[OPE-L:1264] determination of constant capital

akliman@acl.nyit.edu (akliman@acl.nyit.edu)
Thu, 29 Feb 1996 19:18:30 -0500

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Andrew here, replying to Costas (ope-l 1250):

Again, I think Costas has hit the nail on the head. Changes in the amount
of labor extracted matter, benefit/hurt the capitalists, even if the
material substance of the extra labor remains unchanged.

Costas notes correctly that this is what Marx's value theory implies.
This is exactly my point. Only a temporal conception of the DETERMIN-
ATION of value can capture this.

Let me try another simple example. Assume 5 qtrs. of corn used as
seed and 3 qtrs. paid as wages, and output of 10 qtrs. Assume 5 units
of living labor are extracted. Assume either that the input value of
corn = 1 or compute the unit value of corn simultaneously. In either
case, the unit output value also = 1. In this case, then, both
simultaneous and temporal valuation give a profit rate of 20%.

Now assume the same input and outputs, and same wages in the next
period, but assume that only 3 units of living labor are extracted.
If one's THEORY is that valuation is simultaneous, i.e,

10v = 5v + 3

then the unit value falls to 0.6, but the profit rate remains 20%!
This is because the input value is also 0.6, somehow, although
corn entered with an input value of 1 (the output value of the first
period). What is really going on is just the Dmitriev-Sraffa theory
that value is just a veil; profitability is determined solely by
physical input/output relations. Labor extraction per se is
irrelevant.

But in the temporal conception, the unit INPUT value of the 2d period
remains = 1 (the output value of period 1), and this enters into the
DETERMINATION of the output value (actually, the unit input value
figures in here because it is the same as the unit input price), so
that we have

10v(output) = 5*1 + 3,

and thus v(output) = 0.8.

The profit rate is thus

0.8*10 - 1*5 - 1*3
------------------
1*5 + 1*3

i.e., zero. Here, the reduced extraction of living labor has lowered the
profit rate, just as Marx's law of the falling profit rate implies.
Here, value really is being DETERMINED by labor-time, whereas in
the simultaneist theory, value is really being DETERMINED by physical
input/output relations, and labor-time just acts as an irrelevant
numeraire.

Andrew Kliman