Re: [OPE-L] Theoretical/empirical error in Marx in converting surplus value into additional capital?

From: Paul Zarembka (zarembka@BUFFALO.EDU)
Date: Sat Jul 28 2007 - 18:39:53 EDT


--On Saturday, July 28, 2007 12:24 PM -0400 Howard Engelskirchen 
<howarde@TWCNY.RR.COM> wrote:

> I may not understand the problem you present, but different things are
> going on in the passages from Capital that you refer us to.
>
> Chapter 9 introduces the concept of the rate of surplus value, s/v.
>
> For this purpose, although Marx uses data given by a Manchester
> manufacturer for a week in April 1871 which appear to have included
> figures for machinery, etc., the constant part of the value of the
> product is set at zero.  We consider the ratio of surplus and variable
> capital only.

Howard,

I agree to all of the above, including the purpose of the discussion in 
Chp. 9.  Still, we have data which Marx assures us can be relied upon.

> When Engels recovers this example in Book III, he uses it to illustrate
> the rate of profit.  Now constant capital must be considered.  He takes
> machinery of $10,000 and assumes circulating capital of $2,500, giving a
> total C of $12,500.  Total wages paid are $2,704, but they are turned over
> 8.5 times so v is only 318.  Your figure of roughly 38 (39?) appears to
> assume eight and a half turnovers.  If there were no turnover, then the
> figure would be about 4.6.

The 8 1/2 turnovers of wages is Engels relying upon Marx's presentation of 
the data along with his assumption that circulating capital is 25% of fixed 
capital (which he considers rather on the high side). The number 38 is 
Engel's (12,182 : 318) although he reports percentages 97.5 : 2.5 (making 
39 the ratio due to rounding).

> In Chapter 24 of volume 1 there is no consideration of turnover.

Correct, which of course doesn't mean unity would be apppropriate.

> Nor is there any suggestion the example of Chapter 9 is being recovered.

Insofar he repeats that he is using cotton spinning as his illustration 
("suppose a spinner..."), that he had analyzed spinning empirically, and we 
know of the huge fixed capital cost involved, I would disagree.

> Marx
> says "cotton, machinery, &c." are $8000 and wages $2000.  Later he says
> $1600 of the $2000 surplus will be used for the purchase of "cotton, &c."
> which reasonably may be read to include machinery.  C/v is 4 in both
> cases.

The 'machinery' included must be the wear and tear of spindles, not the 
cost of new stock of spindles.  The big circulating capital expense must be 
the cotton.  Otherwise, he would be very, very off the mark of the Chp. 9 
data.  Further, he even drops "machinery" is the second phrasing.

> That is, the problem, if I understand it, seems to arise from importing
> the turnover included in the Bk III example into the conversion example
> of Bk I. What is the reason for assuming that Chapter 24 must include
> turnover?

Turnover is always there, implicitly as least.  You must be asking why not 
take turnover as unity?  But we know that fixed capital turnover in this 
case is at least ten years (because Marx refers to wear and tear at 10%; 
while my own limited research found that mull spindles last some 40 years, 
I suspect Marx is also including normal maintenance in his 10%).

My focus is upon Chp. 24's conversion of surplus value into capital.  My 
reply to Fred may help in understanding what's involved.  Another way to 
characterize the problem is the following.  Take C as the stock of 
spindles, c as the consumption of constant capital, and v as variable 
capital.  Then, Marx should have had the newly committed cost as C + c + v 
in order to get the new production process rolling, not simply c + v.

If the turnover of wages were once yearly at 2,704, circulating capital in 
raw materials would have to rise accordingly, i.e., in the ratio 342 : 52 
(Marx, p. 210-212), as you would be making the case that the spun cotton is 
not sold until one year after production, instead of after six+ weeks. 
This calculates out to 17,784 for unspun cotton alone.  Wear and tear 
would be replaced by 10,000 annual turnover of fixed capital in spindles, 
building rent remains at 300, auxiliary materials 520; all totaling 
31,308. Output is not changed thereby, so revenue is still 26,520 and now 
surplus value equals -4788.  In sum, taking turnover at unity, leads to a 
bankrupt firm.  I conclude that failure to mention turnover is not 
equivalent to assuming unitary turnover.

Howard, I want to thank you for raising this consideration and if you are 
not satisfied I'd welcome further reply.

Paul Z.

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