[OPE-L:3310] Re: TSS and Value Added

Duncan K. Fole (dkf2@columbia.edu)
Mon, 7 Oct 1996 09:47:25 -0700 (PDT)

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In reply to John's [OPE-L:3290]:

>In OPE-3207, one of the questions Duncan poses is:
>"What are the strengths and weaknesses of these two concepts of money
>value added in representing Marx's thinking on the relation between the
>LTV, technical change and the path of the money profit rate in capitalist
>John responds:
>Given that we are forced to deal with the path of the money rate
>of profit, we have to consider our hypothetical economy as it
>moves through time. If this is the case, we are stuck at the end
>of the second period no matter which concept of money value added
>we adopt.
>As I have pointed out in previous posts, should Andrew's prices
>prevail at the end of each period, then capitalists would see
>that the declining profit rate gets them nowhere and begin to
>take into account something like "moral depreciation" as they
>invest. With Duncan's absolute disaster can easily occur as
>the loss in capital value can exceed the value added. Thus,
>it would seem impossible to use either concept of the money
>rate of profit beyond 2 periods.

I think this is excessively pessimistic, and puts too much weight on
particular examples. The example you developed had a very high rate of
labor-saving technical change. With more realistic rates of technical
change the money rate of profit, even with a constant monetary expression
of labor-time, can be positive.


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