[OPE-L:3311] Re: TSS and value added

Duncan K. Fole (dkf2@columbia.edu)
Mon, 7 Oct 1996 09:47:36 -0700 (PDT)

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In reply to John's OPE-L:3269:

John comments on my observation that macroeconomic data (for example,
plotting the efficiency schedule for real capitalist economies as the line
whose vertical intercept is output per worker (or per labor hour) and whose
horizontal intercept is the ratio of output to capital value) in many cases
shows a "Marx-bias", that is, rising labor productivity and declining
output-capital ratio.

>I have no doubt that there is considerable macroeconomic evidence
>for this pattern. However, there is scant evidence on the micro
>level in the period of large scale industry. Thus, if we are to
>connect with observed pattern of a "current cost" rate of profit
>with a theory of capitalist investment behavior that explains it,
>much work is to be done.

One intermediate level of evidence would be provided by the input-output
tables Paul C. and Allin work with, since over time they show changes in
non-labor inputs per unit of output across fairly disaggregated sectors.
>Duncan says:
>I gather from your previous posts that you have some doubts that real
>capitalist technical change has this "Marx-biased" character. It might be
>fruitful for us to discuss this point further.
>John responds:
>You're right. Indeed, my doubt is considerable. I base it on
>experience and a reading of Marx.

Of course, Marx can't really tell us anything about the empirical pattern
of technical change after 1883 when he died.

>1. I work with printers and folks in the mailing industry. I have
>yet to see or hear of anyone selling a machine or a set of machinery
>that does not increase output more than the increase in the

I'm not sure what you mean by this way of putting the situation. Surely
rational capitalists will only introduce investments which increase cash
flow by more than their cost. That still doesn't rule out labor-saving,
capital-using investments.

>Further Thoughts.
>Are we really ready for discussion of the form of technical
>change(s) within the period of large scale industry? As
>I suggested in an early post, both TSS and its critics have
>some explaining to do. In no example, have we clearly explained
>why prices fall.

Actually, I don't have much trouble with this, under the assumption of at
least some competition. The availability of lower-cost productive
facilities forces the price down in each sector.


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