[OPE-L:4833] RRI and the Rate of Profit

john ernst (ernst@pipeline.com)
Mon, 21 Apr 1997 23:23:29 -0700 (PDT)

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As always, it was good to hear from you.
(OPE-L 4831) Here let me take up just one
of issues involved and close with a question
to you.

I said:

>Given the differences between "r" and "RRI", it is hardly surprising
>that Dumenil and Levy find a lag between the two over time. Why both
>are falling, albeit lagged, requires some explanation. Here again, I
>would find things much more convincing if the analysis itself contained
>examples of how individual capitalists were actually investing. As it
>stands, the reader is left inventing scenarios of such investments.

You noted:

I know you feel strongly that capital-using investments are rare at the
micro level. It is true that at the macro level a capital-using,
labor-saving bias in technical change is quite common (though by no
means universal).

I now add:

You're right I do feel strongly about this. Let
me say why without being too repetitious.

1. When Marx himself describes the replacement of
machines by machines, he clearly indicates that
capital saving machines are introduced. Granted
the passages where he does this are few but
they do exist.

2. As relative surplus value is produced and the
rate of surplus value rises, it becomes increasingly
difficult to argue that capitalists are able
to achieve lower cost prices simply by replacing
living labor with dead labor. The task grows even more
difficult if one also argues that as this occurs the
constant capital to output ratio grows when the unit
prices of inputs and outputs are the same.

3. If we consider what Marx called "simple co-operation"
as the basic manner in which technical change takes place,
it is hard to imagine why in the period of large-scale
industry the machines themselves are not to be treated as
workers were in the period of manufacture. That is, in
the period of manufacture by increasing the number of
workers, dividing up the labor process, etc. capitalism
forces the output to grow faster than the work force for
the sake of ever-growing amounts of surplus value. Given
mechanized production, the process of co-operation continues.
Machines are replaced just as workers once were and for the
same reason -- increased surplus value. More machines, larger
machines and ever specialized machines replace those of the
last generation. If the output grew faster than the work
force in the period of manufacture, why should the output
grow more slowly than the "machine force" in the period
of large scale industry? (Measuring all this aside.)

4. Given that Marx bias technical change requires rising
real wages or, at least, the fear that they will rise, we
should be able to point to previously abandoned techniques
that will be reintroduced should those wages fall. My
intuition tells me that Smith's pin factory will never
reappear even if the wages for those 14 or so workers were
set at 0.


Having argued for characterizing Marx's notion of
technical change as capital saving rather than capital
using in the period of large scale industry, I am now
faced with task of considering your recent piece as well
as the results of Dumenil and Levy. So far, I do note
that in neither work do we find many references to others
who have done empirical work on the FRP. Here, I
am not asking for overt or even covert attacks on others
but rather for reasons why the paths of, say, Mage,
Moseley, Wolf, Shaikh, etc. were not pursued.