[OPE-L:530] Re: Value of Constant Capital

akliman@acl.nyit.edu (akliman@acl.nyit.edu)
Tue, 21 Nov 1995 17:32:48 -0800

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I've been reading the discussion between John Ernst and Paul Cockshott with
great interest. My biggest question is the following:

What if prices do not fall when productivity rises? It's true that computer
prices per kilobyte or whatever have fallen, but if one looks at the postwar
period (in the U.S. and I suspect elsewhere as well), productivity has
increased tremendously, but so have prices? I suspect that the way the law
of value appears is different than in Marx's day, because we no longer have
a gold standard and thus nothing forces prices to fall. So for the way in
which the law of value appears, I suspect we need to look at the
problems that develop due to the run-up of prices--perhaps especially excessive
issue of credit and debt crises? Any thoughts on this?

This relates to another major point of the discussion--can the capitalists
amortize "moral depreciation" into the price of their outputs ("moral
depreciation" no longer seems to be the correct term then)? Doesn't this
depend on how much they can get for their stuff? What determines that? For
Marx, the whole thing seemed rather clear--due to productivity increases,
(and competitive markets and gold std., etc.), prices would have to fall, which
means that this amortization of depreciation couldn't/wouldn't succeed.
Does this no longer hold? Or does it hold, but in a different way? If
it doesn't hold at all, then they can charge whatever they want, which is
ridiculous. So what sets the actual limits?

And related to this is the following: clearly if there is inflation, the
capitalists' nominal profit rate can rise above the "real" profit rate
(leaving undefined for the moment what we mean by "real"). If the inflation
is continuous, then the discrepancy can be so as well. But that seems to
be an illusory phenomenon, since they can't all get extra "real" profit by
overcharging one another (assuming, ceteris paribus, that the inflation does
not affect wages). Now my question is--what is the "real" profit rate, the
profit rate in terms of use-values (which is how inflation adjustments are
made in the national income accounts, etc.) or the profit rate in terms of
labor-time? MArx often speaks of the "inflation" in the monetary expression
of value, meaning a rise in total money value greater than the rise in value
measured in labor-time. This certainly seems to suggest (and Marx does so
explicitly at one point, maybe Ch. 10 of _Capital_ III?) that a rise in
money values over labor-time values--or a maintainance of the price level
in the face of productivity increases--is illusory. Why? How? It seems
that this line of thinking ultimately comes down to the notions that
(a) capitalists care about values, not use-values (for consumption); and
(b) value is determined by labor-time.

If this is right, then it seems that the usual way of deflating the price level
is not appropriate to a Marxian analysis. But in any case, the question
remains: why and how does productivity matter to the capitalist system and
its crisis tendencies if prices do not fall when productivity rises?
(Obviously there is premature obsolescence, etc., but I'm looking for an
answer at a different "level of abstraction.")

Any answers, any thoughts?

Andrew Kliman