[OPE-L:3087] Re: Fred's Comments on 3074

Duncan K. Fole (dkf2@columbia.edu)
Sun, 22 Sep 1996 13:56:36 -0700 (PDT)

[ show plain text ]

In response to John Ernst's comments on Fred Moseley:

>John says (in part):
>TSS simply holds that the funds invested in constant capital should
>be used in computing the rate of profit for a given period of
>production. For example, if someone invests $100 in constant capital
>and the product produced sells for $110, the profit rate is 10%,
>assuming v is very,very,very small.
>What others (including you) seem to say is that if the means of
>production that were purchased for $100 sell for, say, $80 as the
>product is being sold for $110, the profit rate would be 37.5%.
>It seems to me that is using an eraser with great gusto. What
>happens to to the $20? Is the capitalist unaware of it?

This misses the point of my questions. The problem I'm raising doesn't have
to do with the rate of profit, which can be calculated on historical cost
if one prefers, but with the definition of the value added, which is
crucial in translating the Labor Theory of Value assumption that the source
of exchange value is the expenditure of living labor in production into a
theory of prices in the examples we have been offered.

Capitalists are certainly aware of the impact of capital gains and losses
on their fixed capital and inventories on their net worth, and this
presumably enters into the tendency (however strong it might be) for
competition among capitals to equalize profit rates.


Duncan K. Foley
Department of Economics
Barnard College
New York, NY 10027
fax: (212)-854-8947
e-mail: dkf2@columbia.edu