In reply to John's [OPE-L:3592]:
>In OPE-L:3588 Duncan says:
>
>These studies use the decomposition of the rate of profit I developed in
>_Understanding Capital_, r = s/K = (s/v)(v/c)(c/K) = ekn where r is the
>rate of profit, K is the stock of capital invested, including both fixed
>capital and inventories, e is the rate of surplus value (the ratio of
>surplus value to value added), k is the "composition of capital" (the ratio
>of the flow of variable capital to the total flow of constant capital,
>including depreciation on fixed capital) and n is the rate of turnover of
>capital (the ratio of the stock of fixed capital and inventories to the
>flow of constant capital).
>
>The studies so far indicate a slowly rising rate of surplus value, e,
>offset by a declining composition of capital, k, leading to a very gradual
>fall in the markup on costs, q = s/(c+v) = ek. There is a sharp structural
>break noticeable in the data in the early 1970s when k dropped abruptly
>(corresponding, presumably to the sharp rise in energy prices). The rate of
>turnover shows a substantial cyclical component, but no strong trend. This
>is one aspect of the macroeconomic evidence I think broadly confirms what I
>called the "Marx-biased" pattern of technical change, that is,
>capital-using and labor-saving.
>
>
>John says:
>
>1. Is "s" equal to "s/v" or "s/(v+s)"?
Duncan:
s is surplus value, s. e is the rate of surplus value, or the rate of
exploitation, s/v.
>
>2. Could not the "Marx-biased" technical change be due to
>increases in the relative prices of raw and/or auxiliary
>materials? You note that k dropped when energy prices rose.
>Drops in "k" would then not be part of a "`Marx-biased'
>pattern of technical change."
If we adopt the "single-system" interpretation of Marx, as I do, the
constant capital is the money outlay for means of production. If the price
of energy goes up, capitalists have to advance more capital to sustain the
production process, so the ratio v/(c+v) goes down. At the macroeconomic
level it is true that any measure of the bias of technical progress has
relative price changes in it. That's one reason why it would be useful to
understand the relation of the macroeconomic figures to underlying
input/output or individual enterprise patterns.
Duncan
Duncan K. Foley
Department of Economics
Barnard College
New York, NY 10027
(212)-854-3790
fax: (212)-854-8947
e-mail: dkf2@columbia.edu