[OPE-L:3429] Re: Marx and historical costs

Michael Perelman (michael@ecst.csuchico.edu)
Tue, 15 Oct 1996 12:00:38 -0700 (PDT)

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Fred Moseley wrote:
> I would like to raise another issue in the ongoing discussion of the TSS
> interpretation of the falling rate of profit - whether or not Marx's theory
> does in fact assume that constant capital is valued at historical costs -
> the actual costs at which the means of production were purchased at various
> times in the past. It seems to have been taken for granted in the recent
> discussion that the TSS interpretation - that constant capital is determined
> at historical costs - is a plausible interpretation of Marx's theory. But
> I don't think so.

Fred, let's think about historical costs a bit more. If I look at an
industry, if a firm has mis-invested, its historical costs might be
overlooked in terms of price formation.

Now, think about a sequence of rapid technological changes, each of
which wipes out much of the historical costs accross an industry. After
a few iterations, the industry [or on a grander scale, business in
general] faces bankruptcy.

This is the logic that links historical costs to the frp.

Michael Perelman
Economics Department
California State University
Chico, CA 95929

Tel. 916-898-5321 E-Mail michael@ecst.csuchico.edu