From: Francisco Paulo Cipolla (cipolla@UFPR.BR)
Date: Mon Oct 16 2006 - 17:20:50 EDT
Thanks Rakesh for your very good message. You clarify points that I did not myself. Paulo Rakesh Bhandari wrote: > > > The maximum rate of profit is a concept that allows us to see that the > >> fall of the profit rate is independent of the rate of exploitation. For > >> this to be true it is enough to show that the new value created (L) > >> shrinks as a percentage of constant capital. Besides, L/c is part of > >> reality: it is the total new value created as a % of constant capital. > >> It is a living concept not an absurd hypothesis. Just as simple > >> reproduction, it is there, it is part of the real world. The fact that > >> some of L is paid as variable capital only shows that the actual rate of > >> profit moves underneath a falling trend. This was a way out of having > >> the same status for tendency (rising c/v) and counter-tendency (rising > >> s/v) in the interpretation of the FROP issue. I have never seen a > >> critique of this view. > > > >Paolo: > > > >I think you illustrate well the dangers of making extreme assumptions -- > >the purpose of which was merely mathematical convenience. The > >idea that new value and surplus value > > No for Paolo new value includes what would be surplus value and > variable capital, so you can't say new value and surplus value. > > He seems to be defining the maximum rate of profit as v+s/c, and > measuring it at the end of each period, t1 rather than t0, t3 rather > than t2, etc. At the end of each period there is so much new value > (surplus value and variable capital, not new value and surplus > value), and Paolo says that we should me measure that in relation > only to the constant capital costs of production. > > It seems to me that the question you should raise is whether the > rate of profit should ever be defined as v+s/c rather than as s/c+v. > > One could say that Paolo's measure seems to imply a kind of capital > fetishism in that it measures new value in relation to constant > capital only rather than surplus value in relation to variable > capital. In putting only dead labor in focus in the denominator, one > could say that the maximum rate of profit is anything but a living > concept as Paolo has claimed. Of course the point of the measure may > well be to show that even if workers lived on air, the rate of profit > would still fall. But that does not imply that they do. Plus, this is > what Marx himself says. > > In measuring new value in relation to constant capital Paolo is not > saying that v=0; he is granting that v is some percentage of new > value. Which in turn ensures that the actual rate of profit is below > the maximum rate of profit. > > So I think your criticism while interesting has misfired. > > The fundamental critical issue with all economics (sraffian and > neoclassical) is implicit and explicit fetishism, the ontological > equivalence given to all the factors of production in determination > of value. > magnitudes. > > Rakesh > > >is created even where there is no > >wage-labor is most certainly _not_ a hypothesis which is "part of the real > >world". > > >Even in the abstract scheme of simple reproduction, there is > >surplus value, variable capital, and wage-labor. The _fact_ is that the > >rate of profit is _not_ independent of the rate of surplus value. The > >dangers in linear formalizations include over-simplification, > >mis-specification, and the development of theory which is trans- > >historical and incapable of saying anything meaningful about capitalist > >realities. Mathematical imperatives should never be allowed to by > >themselves drive the development of a theory of modern society: > >GI = GO is a slogan which has relevance for more than just > >computer engineers.* Marxists would do well to take some of the criticisms > >made by the French economics students, which led to the creation > >of the _Post-Autistic Economics Review_, to heart. > > > >"Existing economics is a theoretical [meaning mathematical] system > >which floats in the air and which bears little relation to what > >happens in the real world" -- Ronald Coase > > > >"Economists have converted the subject into a sort of social > >mathematics in which analytical vigor is everything and practical > >relevance is nothing" -- Mark Blaug > > > >(above, and other noteworthy, quotes, from http://www.paecon.net ) > > > >In solidarity, Jerry > > > >* GIGO is an aphorism meaning 'Garbage In, Garbage Out'. A > >variant -- especially noteworthy for Marxians -- is 'Garbage In, > >Gospel Out'.
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