> For Marx, both the direct and
>indirect labor in a commodity decline as machinery is applied.
It is possible for the indirect labor per commodity to rise as long as it
is enables the displacement of even more direct labor--as in Duncan's ex of
seed corn intensive technological change. The "capital output" ratio can
rise even as unit values decline (both can decline per unit as well; Marx
seems to have thought only that direct labor would fall at a steeper rate
than indirect labor--on that his dynamics hangs). Marx seems to have
thought capital intensive tech change to be the probable course for the
reduction of unit values (see quote below), though as we know the neo
Ricardians reject that such technical change in itself can lower the
average rate of profit insofar as unit costs are reduced and profit margins
increased thereby. The neo Ricardian challenge continues to strike at the
heart of Marx's argument, the crux of which is contained in the following
important and underdiscussed passage:
"The individual capitalist (or alternatively the sum total of capitalists
in particular sphere of production), whose vision is a restricted one, is
right in believing that his profit does not derive from just from the labor
employed by him or employed in his own branch. This is quite correct as far
as his average profit goes. How much this proift is mediated by the overall
exploitation of labour by capital as a whole, i.e., by all his fellow
capitalists, this interconnection is a complete mystery to him, and the
more so in that even the bourgeois theorists, the political economists,
have not yet revealed it. Saving of labour--not only the labour necessary
to produce a specific product, but also the number of workers employed--and
a greater use of dead labour (constant capital), appears a quite correct
economic operation, and seems from the very beginning not to affect the
general rate of profit and the average profit in any manner. How therefore
can living labour be the exclusive source of profit, since a reduction in
the quantity of labour needed for production not only seems not to affect
profit, but rather to be immediate source of increasing profit, in certain
circumstances at least for the individual capitalist?" Capital 3, p. 270.
Vintage.
The only one I know who has tried to reproduce the logic of this passage
with a numerical model is Carchedi in his critique of Okishio. At the very
least, one cannot say that Marx failed to base his falling profit theory on
microfoundations.
Yours, Rakesh
ps I do think that trying to save Marx from Okishio by questioning the
constancy of the real wage does makes good sense.
First, in his Ricardo critique, Marx was only trying to show the
possibility of falling profitability with a rising rate of exploitation.
Second, the introduction of more advanced techniques usually requires a
more educated workforce which means the real wage must increase if families
are to be able to school their children for longer periods (see Sydney
Coontz's first book), so it seems to me quite arbitrary to conduct these
arguments on the supposition of a constant real wage, though no one has to
the best of my knowledge underlined the absurdity of supposing a constant
real wage can be maintained as the workforce must grow more sophisticated
to handle increasingly sophisticated capital equipment the determination of
the effects of the assimilation of which is the point of the whole Okishio
exercise after all--though I know David and Duncan F have rejected the
real wage foundation for the Okishio Theorem.