[OPE-L] do capitalists see and understand value?

Gerald Levy (glevy@pratt.edu)
Thu, 5 Feb 1998 11:38:07 -0500 (EST)

Rakesh wrote on Wed, 4 Feb:

> Whether circulation costs
> simply transmit value or come out of surplus value (and I think Fred is
> correct that the latter is true), the more important point for Marx is
> that the capitalist has an interest in minimizing circulation costs, as
> well as constant capital, so he can be freed to invest more in variable
> capital, the source out of which surplus value is created. [...]
> I would also like to mention that Marx does indeed seem to make the
> mistake, as perhaps Blaug would argue, of believing that capitalists act in
> terms of value categories, for it does not seem obvious to me that
> capitalists have any interest, as Marx suggests in the following passage,
> in minimizing investment in constant capital especially vis-a-vis variable
> capital if it is by such means they increase the realized mass of *profit*,
> though perhaps reducing in relative terms the value produced in terms of
> capital outlay.

[Hi Rakesh. Let me know if you want to come into the City and have lunch
sometime soon].

You raised a number of interesting questions in your post. I have changed
the subject line to reflect the issue I am going to discuss.

You say that capitalists have an interest in minimizing circulation
costs and expenditures on constant capital _so that_ they can invest more
in variable capital. I would say, rather, that _individual_ capitalists
have an interest in minimizing _all_ costs, ceteris paribus. The
assumptions that you seem to be making are:

1) individual capitalists recognize that if they reduce expenditures on c
that will free up funds for expenditure on v _because_ v is the source of
which s is created.

2) what is true for aggregate capital is also, in this case, the way it
appears to individual capitalists in the realm of competition.

Both of these assumptions are, I believe, mistaken.

To begin with, individual capitalists do not see or understand value. They
certainly don't think in terms of value categories. What they observe,
therefore, isn't s, but individual profit. What they are concerned with
isn't the rate of profit on aggregate capital. Qualification: they are
concerned with the general rate of profit _to the extent_ that they
believe it will affect their _individual_ rates of profit.

Thus, even though v is the source of s, individual capitalists know that
they can increase their individual profitability by _reducing_
expenditures on v. If this were not the case, then individual capitalists
would be acting irrationally whenever they lay workers off!

Even though, from the standpoint of capital as a whole, the actions of
individual capitalists may cause a redistribution of s, this is _not_ how
it appears to individual capitalists. In competition, individual
capitalists judge "what works" from the standpoint of their bottom line.
And, in that context, it may make sense in the presence of labor-saving
technical change to increase expenditure on c and reduce expenditure on v.

In solidarity, Jerry