[OPE-L:882] Re: Valuation of Inputs

Fred Moseley (fmoseley@laneta.apc.org)
Tue, 30 Jan 1996 22:35:11 -0800

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Hi John,

Thanks very much for your reply and comments (860). I think I understand
your interpretation better now. And I am afraid that you are right that we
have a disagreement, and a significant one.

As I understand your interpretation, you say:

1. According to Marx's theory, the value of the existing constant capital
is depreciated as a result on ongoing technological change.

2. However, capitalists try to anticipate this devaluation of capital by
means of accelerated depreciation (or "moral depreciation").

3. According to Marx's theory, the resulting higher depreciation charges
increases the constant capital component of the price of commodities, and
thus also increases the price of the output as well.

I agree with the first two points, but not with the third. Capitalists may
try to anticipate the devaluation of their capital by means of accelerated
but, according to Marx's theory, THIS DOES NOT CHANGE THE DETERMINATION OF
CONSTANT CAPITAL. According to Marx's theory, constant capital is
determined by the social labor time currently necessary to produce the means
of production. If, in addition to the current socially necessary labor
time, capitalists add an extra charge to make allowance for expected future
devaluation of capital, this does not change the current socially necessary
labor time to produce the means of production. It also does not change the
total socially necessary labor time, and thus, does not change the total
price of the commodities.

Your interpretation seems to lead to the opposite conclusions as Marx. Marx
argued that technological change in the producion of means of production
results in a decline in the value of the constant capital and a decline in
the price of the output. You seem to argue the opposite in both these cases.

The main textual evidence that you have presented to support your
interpretation is the footnote in Chapter 15 of Volume 1 of Capital about
the Manchester spinner. Let's look again at this footnote:

The Manchester spinner already referred to (The Times, 26 November 1862)
enumerates, as part of the cost of machinery, 'an allowance for the
deterioration of machinery.' 'It is also intended,' he says, 'to cover the
which is constantly arising from the superseding of machnes before they are
worn out, by others of a new and better construction.' (C.I. 528)

All this footnote says is that some capitalists make an allowance (the
precise nature of which is not specified) for the expected future
devaluation of capital. It does NOT say that this allowance changes the
determination of constant capital and price. Such a change would have been
a major revision of Marx's theory - constant capital would no longer be
determined solely by the socially necessary labor time currently necessary
to produce the means of production, but would also include a component due
to the capitalists' accounting practice of accelerated depreciation.
Surely, if Marx had intended such a major revision in his theory, he would
have discussed this revision thoroughly and prominently. He would not have
simply mentioned it in passing in a two-sentence footnote that is primarily
a quote for the London Times.

I would also argue that Marx's main point about "moral depreciation" in the
subsection from which this footnote comes is that the danger of premature
obscelescence of machiner is a strong motivation to increase the length of
the working day. The title of this subsection is "The Prolongation of the
Working Day".

An examination of the earlier passage from the 1861-63 manuscript in which
Marx quoted the Manchester spinner casts even more doubt on the significance
of this footnote. The discussion of the Manchester spinner is a short
subsection (1.5 pages). The title of the subsection is: "Costs of
machinery, buildings, etc. when NOT WORKING" (emphasis added). Marx then
listed all the various costs enumerated by the spinner when his mill is NOT
WORKING (rent, insurance, taxes, salaries of managers and other personnel,
coal for keeping the mill warm, etc.). At the end of the list, Marx added:
"Finally, 'allowance for deterioration of machinery'." Marx then elaborated
"with regard to this last point":

It may appear to many that, as the mills are NOT WORKING,
they cannot be deteriorating...
But it is intended to cover that kind of wear which cannot be repaired
from time to time ...
It is also intended to cover the loss which is constantly arising ;from the
superseding of machines before they are worn out by others of a new and
better construction. (MECW. 33. 372-73; emphasis added)

Therefore, this quote, which applies to the case in which machines are not
working, is an even slimmer basis for a fundamental revision of Marx's
theory of value.

This passage also indicates that Marx was aware of this "allowance" as early
as 1863, so that if, he intended this point to result in a major revision of
his theory, he had plenty of time to incorporate this important point more
prominently in Capital, which he did not do.

Finally, you say that I see "capitalists going to their books and making
adjustments to both their capital accounts and to their profits" every time
there is technological change. But that is not what I am saying. I am not
saying anything about capitalists' accounting practices. I argue that,
according to Marx's theory, capitalists' accounting practices do not affect
the determination of prices, profit, etc. by socially necessary labor time.
In my view, you are confusing two different things: capitalists accounting
practices and Marx's theory.

I look forward to your reply and to continued discussion.