[OPE] replacement cost and historical cost (again)

As regards Ricardo, in his first chapter on value in the Principles, he says
with reference to Thomas Malthus that he doesn't regard the "value" of a
commodity the same thing as the "cost" of the commodity, and elsewhere he
explains that indeed a commodity can be sold above or below its real cost,
and so forth.

Trouble is really that Ricardo nowhere precisely explicates in his
Principles WHICH quantity of labour-time can be considered as the "value" of
the commodity. And thus I think he does not remove the ambiguity between a
valuation in terms of the actual labour expended on the commodity ("historic
cost" in labour time, or "dated labour" in the Sraffian sense), and the
current average labour expended on that type of commodity ("current
replacement cost" in labour time).

One of Marx's achievements was that he made all this conceptually much more
precise, and he did so partly in criticism of Ricardo's formulations. Thus,
Marx notes at the beginning of Capital Vol. 3 that:

"The fundamental law of capitalist competition, which political economy had
not hitherto grasped, the law which regulates the general rate of profit and
the so-called prices of production determined by it, rests, as we shall
later see, on this difference between the value and the cost-price of
commodities, and on the resulting possibility of selling a commodity at a
profit under its value."
http://www.marxists.org/archive/marx/works/1894-c3/ch01.htm

In other words, the pivot of business competition according to Marx turns
precisely on the differential between privately incurred "costs" and
socially established commodity "values", an insight which completely
disappears in Sraffian theory.

J.

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Received on Wed Sep 2 14:06:43 2009