[OPE-L:2040] Re: depreciation, profits, and subjectivity

Steve Keen (s.keen@uws.edu.au)
Mon, 29 Apr 1996 17:09:22 -0700

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Chai-on asks:
>Steeve said:
>Marx can be shown to support the notion that the owner's subjective
>assessment of a capital item DOES determine its value.
>I wonder. Could you please cite the exact place of his?

By all means:

Marx makes some useful statements on the links between exchange
value, labour value and use value in a critique of Ricardo's
definition of rent. Ricardo, as excerpted by Marx, ascribes the
price paid for wood in a virgin forest not to rent but to profit. The
tentative nature of Marx's reasoning is obvious, but so is the strength of
his conclusion: that the way to reconcile the theory of value with the fact
that things which have no value have a price is to conjecture that the
exchange-value of these commodities is set, not by their value, but by their
"possible use-value", which is their "prospective exchange-value". The cite
is from Ch 11, Section 3 of TSV II: "The inadequacy of the Ricardian theory
of rent."

"When Ricardo here calls the wood ... a "*valuable"*
commodity, then this means only that it is potentially a
*use-value*... But it is not a *"commodity"*. Because
for this it would, at the same time, have to be exchange-value,
in other words, to contain a certain quantity of labour expended
upon it. It only becomes a commodity * by being transformed
from wood into timber. Or does it only become a commodity by the
fact that it is *sold*?... Then we would have to say:
*rent is the price paid to the owner of natural forces or mere
products of nature* for the right of using those forces...
But then the question remains to be solved, how things which have
no *value* can have a *price* and how this is compatible
with the general theory of *value*" (p. 248.)

He similarly criticises Ricardo on mines.

""The compensation *given* for the mine or quarry, is
paid for the *value* of the coal or stone which can be removed
from them, and has no connection with the *original* and
indestructible *powers* of the land."

No! But there is a very significant connection with the
"*original* and destructible *productions* of the soil.
The word "*value*" here is just as ugly as the phrase
"*repaid* himself with a profit" was above.

Ricardo never uses the word *value* for utility or usefulness
or "value in use". Does he therefore mean to say that the
"compensation" is paid to the owner of the quarries and coalmines
for the "*value*" the coal and stone have before they are
removed from the quarry and the mine--in their original state?
Then he invalidates his entire doctrine of value. Or does
*value* mean here, as it must do, the *possible*
use-value and hence the *prospective exchange*-value of coal
or stone?" (p. 249)

Steve Keen
Steve Keen
Senior Lecturer
Economics & Finance
University of Western Sydney
PO Box 555 Campbelltown NSW 2560
s.keen@uws.edu.au (046) 20-3016 Fax (046) 26-6683