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From: owner-ope-l@galaxy.csuchico.edu on behalf of jurriaan bendien
Sent: Sunday, February 22, 1998 10:15 AM
To: ope-l@galaxy.csuchico.edu
Subject: Re: Marx and historical costs
Jurriaan asks:
"So what is the debate really about ? The correct measurement of profitability
in labour value terms ?"
It is about Marx's law of the tendential fall in the profit rate. According
to the law as Marx himself stated it, the profit rate has a tendency to fall
due to rising productivity (combined with a rise in the value measure of the
technical composition, i.e. the organic composition).
If, in the denominator of the profit rate to which the law refers, capital is
valued at the end-of-period replacement cost of the means of production, then
Marx was internally inconsistent. (Plus, to figure value transfer from
constant capital to the product in this way makes him inconsistent in *many*
other respects.)
If, however
(a) in the denominator, capital is taken to be the actual sum of value
advanced -- as the internal rate of return formula also does
OR
(b) in the denominator, capital is revalued so as to equal the
beginning-of-period cost of the means of production AND, IN ADDITION, the
difference between that sum and the sum at which the capital was previously
valued (the capital gain or loss [moral depreciation]) is included as part of
realized profits of the prior period,
then, in both of these cases, the law is internally consistent. That is, the
profit rate, in labor-time terms, or in money terms that are adjusted for
changes in the monetary expression of value, falls under the condition that
Marx said that it falls and for the reasons he said that it falls.
Andrew Kliman