[OPE-L:6342] RE: Re: Historical Costs

Fred B. Moseley (fmoseley@mtholyoke.edu)
Mon, 23 Mar 1998 18:25:58 -0500 (EST)

Continuing with my discussion with Andrew from before the IWGVT.
Sorry for the delay.

I have argued that Marx never explicitly said, that in the case
of technological change, constant capital is valued in historical
costs. To the contrary, every time that Marx discussed the
value of constant capital in the case of technological change, he
stated that constant capital is revalued at current costs. These
passages have been reviewed in detail in my previous posts.

Andrew has argued that this is not sufficient proof that Marx
never asssumed that constant capital is valued in historical
costs and that, in particular, in his theory of the falling rate of
profit, Marx was implicitly assuming that constant capital was
valued in historical costs. I still regard the complete lack of
any explicit statement of this assumption strong evidence
against this interpretation, especially given all the statements
to the contrary.

But there is more direct evidence against Andrew's
interpretation, which I have already discussed in a recent post.
In Section 3 of Chapter 14 ("Cheapening of the elements of
constant capital"), Marx explicitly stated that the existing
constant capital is devalued as a result of increased
productivity in the production of the means of production and
that this devaluation acts as a countertendency to the fall in
the rate of profit.

Andrew has argued that Marx is saying in this section that,
although the existing means of production are devalued, the
existing constant capital is not devalued.
I have already argued that this interpretation is contradicted
by the text itself. If constant capital is not devalued, then how can
this be a "counter tendency" to the falling rate of profit? Why is this
being discussed in a chapter devoted to the counter-tendencies?

Since there has been no response to my earlier argument, I will
reproduce it here, with your permission:

EXCERPT FROM PRIOR POST

Andrew's passage is the following part of a sentence:

... the depreciation of the existing capital (that is, of its
material elements) ...

Andrew then emphasizes Marx's parenthetical remark:

Now, why the parenthetical remark? Is it not to make
clear that the means of production, the material elements of
capital, can be cheapened, although the sum of value already
advanced cannot?

So, Andrew's argument seems to be that Marx's parenthetical
remark indicates that Marx is assuming here that technological
change will change the value of the existing means of
production, but will not change the value of the existing
constant capital. Indeed, Andrew suggests further that the title
of this Section 3 ("cheapening of the elements of constant
capital") also refers only to changes to the value of the means
of production (the "ELEMENTS of constant capital") and does not
refer to changes in the value of the constant capital itself, and
hence that this section is only about the cheapening of the
means of production and is not about cheapening of constant
capital.

But if Andrew's interpretation is correct, then how could this
cheapening of the means of production (but not the constant
capital) be a "countertendency" to the fall in the rate of profit?
(Chapter 14 is of course about "counteracting factors".) Why is
this "cheapening" (that does not affect the constant capital)
included in a list of the countertendencies to the falling rate of
profit? "Cheapening" can be a countendency only if it refers to
the constant capital, the denominator in the rate of profit. If
"cheapening" does not affect the constant capital (but only the
value of the means of production), then it cannot affect the rate
of profit as a "countertendency".

Further evidence that "cheapening" in Section 3 means a
reduction in the value of the constant capital - both new
constant capital and the existing constant capital - is provided
by a reexamination of this section. In the first place, the first
sentence in this section explicitly links this section with Marx's
earlier discussion of how CHANGES IN THE VALUE OF CONSTANT CAPITAL
affect the rate of profit in Part 1 of Vol. 3 (Chapter 6 in particular):

Everything is relevant here that has been said in Part One
of this volume about causes that raise the rate of profit while
the rate of surplus-value remains constant, or at least
independently of the latter.

I have discussed in OPEL 3507 (Section A.2) a number of
passages from Chapter 6 which clearly state that the value of
constant capital is revalued as a result of technological change
and other factors that change the value of the means of
production. These passages will be briefly reviewed below in
#4.

Therefore, with this explicit link, it would appear that if
Chapter 6 is about how CHANGES IN THE VALUE OF CONSTANT
CAPITAL (not just changes in the value of the means of
production) and how these changes in constant capital affect
the rate of profit, then so is Section 3 of Chapter 14.

Secondly, Marx then went on in the rest of the first paragraph
on to discuss how "the value of the constant capital does not
increase in the same proportion as its material volume" as a
result of technological change and increased productivity in the
production of the means of production. Therefore the meaning
of "cheapening" in the first paragraph of Section 3 is clearly a
cheapening of the value of the constant capital, not just a
cheapening of the value of the means of production.

Andrew’s sentence fragment then comes from the first
sentence of the second paragraph of this section. The second
paragraph is about the revaluation of the "EXISTING capital"
and argues that the same devaluation of constant capital
discussed in the first paragraph with respect to new capital
also applies to the "exiting capital". The full paragraph is the
following:

Also related to what has been said is the devaluation of
EXISTING capital (i.e. of its material elements) that goes hand
in hand with the development of industry. THIS TOO IS A FACTOR
THAT STEADILY OPERATES TO STAY THE FALL IN THE RATE OF PROFIT,
even though in certain circumstances it may reduce the mass of
profit by detracting from the mass of capital that produces
profit. We see here once again that the same factors that
produce the tendency of the rate of profit to fall also
moderate the realization of this tendency. (emphases added)

Again, if Andrew's interpretation of "cheapening" or
"devaluation" (as applying only to the value of the means of
production and not to the constant capital) is correct, then:
(1) the meaning of "cheapening" has changed from the first
paragraph to the second without Marx saying so; and (2) the
second sentence in this paragraph is nonsensical. If the
"devaluation of the existing capital" means only the devaluation
of the means of production, but not the devaluation of the
constant capital, then this devaluation cannot be a "factor that
steadily operates to stay the fall in the rate of profit." In order
to "stay the fall in the rate of profit", "cheapening" must refer
to the value of the constant capital.

Therefore, it seems to me that this Section 3 of Chapter 14 on
"cheapening", including its reference back to Chapter 6,
provides very strong evidence that, in Marx's theory of the
falling rate of profit, he assumes that the existing constant
capital is cheapened as a result of technological change, i.e. is
valued in current costs. Otherwise, "cheapening" cannot be a
"countertendency" to the falling rate of profit.

END OF EXCERPT FROM PRIOR POST

As I have said before, I still have many questions about Marx's
theory of the falling rate of profit, but this is not one of them.
I cannot accept the interpretation that Marx assumed that
constant capital is valued in historical costs in his theory of the
falling rate of profit as a reasonable interpretation. There is no
explicit textual to support this interpretation and much explicit
evidence to contradict it.

I hope to return soon to John's posts of several weeks ago in
this same discussion of historical costs, and explore further
some of my unanswered questions. John seems to agree that
Marx assumed that, in the case of technological change, Marx
assumed that constant capital is revalued in current costs. But
John rightfully then asks: what about the capital loss that
results from this devaluation? How does it affect Marx's rate of
profit? This is one of my unanswered questions, to which I
hope to return soon.

Comradely,
Fred