several Frenchmen who came to be known in the trade as Physiocrats.  The central idea they gave to posterity was that an economy is actually an organized process of cyclical reproduction, in which what is produced as output in one cycle of production serves as input into production in the next cycle of production.  They had in mind agriculture, in which some of the crop is set aside as seed for the next planting, but their idea has quite general application.  Both Adam Smith and David Ricardo adopted this way of thinking about the economy, and Ricardo especially made it central to his analysis.  Ricardo was of course well aware that one can find some things for sale in the market that are not reproducible in the way imagined by the Physiocrats.  His examples were old master paintings and fine wines grown on a particular side of the hill [you gotta love Ricardo!].  The prices of these things, no doubt, he said, were determined by the intersection of supply  and demand -- by their scarcity  and by how much buyers wanted them.  But Ricardo brushed these aside as of no interest, because, he thought, they were not typical of the commodities being poured out of the factories or grown on the entrepreneurial farms in nineteenth century England.  The prices of those commodities, Ricardo said, were determined by the amount of labor required, either directly or indirectly, for their production.

There was of course one input into production that it was absolutely impossible to brush aside in the way that Ricardo had dealt with old masters and fine wine, namely land.  The entrepreneurs who rented land in order to run profit-making agricultural enterprises paid rent on that land to the aristocratic hereditary landowners.  So how could the price of their corn be determined solely by the labor directly or indirectly required for its production when in addition to the cost of wages and other inputs, they were forced to pay rent?  In a brilliant tour de raison, Ricardo succeeded in demonstrating that those rental payments are in fact a diversion of profits from the capitalists to the landowners, not part of the cost of production, and hence play no role in the determination of price.

 Marx, who was thoroughly familiar with the entire history of economic theory up to his own day, embraced this conception of reproduction, and made it the foundation of his new version of the Labor Theory of Value.  Like Ricardo before him, Marx concentrated his attention on reproducible commodities whose inputs into their production were the output of previous cycles of production.  Everything in his Labor Theory of Value depends on this assumption.

Consequently, when I read Professor Kliman's statement that apples and broccoli "grow on their own," I was puzzled.  What sort of economy could it be in which the goods consumed by the workers are not produced but rather grow on their own?  A feudal economy?  Certainly not.  In a feudal economy, the peasants use tools and seed and other produced goods as inputs into their productive activities?  A slave economy?  No, for the same reason.

And then it struck me.  Professor Kliman must be talking about a hunting and gathering economy, like those that anthropologists tell us characterized the lives of our forebears prior to the Neolithic Revolution ten thousand years ago or so.  In the apples and broccoli world that Professor Kliman has conjured up for us, men and women range across the savannah collecting apples from wild apple trees and gathering wild broccoli.  [Wikipedia tells me that there is no such thing as wild broccoli, the plant having been developed by selective breeding in the Northern Mediterranean in the 6th century B. C., but that is neither here nor there.]  They do this for wages, we may suppose, because, as always seems to happen, a few men have used force of arms [and the ideological rationalizations of philosophy and religion] to exclude the rest of the population from access to the wild apple and broccoli groves.

Well, I must admit, Professor Kliman has stumped me.  In all the years that I have been turning this subject over in my mind, albeit as an amateur, it simply has never occurred to me to wonder whether Marx's Labor Theory of Value is valid for Hunter-Gatherer economies.  If he says it is, I will take his word for it, so long as he will agree with me that it does not do the trick for economies of produced commodities.

There is another point that needs to be discussed, and I have a suspicion that Professor Kliman may consider it a good deal more important than all of our quibblings about corn/iron or Gummi Bear/Botox or apple/broccoli hypothetical examples.   On page 3, Professor Kliman  alludes to things his colleague, Professor Freeman, has been saying for many years now about how real capitalist economies actually function.  What he cites Professor Freeman as saying is of course true, but it also raises an important methodological question that I ought to address. 

In trying to get a handle on the real inner workings of something as complex as a capitalist economy, there are, it seems to me, two quite different ways in which we may proceed.  The first way is to seize the actual economy in all of its confusion and try to wrestle it to the ground, as it were, gathering facts and attempting to impose some order on what is, at first sight, hopelessly complex.  That approach can be frustrating and extremely difficult, but it has the great virtue of keeping one in touch with the reality of the world.  The second way is to start with a deliberately simple case and analyze it, formulating general propositions about it that one can demonstrate to be true precisely because one has bracketed out all the complications.  Then, step by step, one starts to add in those complications, at  each stage checking to see whether one's original propositions can still be defended.  Economists have a nice term for this.  The more complexity one can introduce into one's explanation while still managing to defend the explanation, the more robust it is [by analogy with a person who is described as physically robust if she can withstand heat or cold or hunger or attacks by bacteria.]

As I have several times indicated, I interpret Marx as having adopted this second line of attack, but Marx never says that, so far as I am aware, and so it is obviously open to another reader of Marx to insist that he adopted some other method.  I don't think it makes much sense to argue about this.  The proof is in the pudding.  All that matters is which approach proves more fruitful.  And of course, in matters of fruitfulness as in matters of pudding, taste plays a large role.

Well, that concludes my response, but I cannot stop without at least taking note of the business about arsenic and sheep.  Professor Kliman does me the great courtesy of simply assuming that I will recognize the reference, but since my readers may be unfamiliar with it, let me explicate.  Voltaire, ever the enemy of the Catholic Church, observed sardonically "Incantations will destroy a flock of sheep if administered with a certain quantity of arsenic."  Joan Robinson, the doyenne of the English Sraffians, invoked Voltaire's remark in her book, An Essay on Marxian Economics:

"No point of substance in Marx's argument depends upon the labour theory of value.  Voltaire remarked that it is possible to kill a flock of sheep by witchcraft if you give them plenty of arsenic at the same time.  The sheep, in the figure, may well stand for the complacent apologists of capitalism; Marx's penetrating insight and bitter hatred of oppression supply the arsenic, while the labour theory of value provides the incantations."  [Quoted in my Moneybags Must Be So Lucky, page 15.]

Professor Kliman, in a lovely concluding paragraph, takes this condescending [and utterly wrong-headed] jest by Robinson and turns it on me.  Touché, Professor Kliman.  I tip my hat to you.