[OPE-L:4272] Re: analytical significance of production periods

Gerald Lev (glevy@pratt.edu)
Mon, 3 Mar 1997 04:02:24 -0800 (PST)

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Paul C wrote in [OPE-L:4271]:

> I suspect that the use of the formula m-c-m' is more of a didactic device
> to enable marx to present production starting off from scratch. Here you
> have a man with only a sum of money, how does he make a profit?, by
> investing in machinery raw materials and labour power. Whilst the
> circumstances presented here do occur when a capitalist moves into a
> new line of business, this is necessarily a minor and exceptional
> occurence within a capitalist economy. When
> one is trying to understand phenomena at the level of social reproduction
> it is no longer appropriate. In fact the explanation given for the
> circuit m-c-m' in volume 1 becomes untenable at the level of social
> reproduction.

The circuit of money capital [M-C...P...C'-M'] is discussed in Chapter 1
and Chapter 4 of Volume 2. The discussion of the "three circuits of
capital" [money capital, productive capital, commodity capital]
constitutes the first 4 chapters of V2. On the one hand, this discussion
was, I believe, intended to serve as a logical bridge between the subject
matter of V1 and V2. On the other hand, his purpose here was to show how
the 3 circuits are inter-related.

> At this level
> the only way in which capitalists as a class can end up with more money
> after a time interval is if more money has been created by the banks or
> some other monetary mechanism. This is of course possible, but is
> irrelevant to the basic mechanism of capitalist exploitation.

I think Marx is abstracting from changes in the size of the money supply
at this level of the presentation. But, yes, he would agree that the
simple process of creating more money by the banks and the state is
irrelevant to the basic mechanism of capitalist exploitation.

> As for Says law, yes every purchase is simultaneously a sale, but the
> question at issue in economic dynamics is the relative rates of change
> of production and purchases, each of which have their own relatively
> distinct causes.

In V2, I think the concern later in the volume was to demonstrate the
conditions under which the reproduction of the aggregate social capital
was possible, which also required a discussion of the possibility of both
equilibrium and crisis. Having established the formal possibility of
equilibrium and crisis, a major task of V3 was to establish that within
the context of capitalist production as a whole crisis and disequilibrium
become *necessary*. How well he accomplished that task is another
(important) question.

As far as "economic dynamics" go, one might usefully distinguish between
long-run dynamics and shorter-run "periodic cycle" dynamics. Much of the
discussion on crisis in disequilibrium and underconsumptionist theory
begins with an examination of the latter subject (and the reproduction
schema). The discussions on the LTGRPD concentrate on the former (but
presented later) subject. I think that part of the problem that we have
inherited is trying to conceptualize both long-run and medium-term
dynamics (and their inter-relationship) within the context of
understanding capitalism as a whole.

As far as understanding the creation of money by the banks and the state,
that presupposes for further development the investigation of
financial capital and the state-form. These, also, are other (important)

> I would suggest that what we have to do is make some assumptions about
> the distribution of consumption periods of the population of constant
> capital commodities. These will vary between industries depending on
> the character of what is produced and upon the rate of technical change
> in the industry. The useful life of a flour mill will considerably
> exceed that of a production line for the fabrication of computer memory
> chips.

Of course, the useful "life" of a flour mill and a chip factory vary. To
understand why, don't we have to understand the turnover of constant fixed
capital? To understand that subject (and many others), it seems to me that
the assumption of a "production period" is a relatively harmless one. What
you haven't demonstrated yet, IMHO, is why although this assumption may
be unrealistic in many cases from an empirical standpoint, it does harm
from a general analytical standpoint.

In solidarity, Jerry