[OPE-L:507] Re: Value of Constant Capital

Paul Cockshott (wpc@clyder.gn.apc.org)
Sat, 18 Nov 1995 12:18:52 -0800

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John Ernst
In part, what I am saying is that for us to simply assert that
price reductions take place assumes that the immanent laws
to which Marx refers are either obvious or, at least,
available for review somewhere. They are not obvious; where
are they?

Paul C
I see your point here. It is true that we do not have a developed theory
of why the law of value operates in a capitalist society through
or what have you. But the level of theory put forward in Marx's analysis
of relative surplus value is a good starting point, that the capitalists
who employ less labour to produce something will earn higher profits,
come to dominate the market and then drive prices down through
among themselves. This mechanism would explain why rising labour
productivity cheapens the product, but of itself is not enough to
explain the correlation between prices and cummulative wage content
of goods in different industries. That has yet to be given a generally
accepted explanation.

John Ernst
4. When capitalist buy the fixed capital, do they not use
the idea of "moral depreciation" in pricing their outputs?
Would this not mean that the value advanced as fixed capital
is recovered despite the cheapening of the elements of
fixed capital? Granted the example I gave was initially
one in which the price change was dramatic but for those
capitalist using computers whose prices are always dropping,
it would seem that the capitalist must shorten the life
expectancy of the computer in question and not revalue
the his capital as the price of computers falls.

Paul C
I would be guessing here, but I would expect that it depends
upon whether the industry in question has a steady long term
rate of growth of labour productivity. If this is the case, then
I would expect that accountants will compensate for it by writing
down the valuation of capital stocks derived from such an industry.
This of course has the dual effect of lowering the rate of profit
( the first derivative with respect to time ) and through its effect
on the organic composition, raising its second derivative.

John Ernst
5. How is the recovery of the value of fixed capital affected
by inflation? Here, I mean not the usual way of looking
at inflation but the idea that the value of money is
falling in that it represents less labor time over time
because of increases in productivity that lead to relative
price decreases.

Paul C
Have you not got some of your inversions out of order in the
last sentence, unless you are talking about a gold money system perhaps?