[OPE-L:4156] Revaluation

From: John Ernst (ernst@pipeline.com)
Date: Thu Oct 19 2000 - 05:18:04 EDT

RE:  Andrew's 4143

I had written:

: Let's be clear here before moving on to the next set of questions.
: Are you saying the value of 5th machine in my example is not
: transferred to the output?

Andrew responded:

>Yes, that's what I'm saying.  Other firms, which don't overestimate their
>needed capacity, will produce the same amount of output at lower cost
>per-unit.  The value of the commodity is determined by the average
>labor-time socially necessary to reproduce it.  Thus, if there are enough
>of these lower-cost producers, they "set" the value of the commodity.
>The labor expended on the 5th machine will have been wasted, not
>formative of value.

My comment:  Alejandro reminded all of us of Marx's treatment of 
those golden spindles.  In my example of the 5th unused machine, I was 
simply trying to find a case in which an unused means of production
transfers value to the output.  I thought I was a bit clearer
than I apparently was.   Here for the sake of clarity let me say
that I was indeed assuming that the 5th machine was "socially 

I had written:

: Now if the 5th machine is never used or
: becomes even useless due to a slump, it seems to me that its value must
: still be accounted for.

Andrew responded:

>I agree, but "accounting for" it isn't the same thing as saying it is
>formative of value.  It can be accounted for as a loss.

My comment:  Here I think you hit the nail on the head.  It seems to 
me that we have to account for losses or gains as we discuss the formation 
of value.  

Andrew wrote:

>I still don't think you've answered one of my questions, namely "do you
>agree or disagree that in Marx's theory, what allows the value of a means
>of production to be preserved (by being transferred) is that it is used
>in production."  To me, this is the crux of the matter -- the
>specification of a *process* by which things happen.

My response:  Ok.  I'll say that for the value of production to be 
preserved, it must be used in a production process.  But I will add
that *all* of the value of the means of production used in that
production process must be accounted for.

Andrew continued:

>It seems to me that once we have the concepts and processes clear, the
>computation of profit rates is exceedingly simple.  Jumping ahead to a
>discussion of profit rates without the conceptual clarification  just
>creates additional problems.  If what you are trying to do, however, is
>work backwards from intuitively "plausible" conclusions regarding profit
>rates to the concept of value transfer needed to obtain these intuitively
>"plausible" profit rates, all I can say is that I think this is indeed
>aackwards.  There is no a reason why the implications of theory should
>conform to a priori intuitions.  All theory would be superfluous in that
>case.  To reject theoretical results because they don't conform to one's
>intuitions is dogmatism.  I hope this isn't what you're trying to do.

My comment: I don't that this is the issue here since I don't have any
"'plausible' conclusions" on this matter.  My intuition and my 
memory inform me that you and I will agree that the losses incurred
when devaluation takes place will not simply disappear as they do 
with simultaneous valuation.  Hence, I push you to "account for" those
losses as we discuss the transfer of value.   

Further, to get a better understanding of Marx on this stuff we
need to push ourselves a bit more. First,  I think we need to 
continue to explore the relation between moral depreciation 
and the transfer of value.  Of course, as we do, I'll insist
that we account for the losses and gains due to revaluation.
Second,  we need to know more of the how's and why's concerning 
Marx's statement that (moral) appreciation can only be discussed 
after his treatment of ground rent.  Third, we need to examine 
the implications of statements Marx makes in Vol II concerning 
moral depreciation.  As far as I know, they are his last 
thoughts on the subject. 


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