[OPE-L:5470] Re: More RRI

John R. Ernst (ernst@pipeline.com)
Mon, 15 Sep 1997 12:29:19 -0700 (PDT)

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There are several reasons why I think the RRI is
important in analyzing capitalism.

1. The RRI provides a way of understanding Marx's
notion of moral depreciation. The concept is
clouded in unclarity if one simply computes the rate
of profit while assuming straight line depreciation.

2. If we are to consider the choice of technique problem
with fixed capital that depreciates, we are forced to
consider the RRI as it is the criteria any rational
capitalist would use in choosing one technique over

3. As the stratification of fixed capital changes the
rate of profit can rise and fall without any change
in the rate of surplus value and without any change in
technique. No such "movement" of the RRI is possible
without such changes. Rational capitalists attempt to
maximize the RRI not the rate of profit. It is thus
a relatively simple matter to show that the rate of
profit can fall with a constant real wage. How this
type of falling rate of profit is to be seen in the
Marxian context is a question.

4. The meager empirical data we have on the RRI and
stratification are, I think, insufficient to argue for
or against the importance of these concepts. For
example, to date, we have no study that focuses on
the production of surplus value by productive workers
while computing the RRI using productive capital.
Further, we should consider two inexplicable results
from the work of Dumenil and Levy concerning the RRI
and stratification in the US economy.

a. A lag of about 10 years between the
rate of profit they compute and the RRI.

b. The relatively large increase in the degree of
stratification that occurred in the 1920's.

5. It is hard to imagine a Marxian concept of accumulation
that incorporates a constant proportion of investment
relative to surplus value produced. Here we would seem to
lose any hope of ever understanding what Marx himself meant
by accelerated accumulation.