[OPE-L:4087] Re: advancing money capital

aramos@aramos.b (aramos@aramos.bo)
Wed, 29 Jan 1997 08:59:41 -0800 (PST)

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> If the prices of new machinery are expected to drop significantly in time
> t + 1, doesnt that then affect the amount of money that capitalists
> advance _today_ for constant fixed capital?

I am seeing the matter in the following way:

Let us suppose that the fixed capital the capitalist
advances today is an amount of money that s/he owes to the
bank. In effect, if prices of this fixed capital drop in
t+1, this capitalist cannot charge the total amount forseen
in t on account of depreciated fixed capital; the amount
that market price allows for depreciation is now lower.

(See my SOS message to "depreciation people": We would
distinguish between "amount of fixed capital allowed to be
depreciated" and "payments to bank")

Are the capitalist happy for this reduction in fixed
capital price? I am afraid that is not happy because s/he
MUST pay to the bank for the amount he borrowed in t, when
prices had not dropped. What is the result of this for the
rate of profit of the indebted capitalist? Bankrupcy. The
bank would seize his/her assets.

In time t, money represents a certain amount of labor time
(the **substance** of value). So, money cost-price
represents some amount of LABOR-TIME in t, which is the
"real" ("substantive") denominator of the rate of
profit. The recourse to the "bank" is only a way to show
that the rate of profit should be calculated by means of a
money which relation to labor time is constant, as assumed
by Marx in Vol. 3 (Penguin, p. 142)

Alejandro Ramos M.