I wish to clarify one point of my OPE-L [3841], commenting
on Fred's OPE-L [3840].
1. It is clear that the rate of profit in labor-time terms
that I calculated in OPE-L [3841]
p* = [20-15]/[15] = 33%
can also be calculated on the basis of the paper money
magnitudes, by simply using the "replacement prices". At
the end of the cycle, as the relation paper money/labor-
time rises from $1 = 1 hour to $2 = 1 hour, capitalists
pocket $40, representing 20 hours. Yet, when they re-
purchase constant and variable capital, they should pay
$20c + $10v (instead of $10c + $5v), so that their profit
rate would be:
p = [$40-$30]/[$30] = 33%
which corresponds to the labor-time rate of profit. In this
case, the rising in the rate of exploitation given by the
increase in the relation paper money/labor-time (explained
by Marx in Value, Price and Profit) is "instantanouesly"
compensated because wages (variable capital) are
immediately doubled in paper money terms.
This is what Fred seems to suggest in OPE-L [3840]:
Now, if the value of money changes, then all prices
will change inversely, and the magnitudes of these
money capital will also change accordingly...
2. However, my problem with Fred presentation is that
the real "givens" in this situation are not paper money
magnitudes, but labor-time magnitudes. So, IMO in this
case we cannot use the following Fred's statement in order
to calculate the rate of profit:
this monetary phenomenon is explained in the same way:
by taking the quantities of the initial money constant
capital and variable capital (i.e the cost price of
commodities...) as given and by deriving the increment
of money as a result of the current surplus labor of
workers.
We cannot take "as given" "initial money cost-price" --at
least PAPER MONEY cost-price-- because the rate of profit
we obtain is "inflated" by the rise in the relation paper
money/labor-time. If we take "as given" "initial money cost-
price" ($15) we obtain a p = $25/$15 = 167%, not 33%.
So, what "is given" is either the "labor-time magnitudes"
or "money magnitudes", calculated by using a kind of money
whose relation to labor-time is constant (Marx's "gold").
Alejandro Ramos M.
18.12.96