[OPE-L:868] Re: Valuation Of Inputs

akliman@acl.nyit.edu (akliman@acl.nyit.edu)
Mon, 29 Jan 1996 14:24:53 -0800

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Andrew here. Three comments on the fascinating discussion of input valuation
and moral depreciation.

First, historical costs vs. replacement costs. The way Alan and Fred have
been using these terms is misleading. I assume that what everyone means by
the historical cost of a commodity is its value (or price) when it was
produced. What Fred and others mean by its replacement costs its the
amount of value needed to replace the used-up commodity after it has been
used up, i.e., after production.

So far, so good; we understand one another. But then Fred uses the term
"reproduction cost" synonymously with replacement cost, and Alan seems to
imply as well that becuase he (Alan) rejects the replacemnt cost interpre-
tation of valuation in Marx, he therefore has an historical cost

The problem is that reproduction cost of a productive input can also mean
its value when it enters production, not after production. This concept
of valuation is neither an historical cost notion nor a replacemnt cost
notion. For instance, assume a can opener :-). Assume that its value
when it was produced was 15. But imagine it was held as a stock for
awhile, and that by the time it gets used in a production process, its
value is only 13. Assume that the can opener lasts one production period,
and at the end of this time, can openers of the same type are being produced
at a value of 11. Then this can opener's *historical* cost is 15, its
*replacement* cost is 11. But it has TWO DIFFERENT reproduction costs,
one when it enters production, 13, and one when the production process
ends, 11. In referring to the "current" reproduction cost, which does Fred
mean? The latter. But the former is also "current." Such terminological
problems make it sound as if some of us think that a sheet of paper produced
at the beginnig of capitalism, if used in production today, transfers a
value to the product which the paper had back then. No one does.

Second, a comment on Fred's references from Marx's texts. He is absolutely
right. Marx consitently denied that the value transferred from constant
capital is its *historical cost*. Marx always affirmed that its value is
its *reproduction cost.* But WHICH reproduction cost? None of Fred's
references seem to me to support the post-production replacemnt cost
view. Some are ambiguous with respect to this issue. Some clearly
support the PRE-production reproduction cost view--such as the one in
which Marx writes that the value of the constant capital enters into the
value of the product as a DETERMINING factor--i.e., not a simultaneously
determined one. (This is in TSV, p. 109. I think it is TSV I, but maybe
not.) Or how about the passage in Ch. 8 of Vol. I, in which Marx says
that the value of the constant capital is determined in the production
process out of which it issues, not the one in which the means of production
are used? In a simulataneously determined (Replacement cost) model, the
value of the corn used to produce corn would be determined in the
process in which the corn serves as input.

Now there are several passages Fred cites in which Marx says that the value
of means of production can change during the production process. Sure.
This doesn't mean that the value of the *constant capital* changes. All
the so-called two-system or nondualist interpretations of Marx's value
theory supposedly recognize the difference between value of means of
production and value of capital. Why not here? Thus, when in Ch. 8 of
Vol. I, Marx writes that the constancy of constant capital does not preclude
a change in the value of its ELEMENTS, the key to understanding this is
not to confuse the value of the elements with the constant capital. As
Marx tells us in Ch. 9, of Vol. III, "it is always possible to go wrong if
one does so."

In the end, however, I fully agree with Alan: the adequacy of any textual
interpretation is its ability to make sense of the meaning as a whole. And
I agree that the "replacement cost" interpretation of Marx cannot do so.

Third--both John and Fred seem to attribute rising prices in spite of
rising productivity to monopoly? Why? There was monopoly for about
2/3rds of a century and "creeping inflation" didn't really exist. I
suggest that the real key to this issue is that we don't have a gold standard
anymore. I don't deny that monopoly is a factor. But I think monopolies
would have a lot of difficulty pushing up the *general* price level on
a gold standard.

Andrew Kliman