Don't time subscripts help? While the total magnitude of new value added (NV) is determined by the value of the means of production consumed in the commodity output, plus the surplus value produced by workers, the s component of that total new value is determined by substracting from total new value (NV) THE REPLACEMENT COST of c and v. That cost however is determined at t+1. That is, the denominator of the rate of profit is defined by the inputs c+v at t; while the numerator s is determined by substracting from new value added (NV) the replacement costs of c+v at t+1. However, as Alan F has put it in another context, capitalists never simply replace c in particular or invest in terms of the same c/v ratio in the next period. So to arrive at s, we have to subtract not the replacement costs of c and v per se from new value added but rather the total amount of the new value that needs to be capitalized for a firm to stay competitive (not only c and v at t+1 but also, as Bauer had it, ac + av at t+1). This may leave much or little of NV as s. What further complicates matters is that the value of the means of production consumed and represented in the final product can be changing as well. A $10,000 machine may have a planned amortization of $2000/yr; but it may be clear that by the 3rd year only $1500 can be transferred annually if a firm is to stay competitive in terms of unit prices. This moral depreciation will decrease the the new value added in the later years, though if the "replacement" cost of c (that is, c and ac at t+1) is also falling, s may not fall as steeply or at all as a result of capital saving innovation! So the impact on s is indeterminate from capital saving innovations. I would not say that they raise the rate of profit; nor am I comfortable with turning them from countertendency to factor in the fall of the profit rate. It seems that there has been no resolution on this list. I will clearly take the TSS side though that capital saving innovations are not *simply* counter-tendencies to the falling profit rate. It's obviously more complicated than that. We also have a rather extraordinary contemporary problem. The stock market (well at least last week!) 'valued' any dollar investment in computer hardware about 10X more than in any "ordinary" capital investment! So here the rapid accumulation of capital seems to have been creating extraordinary fictitious profits. Just thought I would mention it. At any rate, Marx's basic point is that in each successive period, one of the most effective ways for individual firms to reduce their costs is assimilating machines which will allow a greater rationalisation in paid labor costs per unit than they add c per unit. It may even be possible (and common) that c and v decrease per unit absolutely but Marx thought at least that there would be a tendency for c/v to rise nonetheless. The limit to the rise in s/v would be confronted sooner than the limit to the rise in c/v. Two workers, no matter how exploited, simply cannot produce as much SV as 12 workers had. Cogoy has shown this formally. All the best, Rakesh
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