The Conservation of Value: A Rejoinder to Alan Freeman

Abstract

This paper is a critique of Alan Freeman's theory of sequential values. In this approach value is conserved from period to period independently of technical change and disequilibrium, contrary to the traditional view that values are reevaluated at each period depending on the existing conditions of production. Our main criticism is that sequential values fail to account for the devaluation of capital, when the economy is considered globally. Devaluation is possible for individual commodities in Freeman's framework, but the loss of value is always compensated by a corresponding gain for another commodity. The paper also points out a number of puzzling properties of sequential values, in particular the compatibility of increasing values with rising labor productivity. The unusual treatment of fixed capital, in which fixed capital is assimilated to an imperishable raw material, also raises serious problems for Freeman.