# [OPE-L:1315] Re: determination of constant capital

Bruce Robert (broberts@usm.maine.edu)
Tue, 5 Mar 1996 05:22:17 -0800

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Hi, folks. This is my first posting as a new OPE-L participant. There
are several fascinating discussions going on at once now, but they are
sometimes a bit hard for a newcomer to digest at once (if Paul C. is
uncertain about what TSS is supposed to mean, having been on the list for a
time, you can imagine how impenetrable the abbreviation is to those who
haven't been).

I have some reactions to Andrew's argument and numerical example in #1264.
The situation as he poses it: 5 units of seed corn as input, 3 units paid
as wages--first to labor-power performing 5 units of labor, but then (after
a technological change) the same total wage is paid to labor-power
performing only 3 units of labor. 10 units of corn are the physical output
both before and after the change.

First, the profit rate before the change (and after it, from the
simultaneist perspective) is 25%, not the 20% Andrew states.

Andrew's preferred accounting (he would call it Marx's) derives the value
(= price) of a unit of output as 0.8. He gets this by adding up the
original input value (= price = 1) of 5 units of corn capital plus the 3
units of living labor performed after the change, and then dividing by the
physical output of 10 units. This implies, he argues, a zero rate of
profit, since capital initially pays to workers the same total wage of 3 as
before but extracts only 3 units of labor, leaving no surplus value or
profit at all.

Andrew can of course use his own terminology any way he sees fit, but (from
a simultaneist perspective) saying there's a zero rate of profit is at best
a misleading way to describe the situation. Is the capitalist with this
zero rate of profit pulling his hair out? Hardly, since he has a total
Andrew-value of 8, sufficient to replace the 5 units of corn capital (now
Andrew-valued at 4) and replace the workforce by paying them 3 units of
corn (now Andrew-valued at 2.4) and still have a residual value of 1.6 left
over in the form of 2 units of corn. This residual, to Andrew, does not
represent surplus value, but it's there, and I gather that he would be
willing to call it a "release of capital"--at his now-reigning value =
price of .8 replacement has been cheapened. So despite the zero rate of
profit, capital here still has the same ability to consume and/or
accumulate as before the change, and the ratio of the value available for
these purposes (1.6) to the cost of replacement, as _Andrew_ measures it
(6.4), is 25%, a number that no simultaneist will be surprised to see
appear. Even if capital's rate of return over and above outlays (where
outlays are measured at the time of payment) is zero, capital still has the
same fraction of the total value generated, again as Andrew measures it, to
do with as it will. Perhaps we can agree that the number 25till
measures something meaningful _in period 2_, even if we disagree over what
to call that number.

To me, there is a certain irony in Andrew's insistence that his numbers
represent "the determination of value by labor-time" while simultaneist
numbers represent something else. Here, where the capitalist _does_ have a
"surplus" or excess of value in hand after paying for the replacement of
means of production and labor-power, and _does_ therefore still have
command over other people's labor-time, Andrew says there's no surplus
value (thus no surplus labor). Since we're all being polemical here, it
strikes me that a simultaneist, who says that the rate of profit is 25%, is
entitled to claim that THAT's the number that reflects the determination of
profit (capitalist net revenue) by surplus labor-time (labor performed in
excess of the (current) labor-time represented by wages). I think that
Marx would say that there is still surplus (unpaid) labor being performed
here and, if so, then the simultaneist number is the one to use in order to
see it (because by his own assertion it ain't there to be seen in Andrew's
accounting).

In saying that, I don't mean to deny that release of capital is a perfectly
good Marxist concept that has relevance here, as Andrew's numbers would
imply: the simultaneist numbers can be manipulated to have something to
say about release of capital in the immediate aftermath of technological
change, just as Andrew's numbers can be manipulated to yield the relevant
25% ratio between revenue after replacement and the cost of replacement.
My strong suspicion is that both approaches (temporal and simultaneous) are
capable of dealing with the accounting issues that arise, but that they use
the Marxist terminology differently in doing so (Andrew's release of
capital here is a differently scaled expression of simultaneist surplus
value, and vice-versa). So it is an accounting issue, as Paul C. suggests,
but it's not "merely" that, as Andrew counters, since how we use concepts
_does_ matter. Andrew's view, shared by many others, is that values are a
_production_ category, of a different and prior order in comparison to
prices or exchange-value generally. My own view is that Marxism would be
better off understanding values and surplus values as jointly and
simultaneously determined alongside exchange-values and profits, by the
same set of production, circulation and distribution conditions. It seems
to me that it would be progress to discuss these larger disagreements
explicitly, rather than debating which view really "determines value by
labor-time" (_both_ do, but they mean different things in saying so). I'm
pretty sure that I could show that, despite the different numbers produced
by the two approaches, it's possible to translate directly back and forth
between them, meaning that neither one is "right" or "wrong"--each
represents a different Marxian "language," potentially consistent on its
own terms, for using labor-time to conceive the same relationships embedded
in the data.

Unfortunately, I have exams to grade now, so anything more will have to
wait for a later time.

Bruce Roberts

Bruce B. Roberts
broberts@usm.maine.edu
Department of Economics
University of Southern Maine
Portland ME 04104-9300
(O) 207-780-5503
(H) 207-772-7047
fax 207-780-5507-------------------------------------------------