Allin's response to Rakesh's  and  1. I wrote: "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." and gave a hypothetical example from wine-making. Rakesh asks: "How does this isolate the effect if the effect I want to study is exactly the effect of an increase in labor productivity as manifested in the reduced production time that thereby allows the variable capital advanced to be reduced?" If you want to get at the effect of a reduction in turnover time, per se, on the rate of profit, you must hold "other things equal". When Marx and Engels construct their examples, they impose a common ("real") rate of surplus value in their variant cases. This is clearly necessary, otherwise one is going to mistakenly attribute to turnover an increase in profit stemming from the standard mechanism of relative surplus value, namely the cheapening of the wage-bundle via increased labour productivity. If you don't like my example as stated, then alter it thus: suppose that the technical improvement in wine-making _does_ increase labour productivity (i.e. cut the number of worker-hours embodied in a bottle of wine) at the same time as it cuts the calendar time of production of wine, but control for this by raising the wage so that the real rate of surplus value is held constant. In that case any increase in the annual rate of profit, s/K, must be attributable to a fall in K/v, the ratio of capital stock to the annual wage-bill, which is the measure of organic composition that I'm advocating in this context. 2. I wrote, of the wine-making illustration: "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." and Rakesh asks: "What do you mean by side effect--that the annual rate of surplus value is merely a subjective measure?" Those are not the words I'd choose. But note that, unlike the "real" rate of surplus value, which is always well defined and meaningful, the annual rate of surplus value is not in general well defined. What is the size of the "variable capital advanced" in a continuous process industry such as oil-refining or electricity production? That is, how many weeks' wages do the capitalists have to lay out before they get any saleable output from their workers? Allin.
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