[OPE-L:2242] Re: A Great Leap Forward

Paul Cockshott (wpc@cs.strath.ac.uk)
Thu, 16 May 1996 02:05:09 -0700

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>The problem here is whether or not there is any relevant sense in which
>the system-wide rate of profit will fall with labor-augmenting and
>capital-saving technical change. If you plot the real wage-profit rate
>frontier in this case, you see that it moves uniformly to the northeast,
>so that it is hard to see how this type of technical change puts
>structural pressure on the capitalist economy.
>John now says:
>First, let me be clear. I attempted to point out that with "capital
>saving" technical change, the rate of profit in the TSS can fall.
>That is, in your terms, if we use the historic costs of constant
>capital in computing the rate of profit, the rate of profit can fall
>even as capitalists introduce techniques that are normally considered
>"capital saving." Given such a fall, I think it would be "relevant"
>to those making investments and seeing a decrease in their rates of
>return or profit rate. To be sure, I make no attempt here to argue
>that this does occur but merely point out that it can. If we
>ignore the "historic costs" and go with simultaneous pricing, this
>possibility is simply ignored. Thus, defenses of Marx's falling
>rate of profit focus primarily on "capital using" technical change.
>The "Great Leap Forward" is that this focus is needless with TSS.

Paul C
The losses on capital account due to devaluations can be a significant
factor, but recognition of their existence does not depend upon
accepting the TSS definition of value.

I show this in the paper on my web page relating to technical
change and the rate of profit.

Their significant effect is to
a. Reduce the total rate of profit but
b. To slow down the rate of fall of the rate of profit. This is a second
order effect arising because a lower rate of profit constrains accumulation
and a reduction in the rate of accumulation slows down the rate of fall
of the rate of profit.

>I do not think that Dumenil and Levy are wrong but I am curious
>about their explanation of the how's and why's of the fall in
>the output-capital ratio.

One would expect this so long as accumulation was more rapid
than population growth in a developed capitalist society.
The question then is why accumulation should not be as nugatory
as modern European population growth.

Paul Cockshott