[OPE-L:5205] Re: Reproduction Costs vs. Replacement Costs

Duncan K. Foley (dkf2@columbia.edu)
Sat, 7 Jun 1997 06:44:52 -0700 (PDT)

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Part 1 of some comments on Andrew's OPE-L:5179. I'm going to break things
up to keep the posts shorter.

>Duncan: "Isn't the issue of replacement cost quite prominent right in the
>first chapter of Volume I?"
>No. To my knowledge Marx discusses replacement costs only in connection with
>reproduction, never in connection with the determination of value.


I was wrong about the first chapter. But at the end of chapter VIII (pp
317-8 in the Penguin edition), Marx says:

"The definition of constant capital given above by no means excludes the
possibility of a change of value in its elements. Suppose that the price of
cottong is one day sixpence a pound, and the next day, as a result of a
failure of the cotton crop, a shilling a pound. Each pound of the cotton
bought at sixpence, and worked up after the rise in value, transfers to the
product a value of one shilling: and the cotton already spun before the
rise, and perhaps circulating in the market as yarn, similarly trnasfers to
the product twice its original value....The value of a commodity is
certainly determined by the quantity of labour contained in it, but this
quantity is itself socially determined. If the amount of labour-time
socially necessary for the production of any commodity alters...this reacts
back on all the old commodities of the same type, because ... their value
at any given time is measured by the labour socially necessary to produce
them, i.e. the labour necessary under the social conditions existing at the
time.... As the value of the raw material may change, so too may that of
the instruments of labour, the machinery, etc. employed in the process, and
consequently that portion of the value of the product transferred to it
from them may also change. If, as a result of a new invention, machinery of
a particular kind can be produced with a lessened expenditure of labour,
the old machinery undergoes a certain amount of depreciation, and therefore
transfers proportionately less value to the product."

This is what I was thinking of, and it seems pretty unambiguous to me. This
passage also seems to support the separation of accounts of profit in
production and gains and losses on the stocks held in the course of the
process of production.

Andrew proceeds:

>Marx does continually say that a commodity's value is not determined by the
>labor-time that went into producing it originally (historical cost), but by
>the labor-time needed to *reproduce* it. It is quite a leap from this to the
>*replacement* cost interpretation. That interpretation maintains that the
>value of a shirt produced today is the sum of the value added by living labor
>plus what it would cost, tomorrow, to replace the cloth, buttons, etc., not
>what it does cost, today, to use them to produce new shirts. Marx never says
>anything like this.

I'm not completely clear on what the distinction between "reproduction" and
"replacement" is in terms of the actual mathematics of the accounts.

Andrew continues:
>At times, he explicitly says the opposite. For instance, in MECW 33, p.
>91(emphasis in original), he writes:
>"Profit, however, expresses the excess of the *value of the product over the
>value of the whole of the costs of production*; hence it expresses in fact
>increment of value which the total capital receives at the end of the
>processes of production and circulation, over and above the value it
>before this process of production, when it entered into it."

But doesn't the "increment of value" here mean the value added by the
living labor of the workers, not the change in the value of stocks during
the production process due to changes in prices?

>Note that this implies that costs of production are understood to be given by
>the value the capital possessED BEFORE production, in fact precisely the
>it had when it entered into production. The temporalist reasoning is

I don't think so, if you mean that Marx attributed the capital gains and
losses due to price changes to the expenditure of living labor in



Duncan K. Foley
Department of Economics
Barnard College
New York, NY 10027
fax: (212)-854-8947
e-mail: dkf2@columbia.edu