This is a reply to Andrew's interesting and penetrating post (868),
which I appreciate very much.
1. Andrew argues first of all that the distinction between historical costs
and current reproduction costs in misleading because "current reproduction
costs" can refer EITHER to the BEGINNING of the current period when the
inputs where purchased OR at the END of the current period when the output
is sold. Andrew argues further that what Marx meant by "current
reproduction costs" is the former, i.e. at the beginning of the current
period. I have of course argued for the latter.
To begin with, I want to emphasize there appears to be a very significant
agreement here between Andrew and myself: that the value of constant capital
is NOT determined by the actual HISTORICAL costs of these means of
production. The remaining quantitative differences between the reproduction
costs at the beginning of the current period and the end of the current
period is much smaller than the differences between historical costs and
either of these current reproduction costs. There is not that much
technological change from the beginning of a period to the end of the same
period.
However, other things Andrew has said in other places make me not so sure of
his rejection of historical costs. He assume in his paper on the rate of
profit in the Marx and Nonequilibrium Economics volume that, in Marx's
theory, the stock of constant capital (the denominator in the rate of
profit) is determined by HISTORICAL costs. And he states in reply to John
(905) that capitalists value the stock of constant capital (which is not
necessarily the same as the value of constant capital in Marx's thery) as
either historical costs or current replacement costs, but not pre-production
current costs.
BUT ONE CANNOT HAVE IT BOTH WAYS. The flow of constant capital transferred
to the price of the output is the annual depreciation of the stock of
constant capital. Both the stock and the flow of constant capital are
evaluated in the same way - either as historical costs or as pre- or
post-production current costs, but not one method of determination for the
flow and another method for the stock.
2. With regard to the remaining question of whether constant capital is
determined at the BEGINNING or the END of the current period. Andrew first
of all argues that two of the passages I have quoted support his
interpretation that constant capital is determined at the beginning of the
current period.
a. The first passage in one in which, Andrew argues, Marx referred to
constant capital as a "DETERMINING factor", which suggests that constant
capital is not determined simultaneously with the price of the output.
Andrew states that he thinks this passage is from TSV.I. 109. I cannot
find anywhere in TSV.I.109 or in
the other passages I have cited the phrase "determining factor" (maybe I
missed it). But this is not important. Marx does refer in this passage,
and in other passages I have cited, to constant capital as a "postulated
value" or a "precondition" in the determination of the prices of output,
which expresses essentially the same idea as "determining factor".
However, in these same passages, Marx is also clear that, EVEN THOUGH
CONSTANT CAPITAL IS TAKEN AS A GIVEN PRECONDITION, IT IS NONETHELESS
DETERMINED AT THE TIME OF THE SALE OF THE OUTPUT. The clearest statement of
this point is an earlier draft of Chapter 8 of Volume 1 in a part of the
1861-63 manuscript only recently published in English for the first time:
But the values of the material and means of labor only reappear in the
product of the labor process to the extent that they were pre-posited to the
latter as values, i.e. were values before they entered into the process.
Their value is equal to the social labor time materialised in them; it is
equal to the labor time necessary to produce them under given general
social conditions of production. If later on more or less labor time were
to be required to manufacture these particular use values, owing to some
alteration in the productivity of the labor of which they are the products,
their value would have risen in the first case and fallen in the second;
for the labor time contained in their value only determines it to the
extent that it is general, social, and necessary labor time. Hence
although they entered the labor process with a definite value, they may
come out of it with a different value that is larger or smaller, because
the labor time society needs for their production has undergone a general
change... But this change in the value of the material and means of labor
involves absolutely no alteration in the circumstance that in the labor
process into which they enter as material and means they are always
preposited as given values, values of a given magnitude. For in this
process itself they only emerge as values in so far as they entered as
values. A change in their value never results from this labor process
itself but rather from the conditions of the labor process of which they
are or were the products and to which they therefore are not preposited as
products. If their general conditions of production have changed, this
reacts back upon them. They are an objectification of more or less labor
time, of more or less value then they were originally; but only because a
greater or smaller amount of labor time is now required than originally for
their production... These changes in their value, however, always arise
from changes in the productivity of the labor of which they are products,
and have nothing to do with the labor processes into which they enter as
finished products with a given value. Their change of value stems from
alterations in their own conditions of production, which occur outside and
independently of the labor process into which they enter as material and
means; not as a result of an operation occurring within the labor process.
For it they are always values of a given, preposited magnitude, even though
owing to external agencies, acting outside the labor process, they are now
preposited aas of greter of smaller mgnitude than was originally the case.
(MECW.30. 79-80)
As can be seen from this passage, Marx's justification for assuming that,
although the value of constant capital may change during the production
process, this value is nonetheless taken as given in the determination of
the prices of output, is that
THE VALUE OF CONSTANT CAPITAL IS DETERMINED IN A PRODUCTION PROCESS
DIFFERENT FROM THE ONE INTO WHICH IT ENTERS AS IN INPUT, and therefore this
value may be taken as preposited in this process in which it is an input.
The value of constant capital is LOGICALLY prior to the determination of the
prices of output, even though the value of constant capital is determined at
the time of the sale of the output.
b. The second passage cited by Andrew is from Volume 1 of Capital, Chapter
8. Here Andrew argues that:
Marx says that the value of the constant capital is determined in the
production process out of which it issues, not the one in which the means
of production are used. In a simulataneously determined (Replacement cost)
model, the value of the corn used to produce corn would be determined in
the process in which the corn serves as input.
In other words, Andrew argues that, because constant capital is determined
in a separate process from the price of the output, coonstant capital must
be determined chronologically PRIOR to the price of the output. However,
this is not true. We have already seen, in the passage just quoted from the
1861-63 manuscript, that, for Marx's theory, the fact that the value of the
constant capital is determined in the process out of which is issues does
not imply that constant capital must be determined PRIOR to the current
production period.
In addition, in the paragraph from Chapter 8 of Volume 1 which Andrew cites,
two sentences after Marx stated that constant capital is determined by the
production process of which it is a product, Marx said:
If the amount of labor-time socially necessary for the production of any
commodity alters - and a given wright of cotton represents more labor after
a bad harvest than after a good one - this reacts back on all the old
commodities of the same type, because they are only individuals of the same
species, and their value AT ANY GIVEN TIME is measured by the labor
socially necessary to produce them, i.e. by the labor necessary under the
social consitions existing AT THE TIME.
The key words in this sentence are "at any given time" and "at the time".
They suggest that the value of a commodity AT ANY GIVEN TIME (e.g. at the
time of the sale of the output) is determined by the social labor time AT
THAT TIME (i.e. at the time of the sale of the output). Marx did not say
that the value of a commodity at the time of the sale of the output is
determined in part by the social labor time IN THE PREVIOUS PERIOD. Thus,
either Marx is guilty of an important logical inconsistency in the same
paragraph, or the fact that the value of the constant capital is determined
in the process out of which is issues does not imply, for Marx, that
constant capital must be determined chronologically PRIOR to the current
production period.
3. Andrew acknowledges that several of the passages I cite say that the
value of the means of production changes during the production process. But
he argues that a change in the value of the means of production does not
mean a change in constant capital.
All the so-called two-system or nondualist interpretations of Marx's value
theory supposedly recognize the difference between value of means of
production and value of capital. Why not here? Thus, when in Ch. 8 of
Vol. I, Marx writes that the constancy of constant capital does not preclude
a change in the value of its ELEMENTS, the key to understanding this is
not to confuse the value of the elements with the constant capital.
I agree (as I have argued elsewhere in my 1993 paper on the transformation
problem) that constant capital is not EQUAL to the value of the means of
production, because the price of the means of production is not equal to
their value (C not= Vmp). However, constant capital still DEPENDS IN PART
on the value of the means of production (it also depends on the equalization
of profit rates) so that, even though constant capital is not equal to the
value of the means of production, a change in the value of the means of
production results in a change in constant capital (C = f [ Vmp, X ]).
Andrew infers from the fact that constant capital is not equal to the value
of the means of production the conclusin that constant capital is not
affected by a change in the value of the means of production But this is a
false inference.
Andrew again cites Chapter 8 of Volume 1 to support his argument. However,
in the passages cited, Marx is clearly talking about the constant capital
transferred to the price of the output. He is not saying (or implying)
that, although the value of the means of production changes, the value of
constant capital transferred to output is not affected by this change. To
the contrary, he explicitly states the opposite:
The definition of constant capital and variable capital given above by no
means excludes the possibility of a change of value in its elements.
Suppose that the price of cotton is one day sixpence a pound, and the next
day, as a result of a failure of the cotton crop, a shilling a pound.
Each pound of the cotton bought at sixpence, and worked up after the rise
of value, transfers to the product a value of one shilling; and the cotton
already spun before the rise, and perhaps circulating in the market as yarn,
similarly transfers to the product twice its original value...
In the next paragraph, with respect to machines, Marx states just as clearly
with respect to machines:
As the value of the raw materials my change, so too may that of the
instruents of labor, the machinery, etc. employed in the process; and
consequently that protion of the value of the product transferred to it from
them may also change. If, as a result of a new invention, machinery of a
particular kind can be produced with a lessened expenditure of labor, the
old machinery undergoes a certain amont of depreciation, and therefore
transfers proportionately less value to the product.
Can there be any doubt that Marx is talking in this passage about the value
of constant capital transferred to the product and saying that a change in
the value of the means of production changes the constant capital?
Similarly clear evidence that, for Marx, a change in the value of the means
of production causes a change in the constant capital that is transferred to
the product is provided by passage from the earlier draft of Chapter 8 in
the 1861-63 manuscript quoted above (see 2a.)
4. Finally, Andrew agrees with Alan that:
the adequacy of any textual interpretation is its ability to make sense of
the meaning as a whole. And I agree that the "replacement cost"
interpretation of Marx cannot do so.
However, Andrew does not make clear (at least to me) how the "replacement
cost" interpretation cannot make sense of the whole. He may be agreeing
with the specifics of Alan's argument in (828) that this interpretation
leads to a logical contradiction. But I have already argued in a recent
post that, if Alan's argument were valid (which I argue it is not), it would
apply as well to Andrew's "pre-production" current period interpretation.
So I would like to see more specifics of Andrew's argument of why the
"post-production current period" interpretation cannot make sense of the
whole (or makes less sense of the whole than the "pre-production current
period").
Thanks again. I look forward to further discussion.
Fred