From: Jerry Levy (Gerald_A_Levy@MSN.COM)
Date: Tue Feb 07 2006 - 10:19:31 EST
> If you think I am not being sufficiently clear, do say so! Hi Jurriaan, No, you're clear enough. My questions are more a consequence of the way in which I go about thinking about issues -- for me, answers almost invariably lead me to more questions! > The concept of competition, dialectically considered, contains within > itself "the negation of competition as a means of competition", through > blocking competitors or disadvantaging them. Economic competition is > not simply a sport between equals on a level playing field, but a war > between unequals in which you try to tilt the playing field in your favour > as much as possible. Agreed. Most economists, unfortunately, conceive of competition as if it were "perfect competition" and oligopolistic competition as if it were non-competition. I think that Marx's conception of competition was much more sophisticated and realistic than the way in which mainstream industrial organization theory casts different market structures. Yet, despite that, I think there is much to be gained by an examination of mainstream IO literature (IO was one of my 'areas of specialization' for which I was tested -- a long time ago! -- in my PhD written and oral comprehensive exams. At the New School, my IO mentor was the ever affable, knowledgeable, and encouraging Willi Semmler.] > If you have close to a monopoly over a resource, a market or an > output, you can raise prices well above value on a more or less > permanent basis. > Inversely, a strong market position may enable you to force sales below > value, on a more or less permanent basis. In that case, profit can exceed > surplus value for a seller, or surplus value can exceed profit for a > buyer. Monopolies, like cartels, tend to be unstable over the long-term and are generally not permanent. It is precisely the higher than average rate of return on investments received by monopolies which encourages other firms to find a way -- somehow -- to break into the market and bust-up the monopoly. > It could also affect the magnitude of profit. BTW I didn't talk about > "product dumping" (dumping prices) or criminal activity yet (cross-border > "dirty money" is said to be a trillion dollars a year globally; this may > involve a transfer of resource without exchanging for anything). You might > contract to produce something, but it is destroyed or not produced for > some reason, yet you still have a financial obligation. In the insurance > world, you strike this all the time. Someone makes a profit, although > nothing is produced, or although what was produced is destroyed, > because of a contractual obligation. The situations that you describe, though, could be inflationary. If there is an increase then in the rate of inflation then the 'real' magnitude of profit would be less than the nominal magnitude of profit. > >Accounting tricks can't change the _actual_ amount of profit; they > > can only change the accounting for profit. Ditto tax rules -- and > > the accounting that firms do to minimize their tax liability. > I disagree - accounting tricks and tax rules rarely alter the amount of > surplus value produced, but they can alter the magnitude of profit income > realised. Think of depreciation and inventory accounting for example, or, > what items you can and cannot capitalise on. Profit is basically revenues > less costs, but there are numerous techniques for overstating or > understating costs and revenues, depending on what is most advantageous at > the time, and this has real effects for the incomes realised. It may be a > work of science to extract and define the real economic relation, that > exists behind all the clever ways in which it is represented in accounts. We seem to have a disagreement here. I'm still trying to figure out what the basis of that disagreement is. I think it is a micro/macro disagreement. I.e. I agree that accounting tricks and tax rules can change the _individual_ rate of profit for firms. The question is whether it can change _aggregate_ profits. This is not from my perspective primarily an accounting issue, it is a theoretical one. > Whatever else you might > say about it, the assumption in the value-price identity is one of AN > EXCHANGE OF EQUIVALENTS. I agree that the identity of value and price in Volume I assumes the exchange of equivalents. This was appropriate, I think, for the level of abstraction of Volume I. (NB: Marx may have had a political reason also for emphasizing the exchange of equivalents in VI: he wanted to offer an alternative to the perspectives of Proudhon and other leftists of his day who viewed the origins of profit in terms of cheating: Marx, I think, wanted to show that _even when and where_ there is the exchange of equivalents there is still exploitation -- this exploitation is systemic rather than based on the malicious efforts of 'bad' capitalists. In that sense, this assumption played a role in developing his revolutionary critique not just of political economy but also of other political tendencies of his time.) In any event, I agree that when we are considering the capitalist economy more concretely -- especially in the context of current conjunctural studies of the current world economy -- we can no longer assume the exchange of equivalents. The assumption needs to be dropped in order to comprehend the reality of UE. Why hasn't this been done more by Marxists? I think that many Marxists simply take the presumptions and assumptions of very abstract theory and apply those presumptions and assumptions to the analysis of more concrete topics. From my perspective, this is a *huge* methodological error. While it runs counter to Marx's own method -- I believe it may be a consequence in part of the incomplete state of Marx's project and the inability of many Marxists to interrogate capitalism in ways that went beyond Marx. > In reality, however, equal exchange is the exception, and unequal exchange > to some degree or other is the norm, in a business environment that is > constantly changing and prone to market fluctuations - business indeed > scours the globe to buy as cheaply as possible (below value, if possible) > and sell as dear as possible (above value, if possible), even regardless > of what happens in production itself, yet also under the constraint that > everybody tries to do the same thing. It therefore appears as though new > value arises in exchange (value is added, through trading or through > market expansion), whereas in reality it is created in production. How robust is the claim that EE is the exception and UE is the norm *empirically*? I.e. what is the rate of variation which has been observed empirically? Are the rates of variation statistically very significant or are they narrow? Enough for now! You must be a quicker typist and/or a quicker writer and/or a quicker thinker than I! In solidarity, Jerry
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