[OPE-L:808] Valuation of Inputs

John R. Ernst (ernst@pipeline.com)
Thu, 18 Jan 1996 21:30:03 -0800

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I realize that your post of 1/18 is the first of more. Nevertheless,
I think it may be useful to clear up some misunderstanding at
this point.

You begin by stating:

With regard to the discussion on the valuation of input prices between
Duncan, and Alan, I would first like to clarify Marx's own interpretation
the valuation of input prices (especially the prices of the means of
production), and then we can move on to a consideration of the
interpretation appropriate for today.

As I understand it, John seems to be suggesting that:

1. Marx assumed that the prices of previously purchased means of
production fell along with technological change. This assumption
was perhaps appropriate for Marx's day of competitive capitalism.

2. However, in today's monopoly capitalism, the prices of previously
purchased machines no longer fall with technological change

3. Therefore, we should abandon Marx's assumption about the valuation of
input prices in order to retain "Marx's notion of accumulation" (which
remains unclearly specified, at least from recent posts).

I would first like to discuss (1) (Marx's interpretation), and then (in
later posts) move on to points (2) and (3).

My main point in this post is that I agree with (1) - and would argue even
more explicitly that Marx assumed that the price of the means of production

were determined at the time of the sale of the output (i.e. simultaneously
with the prices of output), as the current reproduction costs of the means
of production.


You then continue with a set of citations from Marx that seemingly
support the idea that constant capital is to be valued at its
reproduction cost and NOT at its historic cost. I'll not dispute
the quotes. Here, I would like to consider the following:

1. The movement from social value to individual value.

For me, and I think, for Marx as innovation takes place there is
nothing per se which causes a drop in price. That is, in analyzing
an economy in real time we cannot say that because of increases in
productivity, prices fall. In introducing the concept of relative
surplus value, Marx notes that the social value exceeds the individual
value for the commodity produced by the innovator. When the technique
becomes generalized, the social value again coincides with the
individual value. But this process of generalization is not described
by Marx as he uses the concepts of social and individual value.
Indeed, he admits he is anticipating results. (CAPITAL, Book I,
CH 12, Para 8) Therefore, it seems to me we do not obtain some
rule from Marx that says "with technical change prices will
fall", rather like Marx we are assigned the task of showing
how the "law of value" comes to the fore.

Thus, for me, in your quotes from Marx I see results anticipated
and, in no way, shown. Indeed, there is no indication in any
of them that we are considering the accumulation process as
it takes place from period to period.

2. Moral Depreciation

Let's assume I am wrong in stating that these prices changes do
not take place from period to period. Or, in other words,
let us assume that they do. Marx covers that base quite
well with the notion of "moral depreciation." That is,
if price decreases are a recurrent phenomenon, Marx assumes
that capitalists allow for it in computing the value of the
constant capital to be recovered at the end of any given
period of production.

Consider the following situatiion:

If a capitalist owns 386 computers as their prices fall, do
we lower the amount of capital invested even if the prices
for the commodities he produces do not fall? Why should
we? Indeed, if his prices fall, can we not assume that
he anticipated their fall in setting up his depreciation
schedule for the 386's when he first introduced them?

In none of your citations do we find any mention of the concept
of moral depreciation. I simply do not think we can ignore
it as we attempt to revalue inputs. Put simply, the process
of revaluation must be shown, not asserted. Our task is
to describe the process in real time.

Thus, I disagree with your first point as a characterization
of my position.

"Marx assumed that the prices of previously purchased means
of production fell along with technological change. This
assumption was perhaps appropriate for Marx's day of
competitive capitalism."

Marx made no such assumption and neither do I. Rather, all
of us are faced with the problem of showing the hows and
whys of price decreases due to technical change. For me,
and, I think ultimately, for you the problem will only be
solved when we are able to uncover the mechanisms that
cause prices decreases within Marx's work.