[OPE-L:3380] Re: TSS and Tech Change

Duncan K. Fole (dkf2@columbia.edu)
Sun, 13 Oct 1996 07:39:58 -0700 (PDT)

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In reply to John's [OPE-L:3376]:

>In OPE-L 3359, Duncan said among other things:
>.. If you look at Marx's chapter in Volume I on the long-run
>tendency of capital accumulation, or at the passages on relative surplus
>value, which are the other side of the same coin, you see that he had a
>vision of capital accumulation in which at the beginning capital takes over
>production processes inherited from previous modes of production that have
>very low constant capital to living labor ratios, with a high rate of
>profit and a low rate of exploitation, and that capitalist production
>gradually transforms these processes to a high rate of exploitation, a high
>constant capital to living labor ratio, and a low rate of profit.
>John says:
>I'm in agreement with you when we consider the initial mechanization
>of a particular labor process. In this case it is a question of
>replacing dead labor with living labor, raising the constant capital
>to labor ratio, and lowering the rate of profit. Would you agree that
>in this case the constant capital to output ratio also increases?

I'm not certain whether your question refers to my interpretation of Marx
or to the logical possibilities. I think Marx's "stylized facts" include a
rise in the constant capital/output ratio (a fall in the maximum rate of
profit). This, however, is not logically necessary. You could have
technical change that was both labor- and capital-saving but resulted in a
rise in the ratio of capital to labor input.

>Let's look at the cases where it is not a question of substituting
>dead labor for living labor.
>Case 1.
>If we see that there is a choice between dead labor and living
>labor as there is in the Marx bias type of technical change,
>then there is no reason that living labor cannot replace dead
>labor. Indeed, if the real wage falls low enough, it is clear
>that capitalists who once mechanized using Marx bias technical
>change may switch back to the old technique with falling wages.
>Given Marx bias technical change it would seem we'd be back at
>the Smith's pin factory if wages fell enough. That we do not
>see more of this switching back casts SOME doubt on the notion
>that Marx bias technical change predominates in the capitalism
>of today. That is, older techniques with lower real wages should
>be able to yield higher profits than the newer Marx bias techniques.

I agree with you on these points. I don't think there is any logical
necessity for technical change to take a Marx-biased path, though there is
strong evidence at the macroeconomic level that this pattern predominates
in most capitalist countries over most historical periods. (One exception
is the U.S. between about 1920 and 1940.) Dumenil and Levy have a recent
paper in Metroeconomica that tries to address the mechanisms producing
biased patterns of technical change. In the simplest economic logic
capitalist technical change just has to be cost-reducing, and this allows
for labor-using, capital-saving changes as well. (There are also some
interesting ideas linking social relations of production directly to
patterns of technical change in the literature following Steve Marglin's
"What do bosses do?"--here the idea is that technical change is partly
motivated by the need to control and discipline the labor force.)

The macroeconomic evidence suggests a return to the classic Marx-biased
pattern in the 1950-1980 period, with an accompanying falling rate of
profit, which in the U.S., at least, was partly responsible for an unusual
period of falling real wages. I think you are right in principle that these
falling real wages might offset the tendency to Marx-bias, and it would be
interesting to have more evidence from both the macro- and micro-economic
levels on what is actually going on.

>Case 2.
>When living labor is added to a production process as it is in the
>period of manufacture, the output increases faster than the living
>labor added. The constant capital to output ratio falls and, the
>rate of profit can only fall due to rising wages.

In my view the important issue for Marx was not that the real wage remained
constant, but that the value of labor-power tended to remain constant.
Viable technical change (that is cost-reducing from the point of view of
the individual capitalist) can lead to system-wide falls in the rate of
profit with a constant (or even somewhat declining) value of labor-power.


>Note that I do not think that the only way to observe what we are
>"Marx biased" technical change on the macro level is to hold fast
>to the notion that labor augmenting and capital using technical
>change must take place on the micro-level. Thus, I think my Case 2
>may be compatible with the results of Dumenil and Levy as well as
>those of Moseley and of Cockshott.

The relation between micro- and macro-economic patterns of technical change
is theoretically complex, and could use more work.


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