# [OPE-L:4075] Re: Re: Revaluation

From: Rakesh Narpat Bhandari (rakeshb@Stanford.EDU)
Date: Thu Oct 12 2000 - 19:47:49 EDT

```Don't time subscripts help?

While the total magnitude of new value added (NV) is determined by
the value of the means of production consumed in the commodity
output, plus the surplus value produced by workers, the s component
of that total new value is determined by substracting from total new
value (NV) THE REPLACEMENT COST of c and v. That cost however is
determined at t+1.

That is, the denominator of the rate of profit is defined by the
inputs c+v at t;  while the numerator s is determined by substracting
from new value added (NV) the replacement costs of c+v at t+1.

However, as Alan F has put it in another context, capitalists never
simply replace c in particular or invest in terms of the same c/v
ratio in the next period. So to arrive at s, we have to subtract not
the replacement costs of c and v per se from new value added but
rather the total amount of the new value that needs to be capitalized
for a firm to stay competitive (not only c and v at t+1 but also, as
Bauer had it, ac + av at t+1). This may leave much or little of NV as
s.

What further complicates matters is that the value of the means of
production consumed and represented in the final product can be
changing as well.  A \$10,000 machine may have a planned amortization
of \$2000/yr; but it may be clear that by the 3rd year only \$1500 can
be transferred annually if a firm is to stay competitive in terms of
unit prices. This moral depreciation will decrease the the new value
added in the later years, though if the "replacement" cost of c (that
is, c and ac at t+1) is also falling, s may not fall as steeply or at
all as a result of capital saving innovation!

So the impact on s is indeterminate from capital saving innovations.
I would not say that they raise the rate of profit; nor am I
comfortable with turning them from countertendency to factor in the
fall of the profit rate. It seems that there has been no resolution
on this list. I will clearly take the TSS side though that capital
saving innovations are not *simply* counter-tendencies to the falling
profit rate. It's obviously more complicated than that.

We also have a rather extraordinary contemporary problem. The stock
market (well at least last week!) 'valued' any dollar investment in
computer hardware about 10X more than in any "ordinary" capital
investment!  So here the rapid accumulation of capital seems to have
been creating extraordinary fictitious profits. Just thought I would
mention it.

At any rate, Marx's basic point is that in each successive period,
one of the most effective ways for individual firms to reduce their
costs is assimilating machines which will allow a greater
rationalisation in paid labor costs per unit than they add c per
unit. It may even be possible (and common) that c and v decrease per
unit absolutely but Marx thought at least that there would be a
tendency for c/v to rise nonetheless.

The limit to the rise in s/v would be confronted sooner than the
limit to the rise in c/v. Two workers, no matter how exploited,
simply cannot produce as much SV as 12 workers had. Cogoy has shown
this formally.

All the best, Rakesh
```

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