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Responses below to John E.'s (3690). John, thanks for your post.
At 09:25 AM 8/23/00 -0400, you wrote:
> RE: OPE-L 3685
>In your explanation of your idea of dM in the expression
> M - C ... P ... C' - M' where M'= M + dM,
>"The M and the dM are ADJUSTED FOR CAPITAL GAINS (or losses) due to
> changing asset prices. Marx's theory is not intended to explain the dM
> that arises from capital gains; that is easy to explain. Rather, Marx's
> is intended to explain how dM happens WITHOUT CAPITAL GAINS - that is the
> difficult and interesting question. That is why Marx assumed CURRENT
> COSTS. This is all current costs means: adjusting M and dM for capital
> gains or losses, in order explain the (theoretically more significant) dM
> that remains."
>Here I think you use the notion of capital gains or losses to cover quite
>a bit of territory. That is, I assume that you include the possibility of
>moral depreciation or moral appreciation due to changes in the productivity
>of labor. This, I think, is quite a departure from Marx. Why?
John, I would say that this is quite a departure from YOUR interpretation
of Marx. But Marx said many times, especially in the key Chapter 8 in
which the concept of constant capital is introduced and defined, that
constant capital in valued in CURRENT costs. Valuation in current costs
means abstracting from capital gains/losses. How do you interpret the key
passage at the end of Chapter 8 and the many other passages in which Marx
said essentially the same thing, which I have documented in my IWGVT 2000
Fred, I wish that the capitalist system were simpler and that we
could ignore capital gains and loses as we analyze the self-expansion
of value. Unfortunately, it isn't. Here, let's get a bit more
If a new machine that costs $1000 will have a physical life of 20 years
and an economic life of 10 years, what is the depreciation
charge as we compute dM for its first year of use? For me and, I think,
for Marx the charge would be $100. For you, given no technical change
in machine production in that first year, the charge would be
$50. Your dM would be $50 greater than mine for that year. Now if we
repeat these conditions and calculations for each of the next 8 years,
then at the end of the 9th year, the sum of the surplus value you
compute would be $450 greater than mine. Let's assume at the end of
that 9th year, a new and better machine is produced such that the
older machines are worth only $50 on the market. In your view, the
machine still has $550 of value that has not been depreciated. Given
the machines have no value after the 10th year, it's not clear to
me how you take into account the $500 loss in value.
>1. Within the idea of M - C - M' we find that capitalism is contradictory.
>That is, as value is expanded or, in your terms, dm is produced by
>abstract labor, it is also destroyed by concrete labor. Indeed, if
>the productivity of all labor were to increase, say, 100 fold overnight,
>much, if not all, of fixed capital would be destroyed in terms of
>value. It would be rendered economically useless.
>Here my point is simple. As the creation of value occurs and capital
>expands, its destruction marches forward as well due to the two-fold
>nature of the labor process. By "abstracting" from the contradiction,
>your view of Marx loses a dimension. This is fatal. Specifically,
>how can you even understand the production of absolute surplus value?
>For Marx, the need to lengthen the working day is driven not only by
>the simple greed of the capitalist but also by his need to preserve
>the value of his fixed capital. Indeed, in the period of large
>scale industry the expansion the working day stems largely from fear
>capital devaluation. By abstracting from the possibility of such losses,
unlike Marx your view of capitalism becomes big guys versus little guys
with no recognition of the rules of the game.
I am not saying that Marx ignored capitalists' fear of the devaluation of
their capital, nor the role that this fear played in the lengthening of the
working day. Marx recognized and discussed (as you point out) that
capitalists' actual profit would be affected by the devaluation of their
capital. But nonetheless, Marx's theory of surplus-value abstracts from
capital losses in order to explain that part of the actual profit that is
due to the surplus labor of workers.
According to Marx's theory of surplus-value, as I discussed it in (3697),
surplus-value is proportional to surplus labor (S = mLs). If surplus-value
is also affected by capital losses, then surplus-value would be determined
by something other than surplus labor.
My response: Here you seem to introduce a new category into Marx's effort --
"actual profit." But the real question is -- does Marx include moral
depreciation as part of "c" as we look at the value of output -- c+v+s.
I maintain that he does. You seem to think he doesn't.
John, what is your equation for the determination of surplus-value? Come
to think of it, what is your equation for the determination of the price of
My response: I think our difference here is simple -- how do we
>2. In claiming that any capital gains or losses that happen during a
>given period are taken as "given" at the beginning period, you
>inadvertently show us the strange nature of static analysis. At
>t-1, one must know what will happen at t. How much then should one
>advance for the means of production at t-1? Is the "given" amount
>of money their price at t-1 or at t? You seem to say it is the
>price at t. Are we then to ignore the possible difference between
>the two prices as we compute how much the capitalist actually gains
Yes, that is precisely what I am saying! Marx was not trying to explain
the "actual gains or losses", including capital gains and losses. Rather,
Marx was trying to explain the part of the "actual gains or losses" that is
not due to capital gains and losses, but is due instead to the surplus
labor of workers. Marx said in many places (e.g. Chapter 6 of Volume 3)
that a change in the magnitude of constant capital does not affect the
amount of surplus-value.
My response: To create surplus value workers must preserve the value
of the constant capital. Indeed, workers could become so productive
that no matter how long they work, profits and surplus value would
be negative. In Chapter 6 (V3), Marx points out that capitalists
at that point would stop investing.
John, you talk mostly about capital losses. What about capital GAINS, due
for example to a decline in the value of money? To be consistent, capital
gains should also be included in surplus-value, along with capital losses,
right? But this means that a decline in the value of money is an
additional source of surplus-value, along with surplus labor! Surely this
is not what Marx intended. This illusion is what Marx was trying to dispel
by assuming current costs, i.e. by abstracting from capital gains/losses.
My response: Now you've shifted the focus not only into capital loses but
also into changes in the value of money. Let's deal with each of
1. The Value of Money. Like Marx, I'm assuming that the value of money
is constant. That is, $10 represents a given amount of abstract labor
throughout the analysis. If there is textual evidence to the contrary,
I think we should deal with it. But with all the problems we have in
considering matters even with this assumption, I hope no textual evidence
can be found.
Note that Marx did bring up "moral depreciation" as he holds the value of
2. Capital Gains. With increasing productivity and with an assumed constant
value of money, capital loses is the general case. Yet your concern about
capital gains is valid. How does Marx deal with it?
In Chapter 6 of V3, he mentions the possibility of capital appreciation due
to a fall in the productivity of labor. There he tells us that he can't
really deal with this until he has discussed rent.
To me, this means that just as the losses due to increasing productivity
are to be taken into account in computing surplus value, so too must the
gains due to decreasing productivity.
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