1. It seems to me that, in the discussion about Marx's valuation
of constant capital, there are three possible interpretations, or
that there are three different points in time at which it is
assumed that the value of constant capital is determined in
Marx¹s theory:
T1: the time (in the past) of the actual investment of capital.
According to this interpretation, the value of constant capital is
equal to the actual money invested at this point of time in the
past. Even if there is technological change (or a change in the
value of money), the value of constant capital remains
unchanged at this original amount. This is what I understand
by "historical cost" valuation (and I think this is the usual
meaning of "historical costs").
T2: the beginning of the current period.
According to this interpretation, if there has been technological
change (or a change in the value of money), then the value of
constant capital changes (is "revalued") and is not equal to the
actual amount of capital invested at T1.
T3: the end of the current period.
According to this interpretation, if there is further technological
change (or a change in the value of money) during the current
period, then the value of constant capital changes (is "revalued"
again) and is not equal to the value of the constant capital at
T2. This is what I understand by "current reproduction costs"
(which again I think is the usual meaning). However, the
differences between T2 and T3 will in general not be large,
because the technological change (or change in the value of
money) during a given period is generally small. On the other
hand, the further back in time T1 is, the greater will be the
difference between T2 and T3, on the one hand, and T1, on the
other hand.
2. Now, I have been arguing that Marx assumed that constant
capital is determined at T3 (i.e. by current "reproduction"
costs).
It seems to me that Ale and John in their recent posts are
arguing that Marx assumed that constant capital is determined
at T2 (both the stock and the flow of constant capital, right?).
If that is indeed what you are arguing, then I would say that
the difference between us is not great, and I would be happy to
discuss further in hopes of a perhaps reaching a consensus.
3. However, is I understand it, Andrew's interpretation (and
Alan's too I think) is that, even in the case of changes in
technological change, the value of constant capital is
determined once and for all at T1, (it is not clear to me exactly
what Andrew is assuming about the case of a change in the
value of money). Or rather, more precisely, the STOCK of
constant capital - the denominator in the rate of profit - is
determined at T1. This is Andrew's assumption in his paper on
Okishio's Theorem in Freeman and Carchedi, as I understand it.
(The FLOW of constant capital - the value transferred to the
price of the product - is assumed by Andrew, as I understand
him, to be determined at T2).
But if I am wrong about this, and Andrew (and Alan) also agree
that both the stock and the flow of constant capital are
determined at T2, then I would be very happy. As I just said,
then I think our differences would be minor, and maybe could
be resolved. I can accept T2 as a possible interpretation of
Marx (although I still think the textual evidence is in favor of
T3). But I cannot accept T1 as a possible interpretation of Marx
- at least of what Marx was doing in Capital. As I have said
before, every single passage in which Marx explicitly discussed
the effect of technological change (or a change in the value of
money) on the valuation of constant capital, he stated that the
value of constant capital is determined in the current period
(i.e. that the original capital is "revalued"). He never once said
that, in the case of technological change, constant capital
continues to be valued at the original historical costs. The
whole tenor and thrust of Marx's writing on this subject is
contrary to the valuation of constant capital at historical costs.
4. So, Ale and John, am I correct about your interpretation
(determination of constant capital at T2)?
And Andrew and Alan, am I wrong about your interpretation
(the determination of the stock of constant capital at T1)?
I surely hope so.
5. Furthermore, I agree with Ale and John that, given that
constant capital is revalued in some way as a result of
technological change, then the next question is: how is the rate
of profit determined, and in particular how does the capital loss
that results from the devaluation affect surplus-value or profit,
the numerator in the rate of profit? I think Ale lays out the
two options clearly: (a) the capital loss is NOT subtracted from
the gross surplus-value or (b) the capital loss IS subtracted from
the gross surplus-value. I am not clear in my own mind about this.
I can see the advantages of (b) and maybe I can accept it.
But I see no evidence of (b) in Marx. In particular, when Marx
discussed the "cheapening of constant capital" in Chapter 14 of
Vol. 3, he did not say that the capital loss that results from
this cheapening should then be subtracted from the gross surplus-value
to obtain a net surplus-value. Indeed, Marx discussed this "cheapening"
as a counter-tendency to the falling rate of profit. If the capital loss
is subtracted from the gross surplus-value, then it is not clear
to me that this cheapening would be a counter-tendency.
Maybe the difference between (a) and (b) is higher and lower
levels of abstraction. Also, to be consistent, if one subtracts
capital losses, then one should add capital gains that results
from a decline in the value of money. Ale and John, is that how
you would treat capital gains?
So, I am undecided and open-minded about this last question and
look forward to further discussion.
Comradely,
Fred