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From: owner-ope-l@galaxy.csuchico.edu on behalf of aramos@aramos.bo
Sent: Wednesday, February 11, 1998 4:25 PM
To: ope-l@galaxy.csuchico.edu
Cc: Multiple recipients of list
Subject: [OPE-L] Addendum, re Marx and historical costs
Ale writes: "The problem is that capital not only *self-expands* but,
pressumably, is also *destroyed* continuosly."
Yes. This is exactly the problem. And there's nothing we can do about it, it
seems to me. It is, in Marx's view, a contradiction present in reality, and
his theory therefore includes it.
Ale: "Given labor saving innovations, future (present) commodities will
always contain less social labor-time than the present (past) ones. However,
this would be a rather complex problem insofar as it is concieved in terms of
the monetary
appearance that the process must take. I mean, we can have that the falling
labor-values could not be reflected in falling monetary
prices. So, there can be periods in which there is no way to really
"devaluate" ("destroy") the past capital because its monetary price is
"inflated"."
This is a restatement of the "TSS fish" issue. The problem you pose is only
insuperable, however, if one presumes that the sole mechanism of crisis (value
destruction) is the price system. That seems to be what you presume. If we
discard that premise, then we ask *how* (if at all) does the destruction of
value affect capitalism in the realm of appearances when prices aren't
collapsing, and we search for an answer to that.
As you say, this is a rather complex problem. I think it will take several of
us, working from several directions, several years to solve it adequately.
For a number of years, as you know, my hypothesis has been that when prices
are kept up artificially by means of credit expansion, the crisis mechanism
will tend to be displaced. Rather than a crisis of deflation, we'll have a
debt crisis.
I think that the Asian crisis has confirmed this prediction very well. Of
course, this crisis and related events may bring on a crisis of deflation as
well.
What I think we therefore need to focus on now is not so much *how* the crisis
appears when we have a rising MELT, but *why*. (The post-Keynesians are also
able to predict debt crisis, but they can't explain the point at which debt
burden becomes excessive. That's what we need to do.)
My thinking here is starting from the question of real and nominal. Monetary
magnitudes are not "real," and capitalists know that. If they were real, then
there could be no inflation or deflation, but everyone thinks these things
exist and act on that basis. (This is my basic answer to your comments about
capitalists measuring things in "price" terms.)
It was also very clear to Marx that MAGNITUDES OF USE-VALUE ARE ALSO NOT
"REAL." I recently reread the following brilliant observation in his critique
of Bailey. Marx states that, according to Bailey's theory, the value of any
commodity
"is nothing but a certain quantity of other things exchanged against it. If I
receive 20 lbs. of twist for $1, then [according to this theory] the value of
the $1 always remains the same ... although the labour required to produce 1
lb. of twist can on one occasion be double that required on another."
This of course is the dominant theory today, one that is shared, at least
implicitly, via the "replacement cost" stuff, by the simultaneist Marxists.
But Marx immediately objects:
"The most ordinary merchant does not believe that he is getting the same value
for his $1 when he receives 1 quarter of wheat for it in a period of famine
and the same amount in a period of glut" (TSV 3, p. 150; pounds sterling
changed to $).
Exactly!
Even the most ordinary merchant realizes that wheat is not the substance of
value!
I'm also much taken with Marx's very modern phrase "getting the same value for
his $1." These are the terms in which value is talked about and acted upon --
and therefore in which value exists -- in the real world. Some Marxists think
that when people talk about value in the real world, they mean use-value,
utility. But note that it is not the *quality* of the wheat that is at issue
here, but its quantity. People know much better than the theoreticians what
value is. The people live it; the theoreticians try to make it go away.
If we carefully, painstakingly, and ruthlessly pursue this line of reasoning
to the end, I think we may well arrive at the solution to why labor-time
matters.
Ale: "After all, who does really know the "value of money" in a given point
of time? How do capitalists know what is the value of their capital? They
*believe* that is is worth x or y amount of money, but what is the value of
this money? One day before the devaluation of the "won", South-korean
capitalists *believe* their capital was worth $x; one day after, part of this
capital had been annihilated."
Right. But the $ is *also* not value, but merely a monetary expression of it,
one that fails accurately to reflect real changes in value.
Ale: "Anyway, I think the problem is not "choosing" between
K[t] = v[o]*f[o] + v[o]*f[1] + v[1]*f[2] + ... + v[t-1]*f[t]
or
k[t] = v[o]*f[o] + v[1]*f[1] + v[2]*f[2] + ... + v[t]*f[t]
"Andrew''s model is a quite "stylized" (abstract) one and, as he has
said, it doesn''t depict the capital cycle. But, one or another
"valuation" could be "valid" in a specific temporal point. For
example, in South Korea, vast portions of capital invested in the
past have been suddenly "devaluated" and then, it is k[t] which
begins to be considered as the denominator of the profit rate
(certainly, the losses are written down!). But before the crisis, it
is possible the K[t] was the way in which the assets were "valuated"."
I don't have a model (please!) but you're right. That's why I was careful to
indicate that I was dealing with the tendency of the profit rate considered in
abstraction from the forms in which it appears.
Ale: "BTW, maybe the people in South Korea or in Japan can tell us what is
really going on there."
Yes! I'd very much like to know this too.
Alejandro Ramos