# [OPE-L:1562] Re: Temporality vs simultaneity

Bruce Robert (broberts@usm.maine.edu)
Tue, 26 Mar 1996 17:47:10 -0800

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Reply to John (#1559), with some elaboration relevant to my brief previous

I can appreciate why you make the argument that you do in your reply to my
numerical example. I share the general conclusion. But it doesn't fully
address the seeming paradox in TSS logic that I was trying to point out.
Let's return to the case Massimo originally posed.

In Massimo's case--fewer workers, same output, higher labor productivity,
and variations on the theme of constant wages--he concluded that the TSS
rate of profit falls. That made no sense to me, so I challenged it. I
recognize that you expressed at that time some unease with the results that
Massimo produced (reiterated in your latest post: "As someone in the TSS
school, I question why those prices drop in period 2"), but you didn't
state any clearcut disagreement with Massimo's results, and Massimo and
Andrew certainly clearly stated that that was exactly what they meant.

Putting Massimo's original example in my terms, capitalists would
pre-evaluate the change, at original prices, as follows: C = 50, L = 30, V
= 6 (the same real wage of .2, multiplied by 30L and priced at 1 per unit),
and C + V = 56. If I understand your view correctly, you would say that
they would anticipate W = 100 (the same physical Q of 100, priced at 1 per
unit). If so, then you would agree that capitalists would make the change,
anticipating a higher r = 44/56. Would they in fact realize such a higher
r? Massimo and Andrew say *no*. They say that S = L - V = 24, so r = S/(C
+ V) = .429 and P2 = W/Q = (C + L)/Q = .8. The capitalists get a rude
surprise--a lower r rather than the expected higher r.

I still think that this is a confused conclusion based on arbitrary
accounting (and I would ask you, John, whether you agree with their rate of
profit as the meaningful number to measure capitalist profitability in this
case). But be that as it may, if this is in fact the TSS argument (or at
least Massimo and Andrew's TSS argument), then I reply that such an
experience, where the pre-evaluation was completely wrong, would plausibly
make capitalists consider the possibility that doing the *opposite* would
be "good" for them.

Now I certainly agree with you that a rational pre-evaluation of the change
I considered, at existing prices, would lead capitalists to reject it--that
was in fact my point. But still, if capitalists actually *did* institute
the change I posed--because they had learned the error of their ways from
experience of Massimo's case, or for any other reason, smart or stupid, or
for no reason at all--then the TSS numbers I ground out *are*, I believe,
the ones that follow from Massimo and Andrew's equations. That TSS r
rises. And any capitalist who paid attention to that number would conclude
that s/he was better off, and would, presumably, persist in the behavior.

I'm reluctant to to leave the numbers entirely, since it seems that when we
do go into general discussion of issues we tend to talk right past each
other, but the general point I'm raising is this: some TSS arithmetic
seems to want to have it both ways, in that the TSS r is said to be the one
relevant to the dynamic results we observe in capitalism, but the game is
rigged because that r always seems to fall. In Massimo's case, capitalists
raise labor productivity, avoid paying higher wages, but the TSS r falls,
and apparently they fail to draw any conclusions from the experience
because in my case, despite the fall in labor productivity, the TSS r
rises--but, I'm told, capitalists are incapable of realizing that that
could occur, so they would never institute the change.

That strikes me as entirely too convenient. If this *is* the rate of
profit that's relevant, and if it's this easy to raise it, are we supposed
to believe that in the entire history of capitalism no "entrepreneur" has
figured it out? They don't have to be consciously calculating in
labor-time terms to be capable of learning from experience what works and
what doesn't. Here a comment concerning Duncan's point is relevant: if
any individual capitalist actually does institute a change of the sort I
posed, they all benefit. In my example, suppose the corn industry is
initially composed of 5 equal capitals. If any one of them--say a naive
idealist who actually believes the rhetoric about "creating jobs"--makes
1/5 of the total change in the example, r rises across the board: the
general TSS r goes up, as does the individual r for the altruist (less) and
for all the others (more). If this did happen, don't you think that
capitalists would notice? And draw conclusions?

I continue to think that there's something wrong here: either capitalists
are incredibly stupid, persisting in the sort of "downsizing" behavior that
Massimo and Andrew say lowers r but failing to consider the possibilities
for raising it as in my example, or else the TSS rate of profit is an
accounting artefact that's not really relevant to the selfishly sensible
behavior that capitalists seem quite capable of persisting in.

Is anyone else bothered by this?

Bruce

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-------------------------------------------------