Gil wrote: > Now, of course, it *may* be that as a >psycho-historical matter, one had to begin from a Marxian value-theoretic >perspective to see the particular relevance of this way of expressing the >profit rate. Gil, as I understand it, it is indeed true that the neo Ricardian approach purports to explain (or determine) both the average rate of profit and relative prices while Marx can only explain the formation of the general rate of profit, as I have argued in my last reply to Allin. But the neo Ricardian approach has no relevance outside the non-existent context of output unit prices not equalling input unit prices--a solution can only be had if one of the n equations is removed by setting input prices to output prices; otherwise there would be an unknown other than a distributive variable, right? That is, it is a logical solution to no-thing (except perhaps an an internal critique of another no-thing--general equilibrium). Marx's theory however does lay out the value theoretic determinants of the average rate of profit without the simultaneist stricture which John E called into question long ago. So on grounds of generality and relevance it's no contest despite the absence of a real price theory in Marx's value theory. > > >Second, Marx's *value* analysis leads one uniquely to think about trends in >capital productivity only with respect to his value-based story about >*biased* technical change, not about trends in capital productivity *per >se*. One can find dynamic stories about increased (labor and) capital >productivity through innovation, without the detour into the concern about >biased technical change, in Smith, Ricardo, Malthus, and Mill, just to name >a few. So maybe it's because Marxists had these other stories in the back >of their minds that they were led to thinking about capital productivity, >without particular reference to the specific factor biases that *Marx* is >led by his value theory to focus on. Can it be shown otherwise? Gil, I don't think you find Marx's main point anywhere else. He argues that profit is appropriated in terms of an average rate or so called mark up on the basis of the average cost price in any given industry, not in terms of the value actually produced. Therefore, it is possible that one could lower his cost price vis-a-vis competitors while producing less value relative to the money investment and still gain an extra profit. This will make no sense unless we rigorously differentiate between profit and surplus value. That is, Marx's argument (capital 3, p. 270) is that the most effective and available (though not only) way to reduce cost price is through technological innovation by which paid labor is reduced per unit more than machine, raw material, depreciation, etc costs are increased thereby (this of course does not mean unit values are necessarily falling because as a result of a rising rate of exploitation, surplus value per unit could be rising and thus neutralizing the decline in c+v per unit, v falling more than c is rising as a result of the effort to reduce cost price). While unbeknowst to the entrepreneur this may have the effect of draining the system as a whole of the value substance and thereby exerting downward pressure on the profit rate, it will give an immediate advantage to an innovator who will still claim the average profit rate--which for all practical purposes will be unaffected by his single innovation--on the basis of the average cost price in the industry, not his own reduced cost price. He stands to make extra profit even as he drains the system as a whole of the value substance. The most effective way to secure profit will thus appear, in apparent violation of the labor theory of value, to be the saving of labor and the greater (relative) use of fixed capital. The way Marx thinks this paradox works can only be explained on the basis of his theory of value. Of course even accepting marx's value theory, one can still argue that the innovations will become inputs in other industries and as such will lower costs and raise profits there. But this is a separate question, and the Okishio like arguments which van Parijs describe depends on the methodology of comparative statics, no? > > >>1) The notion that that commodity prices are somehow "regulated," >>>"rationalized (i.e. rendered non-"imaginary")" or at least in some >>>meaningful sense undergirded by corresponding labor values, measured by > >>socially necessary labor time, a notion that Marx twists himself into >>>logical knots to defend under conditions of pure competition in V.III, >>>Chapter 10. A corollary of this is his attempt to establish the aggregate >>>"transformation" identities in Ch. 9. >> >>Where does Marx "emphasize" this? > >Here is a partial count: Volume I (references are to page numbers in the >Penguin edition): 156, 168, 182, 188, 196, 269 (footnote, where he makes >the point emphatically because he needs it to justify his inference about >the salience of price-value equivalence at the end of Ch. 5), 476; Volume >III, throughout chapter 10, 478 (where he contrasts the determination of >the interest rate with the determination of typical commodity prices), >774-775, 1020; Grundrisse, 136-138; and Marx's famous letter to Kugelmann. > No, no! once the assumptions are dropped, what Marx is saying is that changes in relative prices over time can be accounted for on useful approximation by changes in the values of commodities. Allin says this is the position of Ricardo for whom then value was an inherently temporal and dynamic category, not reducible merely to exchange ratios as some, like Bailey, would have it today. Marx is not saying price is directly determined by value. > > >And last but not least, let's not forget the final point of my post: the >basic raison d'etre for a Marxist theory of profit rate determination, such >as suggested by your macro identity, is as a component of a theory of >capitalist crisis. **But since the labor theory of value is >constitutionally incapable of distinguishing returns to "opportunity costs" >from "economic rents," it is constitutionally incapable of explaining why a >given fall in the profit rate (so long as it remains [even infinitesimally] >positive) would create a crisis.** This seems like sufficient reason in >itself to question the relevance of value theory to the analytical project >your identity suggests. Again, I am not following you. But the falling rate of profit is not what engenders capitalist crisis! Where did you get this idea--this has been clarified since Grossmann, as Steindl recognizes. It is the lack of surplus value as a mass for all the surviving capitalists to meet the accumulation they have to undertake to beat off intensified competition at a late stage of accumulation. The shortage then leads to widespread bankruptcies, credit retraction, unemployment, underconsumption problems. Yours, Rakesh
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