[OPE-L:5420] Re: Re: Re: Re: Re: Re: turnover time and surplus value

From: Allin Cottrell (cottrell@wfu.edu)
Date: Wed Apr 25 2001 - 09:15:52 EDT

On Wed, 25 Apr 2001, Rakesh Narpat Bhandari wrote:

> 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....

I think the fundamental problem here lies (as Paul has suggested) with
the concept of a "stock of variable capital" (and associated issues of
measurement of the OCC).  There's really no such thing as a stock of
v: there are only stocks of money, means of production, and finished
or semi-finished output.

Let's go back to basics.  The rate of profit is the ratio of the
annual profit flow (which I'll assume to be the same as the annual
flow of surplus value, s) to the capital stock, K.  The annual surplus
value can be written as (s/v) * v, where s/v is the "real" or Vol. I
rate of surplus value and v is a flow concept, namely the variable
capital employed over the year (not the variable capital "advanced").
So now, writing r for the rate of profit:

r = s/K = (s/v)*v / K = (s/v) / (K/v)

The rate of profit is positively related to the "real" rate of surplus
value, and inversely related to the OCC expressed as the ratio of
capital stock to the annual flow v.

Now consider an innovation that cuts turnover time or "production
time".  To isolate the effect in question we imagine that the
innovation does not reduce the labour time (worker-hours) required to
produce one unit of the product.  For instance, suppose a wine-maker
comes up with a new additive that enables them to cut the time of
fermentation and maturation without hurting quality, so that the
calendar time from "grapes in" to "bottles of wine out" is cut in
half, while the number of worker-hours embodied in a bottle of wine
remains unchanged.  (In practice, of course, it's likely the latter
would be reduced too, but that's a different matter.)

The annual v remains unchanged by the innovation, but K will be
reduced: the stock of semi-finished wine on hand is reduced.  Thus the
OCC, properly measured, falls, and the rate of profit increases for
any given rate of surplus value.

Another perspective on the innovation is that it will reduce "variable
capital advanced" (the capitalist now need "advance" only half the
wages that he used to) and hence raise the annual rate of surplus
value.  But this doesn't explain the increase in the rate of profit,
it's just an arithmetical side-effect.  What's "really happened" is
that K has fallen relative to annual v.  For a given amount of labour
going on in the winery each year (v), and a given amount of surplus
labour performed and surplus value produced (s), there's now less
embodied labour sitting around in the form of not-yet-ready wine (K).


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