[OPE-L:5413] Re: Re: Re: Re: Re: turnover time and surplus value

From: Rakesh Narpat Bhandari (rakeshb@Stanford.EDU)
Date: Wed Apr 25 2001 - 03:41:48 EDT

I gave a simple example of how with a reduction in production time 
the variable capital advanced may be reduced and the profit rate 
thereby improved. this raises the question of how the latter is to 
explained. We have considered three options: 1. the rate of 
exploitation has increased, 2. the organic composition of capital has 
been reduced, and 3. turnover or production time itself has lessened. 
I am uncomfortable with 3 as a complete explanation.

You now suggest #2 as the answer. But this seems to be the wrong one. 
With the variable capital advanced cut in half and the flow of 
variable capital per production cycle also halved, the relation of c 
to v should if anything increase, though you make a clever argument 
otherwise (see below).

the question then is how the rate of profit can improve from a 
reduction in production time if said reduction puts (if anything) 
upward pressure on the OCC.
the answer of course is that the annual rate of surplus value and the 
rate of profit are both calculated only on the capital advanced which 
has been reduced by the halving of its variable component.

But you seem to reluctant to attribute the spike in profitability to 
an increase in the annual rate of surplus value. You seem to be 
suggesting that increased profitability must  simply be an expression 
here not of higher exploitation but a decrease in the OCC which the 
decrease is the effective cause of the profit rate improvement.

So let's look at what you wrote:

>You can calculate profit rates if you add some information on constant
>capital.  In that case the point Paul made kicks in: shortening the
>turnover of v means that you are producing saleable output in a
>shorter period of time, which means that you are carrying a smaller
>stock of work in progress and your organic composition of capital will
>be lower.  If commodities are priced at their values

and that of course is the crux of your argument. But if the 
unfinished goods are not marketable they do not have value and the 
carried stock has thus not increased in value over the course of 
production; if they can't be sold in unfinished form they may not 
even represent the value of the machinery which they embody, much 
less the value of the direct labor expended on their partial 

  Moreover, the variable capital advanced upfront and invested in the 
production period is reduced by the decrease in production time, so 
why will this not neutralize any upward pressure on the OCC from the 
accumulation of a stock of unfinished and potentially unmarketable 
goods, i.e., unfinished goods the potential value of which is 
questionable at best?

I don't think you can reasonably argue that the spike in 
profitability in my example derives from a reduction in the OCC.

the obvious answer remains a rise in the annual rate of surplus value.

And though this means that the capitalists find that they can use the 
product of labor to dominate labor at reduced cost to themselves and 
thus improve its profit rate, you remain opposed to describing this 
as a situation of heightened exploitation.

How with an increase in the annual rate of surplus value has the 
relation between surplus and necessary labor--the only meaningful 
measure of exploitation-- changed, you have asked.

But my retort is that once we consider turnover time a better measure 
of the exploitation of the working class is the sum of surplus value 
which the capitalists can extract per annum for the variable capital 
which they advance. There is no question that in my example the sum 
of surplus value derives entirely from not only live labor but also 
the surplus labor performed by that live labor. So my rate of 
exploitation does not contradict yours; the annual rate of surplus 
value is simply a better measure of what the real rate of surplus 
value is supposed to be measuring once we consider turnover time.

(By the way, Geoffrey Kay makes some rather insightful comments about 
how the concept of the annual rate of surplus value allows us to 
understand why capital is compelled in its movement to make an 
assault on any sense of natural time; the phenomological implications 
of the annual rate of surplus value are thus very rich indeed.)

>and the ("real")
>rate of surplus value is uniform then of course capitals with lower
>organic composition will show a higher rate of profit.
>You objected to Paul's "work in progress" argument, but if you think
>about it, it's the only meaningful interpretation of the case.

I think it is also meaningful to describe workers employed by the 
higher turnover capital as more exploited since capitalists are able 
to use labor's own product to reduce their own costs and improve 
profitability. The more productive labor is or the quicker its 
product becomes saleable, the less a given sum of surplus value costs 
the capitalist class. This seems to me a meaningful and reasonable 
interpretation of the situation, certainly more so than a description 
of faster turnover as a reduction in the organic composition of 
capital. that seems to be a dubious claim to me.

>   What
>are the workers employed by the slow-turnover capital supposed to be
>doing, while the workers for the high-turnover capital are
>periodically churning out saleable output?  They must be "building
>something big", that is accumulating an inventory of work in progress.
>(Marx refers to the example of railways later in the chapter.)

Yes but that inventory even if it embodies new direct labor need not 
raise the value of the capital stock relative to variable capital 
since that stock of unfinished goods may not have any potential value 
at all.

But I will certainly grant that Paul C's answer is a much more 
satisfying one than the attribution of increased profitability in my 
example to the reduction in production time itself. Paul has not 
fetishized time in such a way that the door is open to bourgeois 
theories or rather apologias of profit.

>  If
>capitals engaged in such enterprises are to earn the same rate of
>profit as capitals that turn over rapidly, their output will have to
>sell at a premium relative to its value (aka price of production).


>"Time", in the sense of your question, is the dual of organic
>composition, and yes, differing organic composition can cause profit
>rates to diverge for capitals which exploit their workers to the same

this is a rather ingenious and satisfying answer but I don't think 
the occ is indeed necessarily reduced by a reduction in production 
time; moreover even when the occ is not reduced, profitability may 
still increase. So we are left with a rise in the annual rate of 
surplus value, which may not be simply be an expression of a reduced 
occ. In my opinion, the annual rate of surplus value is a complete 
measure of the rate of surplus value and--what is the same thing--the 
rate of exploitation.

Yours, Rakesh

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