[OPE-L:4841] Re: business cycles

Gerald Levy (glevy@pratt.edu)
Tue, 22 Apr 1997 15:59:16 -0700 (PDT)

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Duncan wrote in [OPE-L:4839]:

> I agree that Marx's distinction between "constant" and "variable" capital
> is foreign to neoclassical economics, but the distinction between "fixed"
> and "circulating" capital seems essentially the same, since in both
> theories the issue is the length of time the capital remains in the
> production process.

Isn't what we call variable capital normally understood in neoclassical
theory to be a part of circulating capital? Thus, in looking at
changes in "circulating capital", how do we decompose that measure
when it is presented in neoclassical studies into constant
circulating capital and expenditures on variable capital? Also, as you
point out later, the distinction between productive and unproductive
labour does not appear in neoclassical empirical studies. Thus, increases
in expenditures on what we call unproductive labour may be counted in
neoclassical studies as increases in "circulating capital."

> >b) In these empirical studies what accounts for changes in labor
> >productivity over the course of the business cycle? (Marxian and
> >neoclassical definitions of labor productivity are also different).
> It's true that Marxian economics makes a distinction between productive and
> unproductive labor that mainstream economics rejects, and that leads to
> different measures of the productivity of productive labor. But I don't see
> why Marxists should measure productivity of use-values any differently from
> anybody else. The studies I mentioned above focus primarily on value flows
> measured either in money or in labor time equivalents, and don't address
> the problem of cyclical movements in use-value productivity.

Let me rephrase my question. In the "story" where changes in constant
circulating capital explain changes in the trade cycle, where and how does
the production of relative surplus value and changes in investment in
constant fixed capital enter the "picture"? If our "story" of the trade
cycle doesn't include changes in relative s and constant fixed capital,
how can we then relate changes in the periodic cycle to longer-term trends
in the rate of accumulation (and, possibly, "long waves")?

> I'm not sure I understand the concept of "quality of constant c", nor why
> one should expect it to vary systematically over the business cycle.
> (Marx's favorite example of c is cotton thread.)

As you recall, Marx believed that moral depreciation "is one of the
material foundations for the periodic cycle" (V2, Penguin ed., p. 264). In
a theory that argues that changes in circulating capital explain changes
in the business cycle, how and where does the revolution in the quality
(the use-value) of constant fixed capital enter into the "picture"?
[Here, perhaps we should look at the changes in individual value and
social value over the course of the trade cycle].

In solidarity, Jerry