In OPE-3207, one of the questions Duncan poses is:
"What are the strengths and weaknesses of these two concepts of money
value added in representing Marx's thinking on the relation between the
LTV, technical change and the path of the money profit rate in capitalist
economies?"
John responds:
Given that we are forced to deal with the path of the money rate
of profit, we have to consider our hypothetical economy as it
moves through time. If this is the case, we are stuck at the end
of the second period no matter which concept of money value added
we adopt.
As I have pointed out in previous posts, should Andrew's prices
prevail at the end of each period, then capitalists would see
that the declining profit rate gets them nowhere and begin to
take into account something like "moral depreciation" as they
invest. With Duncan's absolute disaster can easily occur as
the loss in capital value can exceed the value added. Thus,
it would seem impossible to use either concept of the money
rate of profit beyond 2 periods.
The problem is that we are assuming that capitalists see the
new prices at the end of the 2nd period. When Marx considers
the manner in which innovation and the production of relative
surplus value takes place, he gives us the concepts of "social
value" and "individual value" to show why the capitalists think
that innovations which are ultimately harmful appear in their
self-interests. (See Vol. I, Ch 12 )
As he introduces these concepts, in a sense, Marx appears to be
using money to determine labor time as he computes the social
value of the commodity. On the other hand, he does hold fast
to the notion that the living labor expended determines the
individual value. Within the two views we are discussing, we
should be explicit about the role of social value as we
attempt to examine the paths of the money rates of profit
through time.
John