[OPE-L:3208] Re: TSS and the Value of Money

John Ernst (ernst@nyc.pipeline.com)
Tue, 1 Oct 1996 13:03:39 -0700 (PDT)

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Duncan begins OPE-L 3205 by citing me:

Duncan writes:

John says (in part)

>What is interesting is that we seem to have encountered a fundamental
>contradiction in the accumulation process in our very simple one-sector
>models. How did we do this? By assuming that money has a constant
>value. ($1/1hr)

I don't think the examples I've seen so far indicate a fundamental
contradiction in the accumulation process. It has been known for a long
time that technical progress devalues existing stocks of capital, and that
there are a variety of ways capitalist economies cope with this

John responds:

I disagree and agree with your comment. I do think the contradiction
is fundamental. I agree it is not a new insight. I am certain that
as the discussion proceeds the how's and why's of the manner in which
capitalist economies cope with it will be considered.

Duncan says:

If there isn't any fundamentally new insight here, then I worry that the
belief that there is may divert our attention from more fruitful lines of
inquiry developing Marx's economics and the LTV point of view.

John responds:

All I am saying is that as we consider the movement from Period 0 to
Period 1 and treat the devaluation of constant capital, we need to
account for its affect on the accumulation process. I do not think
anyone is willing to say that all is well in an accumulation process
while the historic rate of profits continually falls or even turns
negative. However, in discussions of the LTV, by allowing the value
added in each period to increase while the living labor stays constant,
the fundamental problem (not new) can be easily overlooked. Witness
the call for allowing the relation between money and living labor
to change as accumulation proceeds.

What seems different about your way of proceeding is that you are
comfortable with holding to the notion that a given amount of living
labor adds the same amount of value, measured in monetary units, in
each period. Thus, a few posts ago, I willingly accepted the price
of the output you computed and simply noted that as the historic
rate of profit turned negative, we seemed to have a case in which
the gross output in value terms actually shrank. This non-expansion
of value, while not a new insight, seems to be in stark contrast to
Marx's idea of looking at capital as self-expanding value. Thus, my
point is that no matter what coping mechanisms there are for
dealing with this, we, at some point, will be forced to consider
this issue if we are to hold fast to an LTV in which the value
added by given amount living labor is constant.