From: Jerry Levy (Gerald_A_Levy@MSN.COM)
Date: Fri Oct 13 2006 - 10:05:16 EDT
> The maximum rate of profit is a concept that allows us to see that the > fall of the profit rate is independent of the rate of exploitation. For > this to be true it is enough to show that the new value created (L) > shrinks as a percentage of constant capital. Besides, L/c is part of > reality: it is the total new value created as a % of constant capital. > It is a living concept not an absurd hypothesis. Just as simple > reproduction, it is there, it is part of the real world. The fact that > some of L is paid as variable capital only shows that the actual rate of > profit moves underneath a falling trend. This was a way out of having > the same status for tendency (rising c/v) and counter-tendency (rising > s/v) in the interpretation of the FROP issue. I have never seen a > critique of this view. Paolo: I think you illustrate well the dangers of making extreme assumptions -- the purpose of which was merely mathematical convenience. The idea that new value and surplus value is created even where there is no wage-labor is most certainly _not_ a hypothesis which is "part of the real world". Even in the abstract scheme of simple reproduction, there is surplus value, variable capital, and wage-labor. The _fact_ is that the rate of profit is _not_ independent of the rate of surplus value. The dangers in linear formalizations include over-simplification, mis-specification, and the development of theory which is trans- historical and incapable of saying anything meaningful about capitalist realities. Mathematical imperatives should never be allowed to by themselves drive the development of a theory of modern society: GI = GO is a slogan which has relevance for more than just computer engineers.* Marxists would do well to take some of the criticisms made by the French economics students, which led to the creation of the _Post-Autistic Economics Review_, to heart. "Existing economics is a theoretical [meaning mathematical] system which floats in the air and which bears little relation to what happens in the real world" -- Ronald Coase "Economists have converted the subject into a sort of social mathematics in which analytical vigor is everything and practical relevance is nothing" -- Mark Blaug (above, and other noteworthy, quotes, from http://www.paecon.net ) In solidarity, Jerry * GIGO is an aphorism meaning 'Garbage In, Garbage Out'. A variant -- especially noteworthy for Marxians -- is 'Garbage In, Gospel Out'.
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