[OPE-L:7938] Re: Re: Re: Re: relation of value to organic composition of capital

From: Rakesh Bhandari (rakeshb@stanford.edu)
Date: Wed Nov 06 2002 - 15:28:55 EST

>Dear Rakesh,
>I think your definitions are wrong. Consult C1, ch.25 second para 
>(Penguin ed. p.762)

Dear Simon,
Capital 3, pp.900-1 (Vintage) is also very instructive, and I don't 
remember whether Alfredo comments on this passage.  Here Marx seems 
to be measuring the TCC and OCC in terms of means of production and 
constant capital in relation to direct labor and variable capital, 
respectively, independent of raw materials and ancillary goods. The 
value composition of capital is then offered as a more comprehensive 
measure than the OCC as it takes into account changing values of raw 
materials. . A Malthusian constraint may raise the value of say 
fertilizer and thus the VCC of agricultural capital without any 
change in the TCC and OCC of agricultural capital. That is, the VCC 
of agricultural capital could rise without an underlying change in 
the TCC or in the improvement of the social productivity of labor for 
which the OCC is meant to be an index.

>>  It would seem that the OCC (as you, Alfredo and Simon are defining 
>>it) is not mirroring changes in the VCC which result only from 
>>technical change because your OCC makes no allowance for the 
>>reduction of unit values and current prices effected by technical 
>Response: the ratio which is determined by the TCC and mirrors the 
>changes in the TCC is the OCC, not the VCC.

Yes but aside from the mirroring  Marx also says that the OCC does 
not rise as sharply as the TCC over the course of accumulation, no? 
Or does Marx say--as Andrew B has suggested-- that the VCC does not 
rise as sharply as the TCC over the course of accumulation? My memory 
is telling me that Marx does indeed say the former...somewhere.

>>Yet why else would have Marx thought the OCC does not rise as 
>>sharply as the TCC if in measuring the OCC itself he wasn't taking 
>>into account the reduction in current prices effected by the 
>>continuous reduction of unit values resulting from technical 
>>change? That is, it does seem to me that Marx was indeed taking 
>>into account the changes in current prices effected in the realm of 
>>circulation in measuring the OCC.
>Response: as long as the real wage rate is more than one dollar per 
>hour, the OCC is always less than the TCC.

My point is not that the OCC is less than the TCC at any point in 
time; the point is that for Marx the OCC does not rise as sharply as 
the TCC over the course of accumulation if I am remembering 
correctly.  And the OCC could only be rising more slowly than the TCC 
if Marx was not measuring the OCC in what you are calling constant 
prices, no?

But of course if Marx does  say that the VCC, not the OCC, tends to 
rise less sharply than the TCC, then my objection to your (and 
Andrew's and Alfredo's) measuring the OCC in constant prices cannot 

>>I would say that the VCC rises faster than the OCC because current 
>>prices are only brought into the orbit of their new lower unit 
>>values which have resulted from on-going technical change through 
>>the periodic effects of crisis.
>>The VCC thus races ahead of the OCC and is only brought into 
>>conformity with it through crisis.
>Response: I don't follow this.

What I mean is that it takes current prices some time to catch up to 
the new underlying values which are enforced moreover through a 
crisis. Until current prices catch up to the new underlying values, 
it would seem to me that the VCC is going to be higher than the 
underlying gains in labor productivity should allow.

>  But empirically it is wrong. Over the period 1964-2001 for the US 
>economy, we have
>1964-1972: OCC greater than VCC
>1973-1991: VCC greater than OCC
>1992-2001: OCC and VCC virtually identical.
>To give some idea of orders of magnitude:
>In 1964 TCC = 41.06, OCC = 3.67, VCC = 3.48.
>In 2000 TCC = 66.13, OCC = 4.46 and VCC = 4.45

Simon, would you kindly point me to the paper where these findings 
are presented?

Thanks for the reply,

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