[OPE-L:4909] Re: ideal vs real value

Michael Perelman (michael@ecst.csuchico.edu)
Sun, 4 May 1997 17:32:34 -0700 (PDT)

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Gerald Levy wrote:

> Suppose you were _not_ able to sell your product and that product
> physically degraded with time such that it no longer has a use-value and
> can no longer serve as a bearer of exchange value.

Then the value of the product is lowered.

The conservation of value question depends what the total value in an
economy is.

> 1) since your product no longer has a use-value and an exchange value, can
> it represent value and be a commodity?

> 2) can we expect that what you and other individual capitalists will
> lose in value during the slump will exactly match the gains in value
> [caused by a transfer of value] for other capitalists? Is it not
> possible that other capitalists will gain value but there will still be
> a net loss in aggregate value?

Will there be a net loss in aggregate value. Here is the key to my
reasoning. Suppose half the commodities rot away during the
depression. I would argue that the value of the other half would double
[assuming each commodity had the same value prior to depression.

> 3) now suppose that your losses as an individual capitalist cause your
> firm to go out of business. Clearly, other capitalists in the same
> branch of production will gain some social value with your loss. But,
> will the other firms in your branch gain the _same_ amount of value
> that you lost in individual value?

Not necessarily. The redistribution will work across branches.

> What would happen to the value of
> your stock of constant fixed capital if it is idle and abandoned? Will
> the devaluation of your fixed capital necessarily correspond to an
> equal increase in the valuation of the remaining stock of fixed
> capital held by other capitalists in your [former] branch of
> production?
> 4) now suppose that what happened to your firm has happened to most other
> firms and there is an "overproduction of commodities". Suppose further
> that your firm and many other firms borrowed heavily for investment in
> fixed capital. What would happen to the banks that loaned you and other
> capitalists money capital for investment? Suppose that some of those
> banks also then went out of business. Will the loss in value by both
> industrial capital and bank capital necessarily correspond to an equal
> gain in value for other capitalists?

Yes, in the aggregate.

> In solidarity, Jerry

Michael Perelman
Economics Department
California State University
Chico, CA 95929
Tel. 916-898-5321
E-Mail michael@ecst.csuchico.edu