Subject: [OPE-L:1888] Re: Stock and flow measures of the profit rate
From: Gerald Levy (glevy@PRATT.EDU)
Date: Fri Dec 10 1999 - 17:16:10 EST
Re Julian's [OPE-L:1886]:
> > Assuming a flow rate of profit makes it easier to conceptualize the
> > mobility of capital that occurs with the formation of prices of
> > production.
> I'm sure I'm being dim, but I don't see how.
The existence of constant fixed capital creates certain "barriers to exit"
that would not exist had all constant capital existed as a flow. The loss
to individual capitalists if they exit a branch of production inhibits the
mobility of capital in the sense that they have to not only consider the
rate of profit in their branch of production vs. rates of profit in other
branches of production but also the cost penalty associated with
prematurely losing the value of their stock of constant fixed capital.
Thus, the question of constant capital existing, in part, as a stock
relates very much to a question associated with the formation of a
general rate of profit and PoP: "should I stay or should I go?".
> > Now, what happens to the value of constant fixed capital when
> > capitalists are "exiting" a branch of production is an interesting
> > question. One could argue that the value of the constant fixed capital
> > is transferred to other capitalists (i.e. re-distributed among
> > capitalists) or you could claim that aggregate value is thereby
> > diminished (and *not* conserved).
> My tentative view is that it is a transfer: if changed conditions of
> production change the value of particular kinds of either fixed or
> circulating capital (and this is reflected in money prices) traditional
> accounting wants to record this as capital gain (loss) for the firm.
This is not an accounting question.
> At the
> macro level, this ought to be balanced by corresponding (losses) gains on
> the books of other capitalists who own a different mix of means of
Why "ought" this to be the case? Simply because some capitalists lose,
doesn't logically require that other capitalists gain (and gain to the
exact same extent as other capitalists lose).
> From the point of view of my previous comment, this sounds
> suspiciously like arguing that value can be destroyed by the act of
> exchange -- in which case, presumably it could also be created thus.
Because you accept the "conservation of value" *axiom*?
I don't know *any* Marxist who believes that the "act of exchange" creates
value -- indeed, this is not, btw, a position of value-form theory. What
is at issue here is thus *not* whether value can be created in exchange.
Rather, the issue concerns how value can be diminished.
In solidarity, Jerry
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