From: Ian Wright (wrighti@ACM.ORG)
Date: Thu Jun 08 2006 - 13:38:57 EDT
Hi Andy Apologies for delayed response. My response is unfortunately also a little rushed. > One general issue: I'd suggest that there needs to be a discussion in your paper of the > relationship between accounting procedures/propositions and theoretical propositions. It > is the ommission of such a discussion that is responsible I think for the *appearance* > that you are offering a very non-Marxian theory of profit (as pointd out by Ajit), which in a > sense your paper revolves around. No doubt this is not intended, but without actually > discussing the general issue regarding how accounting and theory propositions relate it > is impossible to debate this key issue - so impossible for you to avoid giving this > non-Marxian impression to the reader. I must have a presentational problem. So if you get the time I would be interested in any suggestions you might have that would help avoid misunderstandings. > Specifically: Marx, (imperfectly) followed by the Sraffian system, does indeed exclude > capitalists' consumption from the inputs. You are essentially arguing that it should not be > so excluded. I am willing to accept this conclusion -- based on textual evidence and analysis. But until such a demonstration is provided I think it is an open question, with many subtleties perhaps not yet appreciated. For example, it is all too easy to take a common-sense productivist metaphor, taken from Marx's images of factory production, and apply it to the modern concept of vertical integration. > One thing your paper does is confirm from a different angle the key point > (stated by Shaikh 1984 and no doubt by others) that it is this exclusion of capitalists' > consumption from inputs (Shaik's 'circuit of capital') that is responsible for the issues > arising in the transformation problem. That is a very insightful remark, and a connection I had not made until recently. You are right: there is an important common element here. > But you seem to argue that capitalists' > consumption (funded by profit) should be included as an input because profit is a cost of > money-capital lending. This is anathema to my understanding of Marxian theory, it is a > 'surface appearance' from my perspective. I think we will be able to work through these issues. > Crudely put, profit is surplus labour in money > form (surplus value) from which various deductions have been made, including the > deduction of interest (and rent). I think this depends whether we are talking about an undistributed surplus or a distributed surplus. In simple reproduction, there isn't any surplus labour "left over". The deductions balance the productions, so to speak. > Interest and profit need not have the same magnitude. > For a given amount of surplus value, the amount of interest is crudely down to the relative > power of finance capital as opposed to industrial capital - finance capital siphons off > some of the surplus value generated by industrial capital. OK. > There is no general law of > 'interest', nor even of 'profit', rather there is a law of surplus value. Interest, rent and profit > fight over the available surplus value magnitude. No doubt profit and interest must be > positive otherwise capitalists starve. Perhaps then a small proportion of capitalists > consumption might be considererd a true 'input', in the same way as unproductive labour > can be treated like constant capital. But this merely sets a lower limit on the magnitude > of capitalist consumption, a lower limit of relatively small magnitude. Capitalist > consumption should not appear as an input, on this view. But you think that some of it perhaps should? Is this a difference between "subsistence" capitalist consumption and "luxury" capitalist consumption, which echoes Sraffa's distinctions applied to the real wage? In simple reproduction, in which the real-wage and capitalist consumption is fixed, there isn't a need for such a distinction. > To compare our respective approaches to the TP: we agree that capitalist consumption is > the key. Agreed. > I say (with Shaikh and Paul C... and perhaps even Sraffa... ) that capitalist consupmtion goods > will have, on average, close to the economy average OCC hence aggregate equalities will > approximately hold despite it not being input. You say it is an input hence aggregate equalities > hold exactly. Here I agree with Fred. On the assumption of equal exchange there is quantitative identity, not approximation, and this is crucial to the theoretical integrity of Marx's theory of value. I am convinced by Rubin's account of the relationship between Ricardo and Marx's economics, and his explanation that the Ricardian school dissolved due to its theoretical (not empirical) approximations. One of Marx's many great leaps forward over Ricardo's economics was to adhere to the conservation of labour-time in price, which at a given stage of theoretical abstraction, is strict. Best wishes, -Ian.
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