[OPE-L:6590] [OPE-L:55] LTV and accounting [Brickell]

Alejandro Ramos (aramos@btl.net)
Mon, 13 Jul 1998 10:15:47 -0500

Thanks to Mike who have joined John tracking down Brickell's book.

Mike: "In the 1970s there used to be in the UK a group of 'Radical
Accountants', for whose conferences I remember seeing publicity.
Perhaps Brickel is/was one of them?"

Alan Freeman should have had a seat in those Conferences...

The issue of "labor theory of value" and "accounting practice" sounds
interesting to me. In fact, Brickell's title caught my attention (do you
say this in English?) because I had been reading Duncan's Understanding
Capital, specifically, the chapter on The Reproduction of Capital.

Duncan writes:

"All the circuit of capitals variables for a real capitalist firm... can be
determined from ordinary accounting data. Indeed, it is striking that the
ordinary convention of capitalist accounting reflect the labor theory of
value concepts so faithfully. This circumstance arises because both the
labor theory of value and accounting practice insist on the strict rule of
conservation of value except in production itself...

[Why "except in production itself"?]

"For example, the value of productive capital has to be the sum of all past
capital outlays less the sum of the values all finished products that have
emerged from the production process. The wages paid to workers for work on
partly finished products are allocated by accountants to the value of
inventories of partially finished goods, in order to maintain this strict
relation between stocks and flows of value." Understanding Capital, p. 69.

[The "strict relation" Duncan mentions is not clear to me. I think he's
saying that the accounting practice tries to track and "to conserve" any
amount of value, "reallocating" sums of value in accordance with the
different phases of the circuit.]

I think Duncan is quite right about the fact that both Marx and the
accounting practice work with a "conservation principle". Actually, the
accounting practice only reflects the "conservation principle" the
capitalists need daily in order to track the value they are advancing and
"valorising", i.e. to follow the dynamic of value over time, as Andrew has
suggested recently.

Now then, people like Joan Robinson or Schumpeter found that that Marx's
conservation principle is "metaphysical" and should be discarded as a
Aristotelian unfashionable remaining, not fitted to be classified as
"Science". But, what would tell Joan Robinson or Schumpeter to an
accountant about his/her ordinary practice, also based in a "conservation
principle"? Had they suggested also that s/he should abandon the
"metaphysical conservation principle"? What would say a capitalist about this?

Maybe Brickell deals with this but, in any case, we might follow the method
proposed by a character in a Borges's story: They know about a book but
they couldn't find it, so someone proposes to re-write the book! I think
Duncan's passage is an excellent start for it.

Alejandro Ramos