This is a response to Andrew's (3413) on whether Marx valued constant
capital at historical costs.
1. I argued in (3411) that there was an inconsistency in Andew's
interpretation of the valuation of constant capital: with respect to the
"transformation problem" Andrew agrees that constant capital is valued at
current costs, NOT at historical costs, but with respect to the "falling
rate of profit" constant capital is valued at historical costs.
2. Andrew replied in (3413) that there is no inconsistency in his
interpretation. In his interpretation of both the transformation problem and
of the falling rate or profit, he assumes that the "value transferred" from
machines to the value of the product is valued at current costs (he agrees
that there is strong textual evidence to support this interpretation). On
the other hand, he argues that, in the denominator of the rate of profit,
constant capital is valued at historical costs.
In other words, Andrew argues that the STOCK of constant capital (the total
price of the means of production; the denominator in the rate of profit) is
valued differently from the FLOW of constant capital (the value transferred
from the means of production). The flow of constant capital is valued at
current costs, but the stock of constant capital is valued at historical
costs. Therefore, according to Andrew, technological change will reduce the
flow of constant capital, but will not reduce the stock of constant capital.
3. I know of no textual evidence to support this dual interpretation of the
flow and the stock of constant capital, and I ask Andrew (and others) to
please send me any references that I may have missed.
In the absence of evidence to support this dual interpretation of constant
capital, there would seem to be a general presumption that the stock and the
flow of constant capital would be valued in the same way. And since the
evidence regarding the valuation of the flow of constant capital in current
costs is so strong, this presumption of similar valuation suggests that the
stock of constant capital is also valued at current costs.
4. Furthermore, and more importantly, these is considerable textual
evidence that Marx derived the flow of constant capital from the stock of
constant capital, and therefore that he valued the stock and the flow of
constant capital in similar ways. According to Marx, the magnitude of the
flow of constant capital (the value transferred from machines) (c) in any
given accounting period is equal to the quotient of the stock of constant
capital (the total price of machinery) (C) and the expected number of
periods the machines are expected to last (n): i.e.
c = C / n.
Therefore, assuming that the expected lifetime of the machines remains
constant, the flow of constant capital can change only if the stock of
constant capital changes. If technological change occurs, this will change
the stock of constant capital, which will in turn change in flow of constant
capital.
Andrew argues, to the contrary, that the flow of constant capital can change
without a change in the stock of constant capital, i.e. that the flow of
constant capital is determined somehow independently of the stock of
constant capital. But this is not a correct interpretation of Marx's
treatment of the flow and the stock of constant capital. These are not
valued differently (one at current costs and the other at historical costs),
but are instead valued in the same way. The flow of constant capital is
derived from the stock of constant capital, and both are valued in current
costs.
The dependence of the flow of constant capital on the stock of constant
capital is clearly expressed in the passages that we discussed last Fall.
The most important of these passages is from Chapter 8 of Volume 1. Here
Marx said:
As the value of the raw materials may change, so too may that of the
instruments of labor, the machinery, etc. employed in the process; and
CONSEQUENTLY that portion 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 amount of depreciation, and
THEREFORE transfers proportionately less value to the product.
(C.I. 317-18; emphases added)
The emphasized "consequently" and "therefore" express the dependence of
changes in the flow of constant capital on the stock of constant capital.
Technological change reduces the stock of constant capital (the value of
machinery, etc.), and CONSEQUENTLY also reduces the flow of constant capital
(the value transferred).
We also discussed last Fall an earlier draft of this passage from the
1861-63 manuscript:
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..
In this passage and the surrounding paragraphs, these is little explicit
discussion of the flow of constant capital. The discussion is instead in
terms of the value of the machinery, etc., i.e. is about the stock of
constant capital. And Marx clearly states that the value of machinery, etc.
will change as a result of technological change. The general context of
this passage is Marx's theory of value and surplus-value. Therefore, it is
implied is this discussion of the value of the machinery that the flow of
constant capital (the value transferred from the machinery) is derived from
the stock of constant capital, as in the later version of this passage in
Volume 1, and that a change in the total value of machinery (stock) will
result in a change in the value transferred (flow).
We also discussed passages from Chapter 6 of Volume 3. Here the discussion
is about the stock of constant capital and the effect of changes in the
stock of constant capital on the rate of profit. Most of the discussion is
about raw materials, but there is at least one clear passage about
machinery, which states again that an increase in productivity will result
in a reduction in the value of machinery, or the stock of constant capital:
The following points are important for devaluation:
(1) The constant improvements which rob existing machinery, factories,
etc. of a part of their use-value, and therefore also their
exchange-value.
This process is especially significant at times when new machinery is first
introduced, before it has reached a certain degree of maturity, and where
it thus constantly becomes outmoded before it has a chance to
reproduce its
value...
Once machines, factory bulidings or any other kind of fixed capital have
reached a certain degree of maturity, so that they remain unchanged
for a
long while at least in their basis construction, a further development
takes place as a result of improvements in the methods of
reproduction of
this fixed capital. The value of the machines, etc. now falls not
because
they are quickly supplanted or partially devalued by newer, more
productive
machines, etc., but because they can now be reproduced more cheaply.
(C.III., pp. 208-09)
Therefore, it seems to me that there is strong textual evidence that both
the flow and the stock of constant capital are valued in the same way, that
both are valued in current costs, and therefore that both will be devalued
as a result of technological change. From this I conclude that TSS
interpretation of the valuation of constant capital in historical costs is
not a plausible interpretation of Marx's theory.
Comradely,
Fred