Re: [OPE-L] Marx on the 'maximum rate of profit'

From: Francisco Paulo Cipolla (cipolla@UFPR.BR)
Date: Fri Oct 13 2006 - 14:59:18 EDT

L is total new labor which implies that some people are actually working and to
whom there correspond wage payments. L/c measures the ratio of this new value
created to dead labor independetly of how large or small wages are. What is
wong with this measure?

Jerry Levy wrote:

> > 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 )
> 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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