I'd like to jump into your conversation with Andrew as
I think it relates to our discussion. I do understand
how he can find implicit support in Marx for his position.
You wrote:
This is a reply to Andrew's post of February 14. Thanks to
Andrew for his reply to my previous post.
Andrew argued that Marx used more than one rate of profit in
his theory:
I think Marx uses "profit rate" in more than one sense.
With respect to the issue, there are at least two rates of
profit to consider, the actual (realized, ex post) profit rate
of the past and the potential (ex ante) profit rate of the
future.
However, there is never any explicit statement in all of Marx's
writing that he is considering more than one concept of the rate
of profit.
I respond:
I cannot say there is an explicit statement on Marx concerning
this way of looking at the rate of profit. But I'd sure like
to see more of his work after the publication of Vol. I, when
he became more concerned with the turnover of fixed capital.
But what in the world is Andrew even thinking about? First,
we have to separate the value advanced as money from that
which it purchases. Here we focus on the purchase of
machines and abstract from all other purchases.
In my last post to you, I primarily dealt with that advanced as machines.
To understand where Andrew is coming from you have to start there or
at least I did. In my post to you, I placed the role of historical
costs "on the back burner" and only considered it briefly at the end
of the post.
In that post, I attempted to show how moral depreciation and the devaluation
occurred in time. That is, as we moved from C(1), the constant capital
advanced in Period 1, was equal to C(1)-x(1) where x(1) is the amount of
actual and moral depreciation that occurs in period 1. The constant
capital or costs of the means of production in Period 2 is C(2).
Let's deal with some numbers. Say $1000, C(1) is the amount advanced to
purchase a machine. Let x(1) be $300, the physical and moral
depreciation of Period 1. The worth of the machine at the end of
Period 1 and the beginning of Period 2 is $700. Now, if at the
end of Period 1 the capitalist collects $500 from sale of the product
produced by means of the machine and retains the machine, he has one
machine worth $700 and $500 in cash. How much of this cash is profit?
He invested $1000 and ends up with $1200; clearly, the realized
profit is $200, again ignoring the circulating capital costs.
Since at the end of Period 1, the capitalist has $200 in profit,
$300 in depreciation funds and a machine worth $700, we can begin to
deal with the next period.
At the beginning of the next period, he "advances" $700 in
machinery. If he also retains the $300 as a replacement
hoard, then he has $1000 tied up in the investment. The form of
his advance has changed but not the amount. This is the way
I understand Andrew's MNE piece.
He also assumed that all depreciation was moral. If, on
the other hand, we were to assume that the depreciation fund
of $300 is not retained as a hoard but used for other investments,
then the advance in Period 2 is $700. His example in MNE and mine
here are simply examples which suggest the need for further work.
I do not find Andrew's assumption that strange even if he generally
does not make it. Indeed, such an assumption is not foreign to Marx.
Recall that, shortly after the publication of Vol. I, he asked
Engels how he, Engels, treated depreciation as Marx himself
wondered about the use of depreciation funds as source of money
for new investments. Again, I do see the concept of depreciation
funds in the accumulation as one in need of further development.
But I do not think we have reached the point where we can consider
whether depreciation funds are used for further investments or are
simply hoarded. More important, is the understanding that moral
depreciation represents a loss of value to the capitalist. In
our example, should we assume that all depreciation is moral,
that loss would be $300. The value of the machine in the next
period is then worth $300 less than its initial value.
I maintain that this relation between depreciation and the devaluation of
constant capital is in Marx and is the way one can make sense of the
notion of "moral depreciation." Simultaneous valuation of inputs and
outputs does away with the entire process of devaluation by collapsing
it into a moment in time. The accumulation process itself becomes
a series of discrete snapshots of imagined reality that never exists.
To understand Andrew's further thinking concerning the advances in
terms of money or in terms of labor time, this view of simultaneous
valuation is a given.
John