Re: [OPE-L] Marx on the general rate of profit/rate of interest: a translation error

From: Paul Cockshott (wpc@DCS.GLA.AC.UK)
Date: Mon Oct 29 2007 - 17:48:30 EDT

>Paul This is written with a retrospective view from the
> standpoint
> of chapter 3. If one never assumes that there is a
> tendancy
> of profit rates to equalise one does not have to
> assume
> either equal organic composition of capital nor
> simple
> commodity exchange.
Ajit I Think one would raise such question if one has
already read Smith and Ricardo before reading Capital
vol.1. And Marx gives enough indication that he has
read them as well.

Paul : Ok I agree that is a fair point
> Paul: All that is required for exchange values to be
> roughly
> proportional to values is for the half life of
> producers
> who produce substantially below value to be much
> shorter
> than those who produce at or above values. Provided
> that
> producers whose product sells for less than the sum
> of the
> indirect labour plus the necessary labourtime (c+v)
> in
> capitalist terms, cease production after a short
> while,
> then given that the ratio P/L will be normally
> distributed,
> it follows that the standard deviation of P/L must
> be narrow.
I don't fully understand this, but sounds like the
mechanism one would imagine in a 'simple commodity
producing economy'. But keep in mind that in SCP there
is no wage data out there, so producers might not know
that their labor is poorly rewarded compared to
Note that I said that all that was required was
for the half life of producers who recieved less than
the indirect labour plus the necessary labour to be
short. If the labourers do not recieve the equivalent
of what is necessary to reproduce themselves they
can not go on producing for long.

In that case no adjustment will take place. In
any case, you cannot mean all producers receiving less
than c+v  ceasing production. In that case the sector
simply dies out. What you need is that some cease
production or all or some reduce their output so the
total output is reduced and given the effectual
demand, its prices rise up to c+v level. But again, it
is not clear to me, what are you really trying to say
here. Cheers, ajit sinha


I said that the half life of such producers will be
short, thus after this short half life - say a couple
of years, only half as many producers would still
be producing. This would be expected to raise the price
as you say.

But note that this mechanism will work just as strongly
in a capitalist economy. Such producers will be making
a loss and if that continues for a couple of years they
will exhaust their credit lines and close down.

This effect is much faster acting than the movement
of capital to branches of higher return. Thus the
mechanism bringing prices into line with values can
be expected to be correspondingly strong.
> This is a much weaker condition than profit rate
> equalisation
> and could apply accross more than one form of
> commodity production.
> It could apply to simple commodity production, slave
> latifundia,
> capitalist factories, or workers cooperatives.
> Paul Cockshott
> -----Original Message-----
> From: OPE-L on behalf of ajit sinha
> Sent: Sun 10/28/2007 9:06 PM
> Subject: Re: [OPE-L] Marx on the general rate of
> profit/rate of interest: a translation error
> --- Paul Cockshott <wpc@DCS.GLA.AC.UK> wrote:
> > I would agree with you that there will be
> > no tendancy for the dispersion of profit
> > rates to narrow, for the reasons you state
> > among others.
> >
> > If one accepts this though, one has to
> > make R a random variable in the transformation
> > equations, rather than an ordinary variable
> > as both Marx and Sraffa do. But we know that in
> > practice
> > it is not only a random variable, but one that
> > s/c is negatively correlated with c/v.
> ______________________
> Let us leave the empirical R aside and concentrate
> on
> Marx's R. The logical steps that Marx takes is, of
> course, not very clear. He introduces the notion of
> allocation of labor according to social needs in the
> very first chapter of Capital I. 'Values' are
> supposed
> to be the center of gravitation of the allocative
> mechanism--hence there is a 'law of value'. But the
> precise mechanism of this allocation is not spelled
> out. It is because he has not yet introduced profits
> in the system. One is left to wonder whether the
> argument is conducted at the level of 'simple
> commodity production' or there is an implicit
> assumption that organic composition of capitals
> accross the sectors are uniform. I guess, it would
> be
> easier to take that he assumes uniform OCC. In that
> case, the 'law of value' equalizes the rate of
> profits. Then in Volume III, the assumption of
> uniform
> OCC is removed. Now, the 'law of value' has already
> equated the rate of profits, but this implies that
> 'prices of production' must deviate from 'value'.
> And
> this is the transformation problem: given the
> uniform
> rate of profit calculate the prices of production.
> In
> this process no further allocation mechanism is
> taking
> place. There is absolutely no time element involved
> here. Samuel Hollander, on the other hand, argues
> that
> Marx delibrately begins with disequilibrium position
> such that the exchange ratios are equal to value
> ratios and in Vol.3 he allows the disequilibrium
> situation to move to equilibrium position. Thus in
> his
> account, the equalization of the rate of profits and
> the allocation mechanism takes place precisely at
> the
> level of the transformation of values to prices of
> production. But even in this story the time has to
> be
> 'logical' and not 'historical' as I argued in the
> earlier post. Cheers, ajit sinha
> >
> > Paul Cockshott
> >
> >
> >
> >
> >
> > -----Original Message-----
> > From: OPE-L on behalf of ajit sinha
> > Sent: Sun 10/28/2007 6:11 PM
> > Subject: Re: [OPE-L] Marx on the general rate of
> > profit/rate of interest: a translation error
> >
> > --- Paul Cockshott <wpc@DCS.GLA.AC.UK> wrote:
> >
> > > What is left unstated in your summary Gary is
> > > whether Marx expects the dispersion of profit
> > rates
> > > to narrow with
> > > time?
> > > If that does not occur what does a tendancy to
> > > equalise mean?
> > >
> > > Instead of a tendancy to equalise, one might
> > > hypothesise some constraints on the dispersion.
> > >
> > > Paul Cockshott
> > _________________________
> > What time? What could be empirically the starting
> > point in time to see if dispersion rate norrows or
> > not? The idea of the center of gravitation cannot
> > deal
> > with what Joan Robinson called 'historical time'.
> > Historical time is the time of growth and
> > accumulation. Now, growth and accumulation
> theories
> > also put various constraints  on certain
> > parameters--but those constraints on parameters
> can
> > be
> > dealt with by empirical investigations of how
> > 'reasonable' they are. But for the gravitation
> > mechanism to work itself through, you need to
> assume
> > that both techniques of production and the rate of
> > profits and the real wages (and consumption and
> > savings paterns etc.) remain constant while the
> > mechanism works itself out. Now, as long as growth
> > (or
> > movement along historical time) is expected to
> break
> > any of these constants, the gravitational
> mechanism
> > will have to continuously restart itself a
> > fresh--therefore, you will not have a starting
> point
> > or a finish point to empirically test if it works.
> > That's why you will have to assume steady state
> > growth
> > path on the historical time to let the
> gravitational
> > mechanism work. The classical economists, such as
> > Smith and Ricardo, did not asssume a steady state
> > growth path (Marx came close to modeling one
> > though).
> > Thus in their framework, the idea of center of
> > gravitation works on 'logical' or notional time
> and
> > not on 'historical time'. But as we have shown in
> > our
> > paper, the logic of it is not all that sound.
=== message truncated ===

Do You Yahoo!?
Tired of spam?  Yahoo! Mail has the best spam protection around

This archive was generated by hypermail 2.1.5 : Wed Oct 31 2007 - 00:00:20 EDT