I would like to raise another issue in the ongoing discussion of the TSS
interpretation of the falling rate of profit - whether or not Marx's theory
does in fact assume that constant capital is valued at historical costs -
the actual costs at which the means of production were purchased at various
times in the past. It seems to have been taken for granted in the recent
discussion that the TSS interpretation - that constant capital is determined
at historical costs - is a plausible interpretation of Marx's theory. But
I don't think so.
This point was discussed at length on ope-l last fall in relation to the
"transformation problem", mainly by Andrew and I. In that discussion,
Andrew agreed that constant capital is NOT valued at historical costs.
Andrew argued instead in that discussion that constant capital is valued at
the prices prevailing at the BEGINNING of the CURRENT production period. I
argued the "current reproduction costs" position that constant capital is
valued at the END of the current period.
Therefore, there seems to be an inconsistency in Andrew's interpretation of
the valuation of constant capital: with respect to the "transformation
problem" Andrew agrees that constant capital is NOT valued in historical
costs, but with respect to the "falling rate of profit", he argues that
constant capital is valued in historical costs.
This inconsistency is not obvious in the recent equations and examples that
Andrew has offered, because he assumes no fixed capital, so that all the
constant capital is entirely consumed in one period. In this case, the
"historical cost" is the same as the "cost at the beginning of the current
period" (this is perhaps, pace Jerry, one of the disadvantages of working
with the circulating capital model: it obscures this important distinction).
However, if fixed capital is included, then these two costs are no longer
the same. And Andrew assumes the former in his interpretation of the
falling rate of profit and the latter in his interpretation of the
transformation problem.
I think that there is very strong textual evidence, most of which was
discussed last Fall, that Marx's theory is NOT based on the assumption that
constant capital is valued at historical costs. I agree that there is some
ambiguity in Marx's texts between the beginning and the end of the current
production period. But I don't think that there is any ambiguity on the
issue of historical costs - here it seems clear that Marx was NOT assuming
historical costs. I won't go back over all this evidence now, but simply
refer to the main passages that we discussed:
C.I. Chapter 8
MECW.30. 79-80 (the earlier draft of Chapter 8 in the 1861-63 manuscript)
TSV. I. 109
C.III. Chapter 6
Last Fall, Andrew and I argued about whether or not these passages mean that
constant capital is valued at the BEGINNING or the END of the CURRENT
period, but both of us agreed that they clearly mean that constant capital
is not valued at HISTORICAL costs.
So I would like to ask Andrew to explain this apparent inconsistency. Other
TSSers are of course encouraged to respond. Thanks a lot.
Comradely,
Fred