Radhika Desai on the Labour Theory of Value: A Refutation

I was challenged by a person in the comments section to engage with the work of the Marxist Radhika Desai.

So, after looking over a list of Radhika Desai’s articles and books, I found this chapter which partly deals with Marx’s Labour Theory of Value (LTV):

Desai, Radhika. 2016. “The Value of History and the History of Value,” in T. Subasat (ed.), The Great Financial Meltdown: Systemic, Conjunctural or Policy Created?. Edward Elgar Publishing, Inc., Northampton, MA. 136–158.

Marx’s Labour Theory of Value (LTV) is at the heart of his economics, so establishing what interpretation of the LTV that Radhika Desai supports is a very good way to assess how properly she understands Marx.

First of all, Desai appears to argue that the marginal revolution of the 1870s that gave birth to Neoclassical economics was supposedly a direct response to Karl Marx’s economic theories (Desai 2016: 138). This is just plain nonsense.

William Stanley Jevons already sketched the basic ideas of diminishing marginal utility as early as October 1862 in a talk to the British Association for the Advancement of Science, held at Cambridge (Jevons 1866), long before Marx ever published volume 1 of Capital in 1867. I don’t see any evidence at all that William Stanley Jevons, Alfred Marshall, Léon Walras, and Carl Menger – the founders of modern Neoclassical theory – even knew of Karl Marx or his work in the 1870s, or were directly inspired by an opposition to Marxist ideas when they developed the concepts of subjective utility, diminishing marginal utility, and the foundational ideas of Marginalism.

On page 138 of Desai’s chapter, we appear to get her own view on Marx’s LTV:

“Secondly, Marx’s labor theory of value served Marxist economics as little more than an incantation. Operationally, Marx’s theory is rejected because it allegedly suffers from a ‘transformation problem’, unable to consistently transform values into prices. Nothing could be more ironic: Marx rooted his understanding of value production in his critique of Say’s Law (and of Ricardo’s adherence to it) and his insistence that money played an independent role in the economy. For Marx ([1894] 1981: 264–269), values and prices did not exist as two separate systems and there was never any question of ‘transformation’ or ‘translation’, but one of understanding their dynamic relationship. The temporal single-system interpretation (Kliman 2007; Freeman in Freeman and Carchedi 1996) which points this out has generally been met with silence. It is as though, when faced with the choice between Marx’s value and neoclassical prices, Marxist economists cannot break their umbilical tie to the latter, despite their political commitment to Marxism; the spirit may be willing but the flesh is weak” (Desai 2016: 138).

So here Radhika Desai seems to declare her allegiance to the Temporal Single System Interpretation (TSSI) of Marxism.

First, Radhika Desai’s statement that for Marx “there was never any question of ‘transformation’ or ‘translation’” of values into prices is an insanely false statement, since Marx discusses in detail the process in which values of commodities are transformed into prices of production in Chapters 9 and 10 of volume 3 of Capital! The related aspect of the “Transformation Problem” – how different industries with different organic compositions of capital could sell commodities at their labour values when they tend to have an average rate of profit under capitalist competition – was also a fundamental debate within Marxist circles during the 1880s and 1890s.

Secondly, Radhika Desai’s claim that the Temporal Single System Interpretation (TSSI) of Marx has “generally been met with silence” is also false.

Here is a selection of critiques of TSSI, mostly by fellow Marxists:

Laibman, David. 2000. “Rhetoric and Substance in Value Theory: An Appraisal of the New Orthodox Marxism,” Science & Society 64.3: 310–332.

Mongiovi, G. 2002. “Vulgar Economy in Marxian Garb: A Critique of Temporal Single System Marxism,” Review of Radical Political Economics 34.4: 393–416.

Mohun, S. 2003. “On the TSSI and the Exploitation Theory of Profit,” Capital & Class 81: 85–102.

Mohun, Simon and Veneziani, Roberto. 2009. “The Temporal Single-System Interpretation: Underdetermination and Inconsistency,” MPRA Paper No. 30452, 18 June 2009
http://mpra.ub.uni-muenchen.de/30452/1/MPRA_paper_30452.pdf

Moseley, Fred. “Marx’s Concept of Prices of Production: Long-Run Center-of-Gravity Prices”
https://www.academia.edu/27678884/Marxs_Concept_of_Prices_of_Production_Long_Run_Center_of_Gravity_Prices

Veneziani, R. 2004. “The Temporal Single-System Interpretation of Marx’s Economics: A Critical Evaluation,” Metroeconomica 55: 96–114.

For example, Fred Moseley above has shown that the definition of “prices of production” as used in Andrew Kliman’s TSSI is actually different from the authentic concept as understood by Marx.

Thirdly, I have already dealt with the absurd re-interpretation of Marx called the Temporal Single System Interpretation (TSSI) here in these posts:

“Kliman’s Explanation of Marx’s Labour Theory of Value,” March 31, 2015.

“Mongiovi on Temporal Single System Marxism,” May 16, 2015.

“Nitzan and Bichler on the Temporal Single System Interpretation (TSSI),” June 3, 2015.

Any interested person can read these posts to see that the TSSI simply re-defines labour values, contrary to Marx’s original theory, as equal to price by definition. The TSSI has reduced Marxist theory to an empirically empty tautology. It has no explanatory power and adds nothing of any importance to economic science.

If Radhika Desai supports the TSSI, then she is just another Marxist who doesn’t even defend the authentic versions of the LTV as found in volume 1 and volume 3 of Capital.

BIBLIOGRAPHY
Desai, Radhika. 2016. “The Value of History and the History of Value,” in T. Subasat (ed.), The Great Financial Meltdown: Systemic, Conjunctural or Policy Created?. Edward Elgar Publishing, Inc., Northampton, MA. 136–158.

Jevons, William Stanley. 1866. “Brief Account of a General Mathematical Theory of Political Economy,” Journal of the Statistical Society of London 29.2: 282–287.