[OPE-L:373] Re: Chaion Lee's Short Question

Duncan K Foley (dkf2@columbia.edu)
Mon, 30 Oct 1995 12:54:54 -0800

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On Sun, 29 Oct 1995, Gilbert Skillman wrote:

> Paul writes:
> > I dont see a problem with Gils point about some firms
> > being forced to earn less than the rate of interest on
> > their capital if prices are determined by average labour
> > content.
> >
> > I see little reason to doubt that some firms do earn less
> > than the rate of interest on their capital. Such firms are
> > constantly in the position of either:
> > i) moving to liquidation if they have a high gearing ratio
> > ii) deciding to accumulate financial rather than material
> > assets if they have a low gearing ratio
> > Since both of these things do take place, they can hardly
> > be held as an argument against a theory that has them as
> > consequences.
> I believe this misses the point fundamentally. Marx's purpose in
> defining SNLT in average rather than marginal terms was certainly not
> to provide a theory of the sort of market dynamics that Paul
> describes above, but rather to provide an unambiguous characterization
> of the value of a commodity.
> My point was that given this definition of SNLT and Marx's "pure"
> case of simple commodity circulation, in which all commodities
> exchange at their values, Marx's characterization is *fundamentally*
> ambiguous, in fact self-contradictory. I have argued, and Paul
> apparently does not now dispute, that in the general case a given
> average of SNLT will self-destruct through liquidation of firms at
> the (high-cost) margin; this process of self-unravelling may
> continue until the relevant industry is turned into a single-firm
> monopoly.
> Surely this is not what Marx meant to suggest in defining value as he
> did. One can find substantive grounds in Marx for the sorts of
> phenomena Paul refers to.
> I repeat my fundamental point: Marx offers no basis for departing
> from Ricardo in defining value in terms of average rather than
> marginal SNLT. I suggest there is no legitimate basis: as I've shown
> by example using Marx's own "pure" case of commodity circulation,
> the condition is essentially self-contradictory.
This could be explained if Marx was thinking of the commodity as an
average of the whole society, as I tend to think he was. This
interpretation would support the idea that Marx did not see the theory of
value as a theory of prices or competition, and therefore the marginal
ideas that arise from that point of view would seem irrelevant to him.