Paul writes:
> I dont see a problem with Gils point about some firms
> being forced to earn less than the rate of interest on
> their capital if prices are determined by average labour
> content.
>
> I see little reason to doubt that some firms do earn less
> than the rate of interest on their capital. Such firms are
> constantly in the position of either:
> i) moving to liquidation if they have a high gearing ratio
> ii) deciding to accumulate financial rather than material
> assets if they have a low gearing ratio
> Since both of these things do take place, they can hardly
> be held as an argument against a theory that has them as
> consequences.
I believe this misses the point fundamentally. Marx's purpose in
defining SNLT in average rather than marginal terms was certainly not
to provide a theory of the sort of market dynamics that Paul
describes above, but rather to provide an unambiguous characterization
of the value of a commodity.
My point was that given this definition of SNLT and Marx's "pure"
case of simple commodity circulation, in which all commodities
exchange at their values, Marx's characterization is *fundamentally*
ambiguous, in fact self-contradictory. I have argued, and Paul
apparently does not now dispute, that in the general case a given
average of SNLT will self-destruct through liquidation of firms at
the (high-cost) margin; this process of self-unravelling may
continue until the relevant industry is turned into a single-firm
monopoly.
Surely this is not what Marx meant to suggest in defining value as he
did. One can find substantive grounds in Marx for the sorts of
phenomena Paul refers to.
I repeat my fundamental point: Marx offers no basis for departing
from Ricardo in defining value in terms of average rather than
marginal SNLT. I suggest there is no legitimate basis: as I've shown
by example using Marx's own "pure" case of commodity circulation,
the condition is essentially self-contradictory.