[OPE-L:2543] Re: FRP Models

John Ernst (ernst@nyc.pipeline.com)
Wed, 19 Jun 1996 18:53:57 -0700 (PDT)

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I think Duncan's comments on my post are interesting. What
follows is the exchange with my comments inserted.

On Wed, 19 Jun 1996, John Ernst wrote:
(among other things)

> 3. Many posts ago, I asked Duncan to cite specific examples of
> capital-using technical change for cases involving the replacement
> of machines and labor by machines. That he had none proves
> nothing.

Duncan wrote:

If we consider individual firms or industries, so that we can legitimately
assume the prices of capital goods are constant, then I think there would
be numerous examples: late nineteenth century mechanization of production,
the substitution of the production line for individual work in the
automobile industry, the displacement of handloom weavers by mechanized
looms, and so on. Certainly indices such as the average capital invested
per worker keep rising in most advanced industrial capitalist countries.

If we look at the question from a general equilibrium point of view, the
problems of price changes, Wicksell effects, and the Cambridge critique
arise, and make it harder to say definitely what counts as capital using.
It is true, however, that in many countries and many time periods the
productivity of capital (output per value of capital) falls, at the same
time that productivity of labor rises.

John says:

For now, I am willing to focus on the individual examples. As I said
a few posts ago, in the mailing industry I have NEVER seen a machine
that does not fall into the category of capital-saving and labor-saving
except those that replaced living labor in an unmechanized industry.
That is, once the industry began to mechanize and, hence, more
mechanization meant the replacement of living and dead labor by the
newer machines, capital-saving is the rule, not the exception.

I am not surprised that the replacement of hand loom weavers
might well be an example of capital-using technical change. In
the mailing industry, the first folding machines and inserters
fall into that same category.

Again, I agree that the capital invested per worker rises. But
the question is -- Does the investment in constant capital outstrip
the gains in output?

John wrote:

> However, does anyone? Indeed, let's assume that we
> have studies showing a falling rate of profit.

Duncan wrote:

Gerard Dumenil and Dominique Levy have published a lot of very good
empirical analysis on this recently.

John says:

Clearly, they are not required to furnish any example of the type of
technical change I'm looking for in a particular industry to carry
out their analysis. To the best of my knowledge, their work contains
no such example.

John wrote:

> Given Okishio,
> do we not also have to have examples of individual capitalists
> choosing techniques that bring about the fall? As we sift through
> the examples, should we not find some that fall into the category
> of capital-using replacement of machines and labor by machines?
> Clearly, if we find none, it proves nothing but, I think, suggests
> that something is wrong.
> 4. Within a given industry, as techniques become more mechanized, the
> reduction of the cost price with capital-using techniques becomes
> more difficult as labor costs become smaller and smaller per unit
> of production. Why would capitalists not try to reduce the
> capital costs as well?

Duncan wrote:

Of course, they would and do. It's only from the point of view of the LTV
that there is a strong distinction between labor and non-labor costs. (In
my view, one of the strengths of the LTV is that it immediately
distinguishes these types of technical change, and therefore comes to
grips with the real patterns of economic growth in a way that neoclassical
growth theory can't.) The question of the link between the bias in
technical change and the social relations of production is very important:
it's what lies behind the questions I asked several months ago about why
real wages have tended to rise with capitalist development, and whether or
not the rising real wages are behind the observed bias in technical

John says:

I think introducing the real wage may help in the quest for
examples. That is, should the wage be high in a particular
industry, it is more likely that capital-using technical change
may take place. In the mailing industry, wages are relatively
low and perhaps that is why we see no capital-using technical
change. Still, given that capitalism is no longer a system in
which the machine replaces workers and their tools but one in
which systems of machinery replace workers and machines, in
theory at least, the bias toward capital-using techniques
begins to disappear.

For those of us taking a TSS approach to Marx, this tendency
clearly fits within the framework of his theory of accumulation.
Those pursuing other approaches would seem to find the
tendency itself problematic. Indeed, more than a few find
Marx's notion of accumulation either dated or, simply, wrong.