1. In an economy with long-lived fixed capital, labor-saving technical
change will lower the value of existing capital by reducing the prices of
commodities, and also possibly by reducing the cost of replacement capital.
John comments:
I'm unclear on how technical change can lower the value of the existing
capital if the cost of replacement capital is not reduced.
Duncan continued:
Marx clearly recognizes this, and I don't think there would be much
disagreement about this point. This "devaluation" of existing capital
reduces the wealth of capitalists, and, if they have financed their
investments by borrowing, can threaten them with insolvency, thus creating
disruptions in the circuits of credit and the financing of production.
John comments: I'm not sure what you mean by "the wealth of capitalists."
For now, I'll assume you mean the value of the capital they possess.
I don't think you have to move to borrowing to see how devaluation can
be a problem for capitalists. If the amount of devaluation is to be
deducted from profits, devaluation may mean negative profits.
Duncan wrote:
2. Labor-saving technical change, given a constant real wage, raises the
profit rate on new investments. I don't think there's actually any
disagreement on this point, either. In the TSS literature this point is
acknowledged through the analysis of the "commodity" profit rate rate.
John comments: Obviously, TSS claims that the material or commodity rate
of profit is not the same as Marx's rate of profit.
Duncan wrote:
3. In real history, real wages aren't constant, but rise at about the same
rate as labor productivity, giving rise to a roughly constant value of
labor-power. Marx analyzes the falling rate of profit on the basis of the
hypothesis of a constant value of labor-power, not a constant real wage.
When the value of labor power is constant, technical change that is
labor-saving and capital-using will lower the rate of profit on new
investment.
John comments: But, once again, we are stuck with "capital-using"
new investments. TSS folk do not insist on this. To be convincing
on this matter, we need to look at the prices of machines that replace other
machines as well as those that replace living labor. We also need
to take Marx a bit more seriously when he tell us that the replacement of
machines with new machines is capital-saving.
Duncan wrote:
4. Maybe our job as Marxist theorists is to devise a vocabulary and a set
of simple accounting conventions (simple enough to teach students, for
example) that make these effects and their analysis transparent. I think it
would help if the vocabulary and the accounting conventions explicitly
separated these different effects, at least to begin with, and then showed
how they combined to affect the income statements and the balance sheets of
capitalist firms.
John comments: It seems to me that the simplest way to treat
depreciation is to look at the value or price prior to production
and then to observe what it becomes after production. That difference
is the total depreciation aka economic depreciation. I'd argue that
we should use the RRI to arrive at the depreciation figure if there
is not an extensive market for the used fixed capital. Granted this
makes it difficult to get to accounting conventions, income statements
and balance sheets. However, it seems to me that the effort to "accelerate
depreciation" is, in part, an attempt to estimate economic depreciation.
John