[OPE-L:3639] the value epiphenomenon

From: Rakesh Bhandari (bhandari@Princeton.EDU)
Date: Thu Aug 10 2000 - 15:50:21 EDT

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I want to follow up a bit here.
As I have been suggesting, let us assume that the law of value holds and
that prices are determined in the way Marx says (so please suspend for a
moment the objection that it's not logically possible to square an equal
profit rate with varying OCCs), then what?

Let me lay out the argument simply and then address your point about the
epiphenomonal nature of value.

Not only will a rise in a capitalist's relative investment in means of prod
NOT directly reduce the profit he can appropriate, it may well be the most
effective way to bolster his own profit as both a rate and a mass.

Yet in terms of the system as a whole--and this is what is really 'macro'
about Marx's method--the mass of value will fall in relative terms (s/c+v)
and thereby exert downward pressure on the *average* rate of profit.

And what is the most effective way to beat this off?

Obviously we have a system of positive feedback here, for independent of
the competition which Shaikh invokes, firms will have to reduce their units
costs, the most effective mechanism for which (aside from economies of
scale) is the subsitution of less indirect for more direct labor per unit,
though again this will only reduce the value produced in the system as a
whole, relatively speaking, and thus the average rate of profit.

This is not to deny that falling profitability will engender the predatory
behavior which both Shaikh and Brenner highlight, but the decline in the
profit rate must be explained independently of competition which neither
Shaikh nor Brenner do. Here I agree with Andrew and especially Carchedi.

At any rate, this accelerating system of positive feedback can go forward
for some time as the growing mass of surplus value remains sufficient for
accumulation depsite the falling profit rate (Richard Jones was the first
to note this). Countertendencies (the strength of which I shall sidestep)
and the cathartic effects of recessions are then studied in this context.

It is this dynamic which Marx is attempting to explain. As a theory of
capital's actual dynamics, it has no rival. Schumpeter's is the only to
offer an alternative explanation of these most important dynamic aspects of
capitalist reality. As far as I know, there is simply nothing else.

Now Marx has proposed a hypothesis to account for what is observed and it
can even be tested (for example Fred does find a rising rate of
exploitation). It involves alas postulation of an unobservable mechanism
or entity so science here is not reduced to merely describing what is

But this positivist stricture is now thoroughly discredited since if this
had been observed, there would have been no atomic theory and thus no
chemistry and no genetics and so little 20th century biology (I refer here
to Karl Pearson's dismiss of the Mendelians on the grounds of refusing
hypothesis into science). This is why I am not that disturbed by your
charge of epiphenomenalism.

Yours, Rakesh

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