Like Andrew K. and Alan F., I have been working on the idea of constant
capital for more than a decade. I have remained fairly silent on the topic
because of other obligations.
I mostly agree with Andrew's [OPE-L:868], with two minor exceptions.
1. I am still not clear about the correct way to measure value with respect
to the valuation of constant capital. In a "perfect competition world"
[i.e. with no monopoly] the inputs may be valued according to their value
at the inception of the production period (as I understand Andrew to
suggest) or at the end of the production period. I can think of reasons
for either method.
2. Consistent with valuation at the beginning of the period, we can think
of the capitalist as estimating a subjective patter of depreciation. This
information cannot be known in advance. Some of the earlier postings
assumed that it could be.
3. As we move toward a greater reliance on constant capital [where fixed
costs loom large] a competitive economy will make prices move toward
marginal costs. As a result, fixed capital might suffer rapid devaluation.
Under such circumstances, capitalism will not be viable. [Witness the U.S.
airlines] I amplfy on this idea in my new book, The End of Economics
(Routledge, in the next couple of months) and further in a new book in
progress.
4. The formation of monopolies and cartels at the turn of the century was
intended to short circuit this tendency toward devaluation. [The End of
Economics, again.]
5. Andrew ended up by denying the importance of monopoly. He is partially
correct. Keynesian economics more or less sustained demand, offering an
alternative method of short circuiting capital devaluation. [an earlier
book of mine, Keynes and the Economic Slowdown].
-- Michael Perelman Economics Department California State University Chico, CA 95929Tel. 916-898-5321 E-Mail michael@ecst.csuchico.edu