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Two Concepts of Value, Two Rates of Profit, Two Laws of Motion

Author

Listed:
  • Freeman, Alan
  • Kliman, Andrew
Abstract
Article that appeared as Zarembka, P (ed) Economic Theory of Capitalism and its Crises, Research in Political Economy 18, pp241-48. Stanford, CT: JAI Press. (http://www.elsevier.com/wps/find/bookdescription.cws_home/621298/description#description) Responds to debate initiated in Research in Political Economy 17 (http://www.elsevier.com/wps/find/bookdescription.cws_home/621907/description#description) This article formed part of a four-way exchange on the rate of profit which appeared in Research in Political Economy 17 and 18 in 1999 and 2000, between David Laibman, Duncan Foley, Andrew Kliman and Alan Freeman. This piece constituted Freeman and Kliman’s response to the contributions of Foley and Laibman, themselves a response to our reactions to Laibman’s initial critique of the Temporal Single System Interpretation (TSSI) of Marx’s value theory. Our response establishes that both Laibman and Foley concede the fundamental point in the debate: there exist circumstances under which the rate of profit falls under cost-saving technical change, refuting Okishio’s theorem which states that the rate of profit cannot fall on these presuppositions in any circumstances. Our response assesses the reasons that, although Okishio’s theorem has been disproved, Marxist authors are unable or unwilling to acknowledge this fact. We dissect the faulty mathematical reasoning that lies behind the following notion: ‘the temporal rate of profit may fall, but it may also rise. Since it does not inevitably fall, Okishio’s theorem holds’. In fact, Okishio’s theorem asserts that the rate of profit may never fall. Therefore, mathematically, if a case is exhibited in which, under Okishio’s assumptions, the rate of profit does fall, the theorem is thereby disproved. Our response then establishes the general conditions under which the rate of profit does, or does not, fall.

Suggested Citation

  • Freeman, Alan & Kliman, Andrew, 2000. "Two Concepts of Value, Two Rates of Profit, Two Laws of Motion," MPRA Paper 6715, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:6715
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    File URL: https://mpra.ub.uni-muenchen.de/6715/1/MPRA_paper_6715.pdf
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    References listed on IDEAS

    as
    1. Foley, Duncan K., 1982. "Realization and accumulation in a Marxian model of the circuit of capital," Journal of Economic Theory, Elsevier, vol. 28(2), pages 300-319, December.
    2. Kliman, Andrew & Freeman, Alan, 2000. "Rejoinder to Duncan Foley and David Laibman," MPRA Paper 6717, University Library of Munich, Germany.
    Full references (including those not matched with items on IDEAS)

    Citations

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    Cited by:

    1. Freeman, Alan, 2013. "The Road to Market Serfdom: Why Economics is Not a Science and How to Fix it," MPRA Paper 52677, University Library of Munich, Germany, revised 01 May 2013.
    2. Dong‐Min Rieu, 2009. "Has The Okishio Theorem Been Refuted?," Metroeconomica, Wiley Blackwell, vol. 60(1), pages 162-178, February.
    3. Roberto Veneziani, 2004. "The Temporal Single‐system Interpretation of Marx's Economics: A Critical Evaluation," Metroeconomica, Wiley Blackwell, vol. 55(1), pages 96-114, February.
    4. Freeman, Alan, 2015. "Heavens above: what equilibrium means for economics. With an appendix on temporality, equilibrium, endogeneity and exogeneity, in the inductive sciences and in economics," MPRA Paper 65045, University Library of Munich, Germany, revised 14 Jun 2015.
    5. Kliman, Andrew & Freeman, Alan, 2006. "Replicating Marx: a Reply to Mohun," MPRA Paper 6890, University Library of Munich, Germany.
    6. Freeman, Alan, 2006. "Die Himmel über uns: Über die Bedeutung des Gleichgewichts für die Wirtschaftswissenschaft," MPRA Paper 6892, University Library of Munich, Germany.
    7. Freeman, Alan, 1998. "Reply to some objections," MPRA Paper 6811, University Library of Munich, Germany.

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    More about this item

    Keywords

    TSSI; MELT; value; Marx; price; profit rate; Okishio; non-equilibrium; equilibrium; money; sraffa;
    All these keywords.

    JEL classification:

    • B51 - Schools of Economic Thought and Methodology - - Current Heterodox Approaches - - - Socialist; Marxian; Sraffian
    • B40 - Schools of Economic Thought and Methodology - - Economic Methodology - - - General
    • B12 - Schools of Economic Thought and Methodology - - History of Economic Thought through 1925 - - - Classical (includes Adam Smith)
    • B0 - Schools of Economic Thought and Methodology - - General
    • B14 - Schools of Economic Thought and Methodology - - History of Economic Thought through 1925 - - - Socialist; Marxist
    • A1 - General Economics and Teaching - - General Economics
    • B50 - Schools of Economic Thought and Methodology - - Current Heterodox Approaches - - - General
    • B24 - Schools of Economic Thought and Methodology - - History of Economic Thought since 1925 - - - Socialist; Marxist; Scraffian

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