# [OPE-L:1559] Re: Temporality vs simultaneity

John R. Ernst (ernst@pipeline.com)
Tue, 26 Mar 1996 12:32:21 -0800

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Bruce,

If your example worked, things would indeed be simple. It doesn't.
Why? 2 reasons.

1. Where's the money? You assume that TSS means that capitalist's
will invest on the basis of labor-time content and not money.

2. I think you also assume that TSS abandons the notion of socially
necessary labor time. It does not.

3. Let me also note that in your example, reproduced below, capitalists
seem to be intentionally not accumulating capital.

Let me elaborate.

If the price of corn is \$1, then we can write:

c + v + s = w

\$50 + \$10 + \$40 = \$100

Assume the above represents the prices at the end and the beginning
of the 1st period. Then, evaluating the new technique using those
prices would show that period (2) would look like

c(2) + v(2) + s(2) = w(2)

\$45 + \$ 15.50 + \$39.50 = \$100

Note, again, I am using the prices of Period 1 to evaluate the technique
of Period (2). No capitalist in the TSS approach would do this.

Where then is the difficulty? Perhaps, we've been moving a bit too
easily
from one unit of measurement to another --- money, labor time and value.
When Andrew, Massimo, et. al allow prices to fall in Period 2, we
should bear in mind that these are not the prices capitalists anticipate
as they make the investment but rather the prices that obtain according to
the determination of prices by labor time added. But no one in either the

SSS or the TSS approach is saying that capitalists make their
calculations in labor hours hoping that each labor hour will always
represent
a certain amount of money. As someone in the TSS school, I question why
those prices do drop in Period 2. But I would pose the same question to
those in SSS school. For now, TSS has been content to say "competition"
as has SSS.

Let's also note that prices mask the labor content of commodities and it
is this mask together with profit maximation, that forces capitalists
generally
to minimize the labor content of commodities. This is true of both
approaches.

Put simply, the investment has to look good to the capitalist as he
evaluates
the new technique. For now, we are assuming that he uses the prices in
Period 1 as he evaluates a new technique for use in Period 2. At no point,

does he recompute prices according to the labor time used in production.
For both TSS and SSS, this is true. The difference is that SSS wants to
tell the capitalist that he invested less than he did in Period 2 after an
increase in productivity takes place, or, should there be a decrease in
productivity, it would tell him he invested more than he thought he did.
TSS simply says that the investment is what he invested.

John

On Tue, 26 Mar 1996 broberts@usm.maine.edu (Bruce Roberts) said:

>This is a bit of a change in focus from the recent flurry of posts under
>this heading; I'm going back to the earlier discussion. On the drive
back
>from the EEA I was mulling over the "temporality vs simultaneity" debate,
>on OPE-L and at the meetings (where it was quite intense), and a
>potentially interesting numerical case came to mind as a way to separate
>and distinguish the two approaches. I'm curious what you all think of the

>following example--TSS proponents especially.
>
>I start from the same physical conditions as in Massimo's example in his
>post #1357 (3/7/96). There is one commodity (corn), so price and value
are
>identical. 50 units of corn constant capital, combined with 50 units
labor
>performed, yield 100 units of corn output. The real wage per unit labor,
>which I take to be given and unchanging here, is .2 unit of corn. Unlike
>Massimo, I assume that wages are advanced, i.e., between period 1 and
>period 2, capitalists advance to workers money (to pay them for their
>forthcoming labor) which the workers immediately use to purchase means of
>subsistence--they buy some of period 1 output at the existing period 1
>output prices. (I do this because this is the way I understand Andrew to
>conceive it; changing the assumption would affect the numbers that result
>but presumably not the shape of the conclusions).
>
>Given these premises, the initial situation (in common to both approaches)
is:
>
>input P = output P = 1
>C = 50
>L = 50
>V = 10
>total real wages = 10 corn
>real wage per worker = .2 corn
>S = 40
>S/V = 4
>C/V = 5
>r = .6667
>
>Now, suppose that capital comes up with a new technology: the same
>physical output of corn (100) can be produced with only 45 units of corn
>constant capital (5 fewer), but it requires a significant increase in
>labor--L would be 77.5. Given the real wage (.2 corn), the 77.5 units of
>labor would have to be able to purchase 15.5 units of corn (5.5 more than
>before). The decrease in corn constant capital is more than offset by the

>increase in corn wages.
>
>Would capital institute this change? According to the SSS approach (and
>Marx as I read him), no. Physical capital advances (45 corn plus 15.5
>corn) rise, without any gain in total output. Labor productivity falls
>dramatically (more workers producing the same output), and the saving of
>constant capital is not enough to offset this. The rate of profit would
>fall a bit. Here are the numbers that would result (according to SSS) if
>the change was instituted:
>
>input P = output P = 1.409
>C = 63.409
>L = 77.5
>V = 21.841
>total real wages = 15.5
>real wage per worker = .2
>S = 55.659
>S/V = 2.548
>C/V = 2.903
>r = .653
>
>However, as near as I can tell, the TSS approach says that capital would
>*eagerly* embrace this change. The "determination of value by labor-time"

>dictates that the rate of profit will *rise*, since more workers are
>exploited. Here are the numbers I get for TSS in period 2:
>
>input P = 1
>output P = 1.225
>C = 45
>L = 77.5
>V = 15.5
>total real wages = 15.5
>real wage per worker = .2
>S = 62
>S/V = 4
>C/V = 2.903
>r = 1.025
>
>Since TSS proponents insist they are not interested in iterative
solutions,
>I don't bother with subsequent periods. But presumably capitalists make
>their decisions on the basis of what they expect to happen in the next
>period, so they *would* institute this highly profitable change; then,
>given the effects produced in period 2, they would presumably look around
>for any further labor-using technical opportunities in order to further
>raise their rate of profit by adding to the workforce and shrinking the
>means of production (and the composition of capital). The only obvious
>barrier to such efforts would seem to be the exhaustion of the reserve
army
>and the effect that might have on real wages. Otherwise, it would seem
>that capitalists would always seek to capture the benefits that accrue to
>them from maximizing employment (irrespective of the physical productivity

>of labor).
>
>I refrain from offering any Okishio-like theorems that might spring from
>these TSS numbers, at least until someone from the TSS group will verify
>that I'm presenting that view accurately here. Have I calculated the TSS
>numbers correctly, and is it correct that TSS logic must view this change
>as one that capital *would* eagerly put into practice?
>
>If so, then we have a potentially interesting case of disagreement, since
>SSS logic says that capitalists are certainly smart enough to realize that

>paying out more in order to get a smaller surplus product (available for
>consumption and/or net investment) is a dumb way to accumulate. We would
>also have a potential empirical test--have capitalists ever actually
>behaved in this way, which TSS logic apparently views as a profitable
thing
>to do?
>
>
>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-------------------------------------------------
>
>
>