" As I understand Marx (and business accounting practices), the costs of
the current period are recovered out of the price of commodities in the
current period."
At first I thought I disagreed with this, but as it stands I think I would
accept it. It therefore seems to me that the differences between us must
turn on the meaning of the phrase 'of the current period'. I would like to
try the experiment of taking it literally as it stands because, as such, it
seems to me to state what Fred has termed the 'historical cost' thesis,
rather than the replacement cost thesis.
To my way of thinking, the costs of the current period consist of the money
spent in order to acquire the goods that are consumed (both for personal
use and to produce more goods) during it. If a producer makes steel that
sells for #100, using iron that costs #40 and labour that costs #40, then
it seems to me that the income of the period is #100 and the costs of the
period are #40+#40=#80.
If we suppose also that by the time the producer sells the steel, the price
of iron has sunk to #30, then it does not seem to me that this alters the
last fact; it does not change #80 into #70. If Fred had wanted to advance
the 'replacement cost' calculation, he should surely have said "the
MATERIALS of the current period are recovered out of the price of the
commodities in the current period", rather than 'the COSTS of the current
period are recovered out of the price of commodites in the current period."
I suspect that this turns us back again to the question 'what is meant by
the current period?' which Alejandro has raised. Here is a suggested way to
conceptualise it, which follows on from my post about accounting for
unproductive labour.
Each act of circulation (each purchase or sale) falls in between two
periods. 'Of the current period' is therefore ambiguous. It might mean the
phase of circulation that comes at the beginning of this period, or the
phase of circulation that comes at the end of this period. But it is
confusing to try and assign the same act of sale, or the same act of
purchase, to two periods. If I sell steel at midnight on December 31 1997,
one may either say that it is part of the receipts of 1997, or of the
receipts of 1998, but not both. Otherwise, each period would have two sets
of receipts (and two sets of purchases). One of the things that I find
difficult in clarifying our differences with Fred, is that to me it seems
that he never states unambiguously to which period a sale belongs, or to
which period a purchase belongs.
My concept is as follows: there are two aspects to circulation, sales and
purchases, hence C-M-C, which conceptually contains two distinct acts, C-M
and M-C. Write two whole circuits of reproduction like this:
C - M - C - P ... C' - M' - C'(C+c) - P...C'
Considere the middle term, C' - M' - C'(C+c), whicn encompasses the whole
of the circulation that takes place between the two periods of production.
I think that the best way to conceptualise it is to say as follows:
C' - M' belongs to the first period ('comes at the end of the first
period')
M' - C'(C+c) belongs to the second period ('comes at the beginning of the
second period')
The 'timing' of the periods then runs as follows:
C - M - C - P ... C' - M' - C'(C+c) - P...C' - M'
t0 --->][<------ t1 ----->][<------ t2 ---------->][<-- t3 etc
Thus we treat the expenditures of each capitalist (their costs) as M-C and
include them at the start of the current period, and the sales (their
receipts) as C'-M' and include them at the end of the current period.
In that case, I would agree that the capitalists recover their costs (C)
out of sales (C'), that is, their costs are incurred at the beginning of
the period, and the sales income comes at the end. [Though this attempted
recovery may fail. There is no assumption that the capitalists will sell
enough steel to recuperate the money that they spent on the iron, and the
calculation of the value of the steel does not depend on this assumption.
That is why, for me, the value of the steel is given independent of its
price.]
When I discuss with Fred, it always seems to me that he oscillates between
the idea that the cost of the current period (t1) is M-C, and that it is
M'-C'. But the difficulty then is, that if one makes M'-C' the cost of the
period (t1), it is confusing to make it the cost of the next period (t2)
also. Whatever position one takes, it seems to me one must stick to it.
The reason I cannot accept M'-C' as the cost of the period (t1) is that it
implies the capitalists acquire their means of production after they used
them.
Alan