[OPE-L:2171] Re: TSS: A Great Leap Forward

Duncan K Foley (dkf2@columbia.edu)
Sun, 12 May 1996 15:03:18 -0700

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In reply to John Ernst:

I had a number of exchanges with Andrew about the FRP. It appears to me
that the sense in which the "TSS" interpretation predicts a falling rate
of profit is simply that the profit per year over the historical cost of
investments will fall with technical progress. We've already had some
discussion of the relevance of this conception to Marx's concerns and to
actual capitalist economies and their evolution on the list. It seems to
me that Marx had much more to say than this about the evolution of the
profit rate in capitalist economies. He criticized Ricardo successfully
for disregarding the fact that capitalism institutionalizes technical
change, and he pointed out some typical patterns of technical change under
capitalist relations of production (labor augmenting and capital using),
which are strongly empirically confirmed. Within this framework he was
able to show why the falling rate of profit Smith and Ricardo both assumed
was consistent with labor augmenting technical change. This is far more
than a "minor post-Ricardianism", in my opinion, and also far more
interesting than a redefinition of accounting rates of profit.

I myself think that interpretations, like TSS, that link surplus value and
variable capital directly to observable national income data, are
especially interesting in opening up Marxian predictions to empirical
testing and explanation. Since several members of the list are
particularly concerned with these problems, maybe some discussion should
focus on these issues.