Duncan says:
In reply to John Ernst:
I had a number of exchanges with Andrew about the FRP. It appears to me
that the sense in which the "TSS" interpretation predicts a falling rate
of profit is simply that the profit per year over the historical cost of
investments will fall with technical progress. We've already had some
discussion of the relevance of this conception to Marx's concerns and to
actual capitalist economies and their evolution on the list. It seems to
me that Marx had much more to say than this about the evolution of the
profit rate in capitalist economies. He criticized Ricardo successfully
for disregarding the fact that capitalism institutionalizes technical
change, and he pointed out some typical patterns of technical change under
capitalist relations of production (labor augmenting and capital using),
which are strongly empirically confirmed. Within this framework he was
able to show why the falling rate of profit Smith and Ricardo both assumed
was consistent with labor augmenting technical change. This is far more
than a "minor post-Ricardianism", in my opinion, and also far more
interesting than a redefinition of accounting rates of profit.
John replies:
A couple of matters:
1. My point was that with TSS one expands the set of patterns
of technical change while considering the falling rate of
profit. That is, with TSS, we need not focus on "labor
augmenting and capital using" but rather can include as well
"labor augmenting and capital saving."
2. Given what we are discussing how are we to determine what
is "empirically confirmed"? I asked for an example of
a machine used to replace another machine such that the
constant capital to output ratio rises. I also stated
that I was unaware of any such machine in the mailing
industry. Do you know of any in any industry?
3. From what I recall of Smith and Ricardo, each included
labor augmenting technical change in their views of
technical change. Perhaps, I misread your use of the
idea.
4. In the standard interpretation of Marx, the rate of profit
falls since the returns to scale fall with technical change.
In both Smith and Ricardo, the rate of profit falls since
the returns to scale fall with technical change. To be sure,
for Smith and Ricardo, the rise in what Marx called variable
capital was the cause whereas, for Marx, the rise in constant
capital is the main factor.
Duncan says:
I myself think that interpretations, like TSS, that link surplus value and
variable capital directly to observable national income data, are
especially interesting in opening up Marxian predictions to empirical
testing and explanation. Since several members of the list are
particularly concerned with these problems, maybe some discussion should
focus on these issues.
John replies:
I have no problem with this. However, as we know, the Okishio Theorem
forces us to consider what goes on at the micro level as well. Again,
in the empirical work, this would lead us to consider specific
changes in techniques that capitalists make in what Marx calls the
"Period of Large Scale Industry."
John