[OPE-L:4075] Re: Re: Revaluation

From: Rakesh Narpat Bhandari (rakeshb@Stanford.EDU)
Date: Thu Oct 12 2000 - 19:47:49 EDT

Don't time subscripts help?

While the total magnitude of new value added (NV) is determined by 
the value of the means of production consumed in the commodity 
output, plus the surplus value produced by workers, the s component 
of that total new value is determined by substracting from total new 
value (NV) THE REPLACEMENT COST of c and v. That cost however is 
determined at t+1.

That is, the denominator of the rate of profit is defined by the 
inputs c+v at t;  while the numerator s is determined by substracting 
from new value added (NV) the replacement costs of c+v at t+1.

However, as Alan F has put it in another context, capitalists never 
simply replace c in particular or invest in terms of the same c/v 
ratio in the next period. So to arrive at s, we have to subtract not 
the replacement costs of c and v per se from new value added but 
rather the total amount of the new value that needs to be capitalized 
for a firm to stay competitive (not only c and v at t+1 but also, as 
Bauer had it, ac + av at t+1). This may leave much or little of NV as 

What further complicates matters is that the value of the means of 
production consumed and represented in the final product can be 
changing as well.  A $10,000 machine may have a planned amortization 
of $2000/yr; but it may be clear that by the 3rd year only $1500 can 
be transferred annually if a firm is to stay competitive in terms of 
unit prices. This moral depreciation will decrease the the new value 
added in the later years, though if the "replacement" cost of c (that 
is, c and ac at t+1) is also falling, s may not fall as steeply or at 
all as a result of capital saving innovation!

So the impact on s is indeterminate from capital saving innovations. 
I would not say that they raise the rate of profit; nor am I 
comfortable with turning them from countertendency to factor in the 
fall of the profit rate. It seems that there has been no resolution 
on this list. I will clearly take the TSS side though that capital 
saving innovations are not *simply* counter-tendencies to the falling 
profit rate. It's obviously more complicated than that.

We also have a rather extraordinary contemporary problem. The stock 
market (well at least last week!) 'valued' any dollar investment in 
computer hardware about 10X more than in any "ordinary" capital 
investment!  So here the rapid accumulation of capital seems to have 
been creating extraordinary fictitious profits. Just thought I would 
mention it.

At any rate, Marx's basic point is that in each successive period, 
one of the most effective ways for individual firms to reduce their 
costs is assimilating machines which will allow a greater 
rationalisation in paid labor costs per unit than they add c per 
unit. It may even be possible (and common) that c and v decrease per 
unit absolutely but Marx thought at least that there would be a 
tendency for c/v to rise nonetheless.

The limit to the rise in s/v would be confronted sooner than the 
limit to the rise in c/v. Two workers, no matter how exploited, 
simply cannot produce as much SV as 12 workers had. Cogoy has shown 
this formally.

All the best, Rakesh

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