Re: [OPE] Reply to critics

From: Paul Cockshott <>
Date: Fri Oct 22 2010 - 17:54:11 EDT

To continue the point about the reproduction formula.

first dimensional analysis - the point that Alejandro ephasises in his interesting paper.
What are the dimensions of the numbers in the reproductions schemes?

Well the notation is, as we say in computer science, overloaded. In Marx's notation
c1 for example means both the exenditure in money on means of production in dept I and also the actual means of production that are sold for that money. It depends on whether we are looking at the commodity or the money aspect of the transactions.
Let us concentrate on the money aspect for now. Are the variables sums of money then?
No, they are sums of money per annum, so their dimension is
Now having established that let us return to the components of the value of the output of dept III
This breaks down into
c3, v3, s3
c3 rrepresents expenditure on the output of dept 1
v3 indirectly, via the workers , goes on ouput of dept 2
the monetary reflux for these comes from the luxury expenditure in depts 1 and 3

It is clear therefore that s3 does not originate from sales to depts 1 and 2
Instead the profits that capitalists in dept 3 make all comes from purchases of luxuries by other capitalists in dept 3.
Thus if they collectively attempt to do what Gerry proposes, reduce their purchases of luxuries and increase their purchases of means of production by $1billion, their profits will fall by exactly $1 billion. Any attempt to divert profits out of dept 3 actually eliminates their profits.

Note that because of the dimensions of the variables as money per unit time, there is no time delay possible. They are simultaneous equations that necessarily operate as accounting identities. The very day that expenditure is reduced on luxuries, that very day their daily profit falls by an equivalent amount. Of course as they do not calculate profit on a daily basis, they are not immediately aware of it, but it is nevertheless recorded in the bank ledgers on settlement at the end of the day.

Of course as rich people, the capitalists in dept III are credit worthy, so they can in principle buy additional means of production on credit, but that is something quite different from being able to accumulate the profit that they have already earned in the business.

The odd thing about equations of the sort that Marx lays out in the reproduction schemes is that they reveal a number of quite counter intuitive relations in the operation of the economy. Things that seem possible if you look at individuals turn out to be impossible for collections of individuals.
From: [] On Behalf Of Paul Cockshott []
Sent: Thursday, October 21, 2010 3:02 PM
To: GERALD LEVY; Outline on Political Economy ma iling list
Subject: Re: [OPE] Reply to critics

Yes the boundaries beteen depts are fuzzy, diesel fuel is both a means of production and an item of workers consumption for workers cars. But the simplified model with sharp boundaries does bring out causal mechanisms. Although some goods overlap dept boundaries, others, are pretty clear examples of department types.
 A 10megawatts marine diesel is pretty clearly in dept I, and a destroyer escort in dept III.
I will reply to the other point in another email.

--- original message ---
From: "GERALD LEVY" <>
Subject: Re: [OPE] Reply to critics
Date: 21st October 2010
Time: 1:40:14 pm

Hi Paul C:

Let's look, then, at means of consumption consumed by the capitalist class.
To begin with, there is in practice a cross-over between commodities consumed
by the working class and commodities consumed by the working class often with
the same firms producing commodities for consumption by all classes. How
ridiculous would it be to say that workers in a sneaker plant are productive
of surplus value when they produce sneakers for working-class consumers but
unproductive when they produce the exact same sneakers for consumers in
capitalist households? Also, the very meaning of 'luxury' goods changes over
time as workers are able to struggle for an increase in their customary needs
(and hence a change in the VLP). So, there isn't any hard and fast dividing line
between the two (sub-) departments producing means of consumption. In addition.
there's the issue of budgetary choices by workers: in actuality a significant percentage
of workers DO buy luxury goods - even if it means that they have to cut back on
'essentials' such as food consumption. This is, at least, the case in the more advanced
capitalist nations.

Moreover, as I have been insisting, capitalists producing luxury goods can invest
their profits back into the same sub-department, the other sub-department or the
department producing means of production. Moreover, there is no reason to think they
will have a problem again obtaining c + v for their firms including in higher
quantities. Certainly, other capitalists will be willing to sell them means of production
if they have the money capital with which to buy them. And, there's no reason to think
that there will either be a shortage of labour power for capitalists producing luxury
goods to hire or that workers would be more willing to work in one sub-branch than another.

In solidarity, Jerry

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Received on Fri Oct 22 17:55:53 2010

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