[OPE] devaluation and revaluation of variable capital

From: Jurriaan Bendien (adsl675281@tiscali.nl)
Date: Mon Feb 18 2008 - 18:08:21 EST

I C what U mean, that is probably fair enough, but if, in a totality, everything is in a sense related to everything else, we do not yet have a "theory" of it. 

Presumably the theory is a simpification which relates the most important variables at issue to each other. I find it difficult to see as yet how e.g. lower housing costs could directly reduce the amount of variable capital tied up. It is conceivable there could be a connection, empirically, in conjunction with other conditions, but I have not yet seen that causal chain proved. I do know that e.g. subsistence labour can keep wages lower than they would be, if there was no subsistence labour. 

I still think that final consumer goods after purchase by final consumers cannot be regarded as variable capital, unless you regard labour power as a final consumer good. Marx's concern is with factors influencing the boundary between necessary labour and surplus labour, but this has nothing to do with piles of goods directly, but with quantities of living labour reflected in capital values.

The categories of variable and constant capital apply only to production capital, not all capital. As I noted before, production capital is only the minor portion of total capital assets, at least in Europe, Japan, North America and Australasia (admittedly this argument depends on whether you regard residential real estate either as a capital asset or as a durable consumer good, but insofar as an integrated residential market exists, I think this real estate is a capital asset; whether the bank effectively owns it or somebody else does matters little in this regard). 

When Marx analyzes economic reproduction terms of Department 1 and 2, he does not talk about "the sector producing variable capital goods" but "the sector producing means of consumption". He says that in each sector, the capital has two components, constant and variable. Then he says that the realisation of value produced requires certain necessary proportionalities between sectors, meaning that market trade will necessarily evolve in a way such that these proportionalities are satisfied, at the very least within certain minimal limits (sometimes you can unfortunately end up with not enough food or not enough oil etc.). 

But this has little bearing on the Keynesian-type zero-sum trade-off between savings, investment and consumption expenditure, or equilibrium analysis. 

- Savings do not automatically imply investment, 
- investment does not automatically imply productive investment, 
- earnings do not automatically equate with consumption expenditure, 
- consumption expenditure may be ordinary final consumption, productive (intermediate) consumption, luxury consumption, or consumption of military goods. 

So in a growing economy, with a developed credit system, more saving does not necessarily mean less consumption and more investment, or vice versa. 

Nowadays, if a quarter of the workforce can produce all the material goods people use, the "necessary proportions" do not concern material output so much, as flows of capital, the total amount of capital that must be tied up in production capital versus other uses of capital. This is already very clear in the pattern of corporate self-financing.

As regards equilibrium, Marx does not say the system spontaneously tends towards balance, he says it tries to balance itself by after-the-fact adjustments to observable imbalances. It is never clear what the balance would consist in anyway, at best you can say that capital accumulates steadily at a stable or rising profit rate. So whereas any society requires certain proportions to reproduce itself, capital accomplishes this only in reaction to observable imbalances, not directly. Markets mediate the economic reproduction process, they do not constitute it or create it by themselves, but you can only see that if you can distinguish between the reproduction requirements of all societies and the specifically capitalist way of accomplishing them. Markets necessarily fluctuate because of this after-the-fact adjustment process, otherwise they would not fluctuate at all. They fluctuate, because there are constant imbalances. Without imbalances, they would not fluctuate.

Actually, I notice I was wrong previously about dating the writing of Capital Vol. 2. In fact Marx worked on this volume later. I should get hold of another copy of Hal Draper's chronology.


ope mailing list

This archive was generated by hypermail 2.1.5 : Fri Feb 29 2008 - 00:00:03 EST