On the cusp of the millenium, Paul Zarembka’s Research in Political Economy published, in the course of two issues in 1999 and 2000, a four-way exchange about approaches to Marx’s theory of value and the rate of profit between David Laibman, Duncan Foley, Andrew Kliman and Alan Freeman. The full exchange can be found in Research in Political Economy 17, 229–33. JAI Press and Research in Political Economy 18, 279–83. JAI Press

Here I reproduce Freeman’s response to an initial critique by Laibman of the Temporal Single System Interpretation (TSSI) of Marx’s value theory. Applying an alternative valuation to the TSSI, he shows that a rising rate of profit can be deduced where the TSSI finds a falling one; and concludes that temporalism cannot be responsible for TSS results. This is of course true: a falling value profit rate arises from the specific combination of temporalism and valuation by the magnitude of labour time. However Laibman accepts the most important conclusion of TSSI research, namely, it refutes Okishio’s theorem, according to which under no circumstances can the rate of profit fall with cost-saving technical change. Since SSI results exhibit such a circumstance, the theorem is false.

My response goes further to establish the precise conditions under which the value rate of profit falls: The maximum profit rate falls if the value invested, as a proportion of the value of accumulated capital, is greater than the rate of increase in living labour. The response also demonstrates that simultaneous valuation results in a violation of the principle that value can arise only from production, a principle preserved in the TSSI derivation of value.

This is a prepublication version of the text. It should be cited as ‘Between two world systems: A response to David Laibman.’ In Zarembka, P (ed) Economic Theory of Capitalism and its Crises, Research in Political Economy 17, pp241-48. Stanford, CT: JAI Press.