Steve K raises some new issues in [5240]: > On this issue, I'm extrapolating from my > interpretation of Marx: there is > no textual support for this proposition. But there > is the quite explicit > consideration of the related issue of how the > exchange-value of an > undeveloped mine is set (discussed further > below). That discussion brings > in the role which expectations of future profit > play in setting the price a > capitalist is willing to pay to secure ownership, > which is a *subjective* > estimation of a future quantity. On the issue of the undeveloped mine, we have to look at *rent*. And, it is true, that there can be, more concretely, a *speculative element* in the determination of the exchange-value (NB: not value) of this mine. The speculation would take the form of assuming a rate of return on investment (RRI) that is comparable to the past earnings of similar-grade mines. This calculation, which you call subjective, is usually based on the assumption that past trends in this market will continue into the future. Yet, as is the case with all speculative activities, although the anticipated RRI is greater, the level of risk and uncertainty is also greater. How this added risk is accessed -- both by the seller and buyer of the mine -- is important then for the determination of its exchange value. Of course, objective facts can intervene -- like an economic crisis -- and render the risk calculations of the old or new owner of the mine meaningless. In any event, this issue is far more concrete than the one we have been discussing. It deals, most fundamentally, with the *division of surplus value among capitalists and landowners* rather than the creation of surplus value. > This same issue > arises in the case of > machinery, which means that the price capitalists > are willing to pay for > machines will rise above value when expectations > of future profit are > high, > and fall below it when expectations are dashed. It is true that there is a level of risk when purchasing constant fixed capital and that capitalists can not know with certainty the "lifetime" and total value that will be transferred by that machinery. This is due, most fundamentally, to moral depreciation. Yet, other issues might affect the value transfer as well. I discussed a couple (capacity utilization and waste of constant circulating capital) in recent threads (see [5186] and [5248]). Another issue, where there emerges possible loss of value, is as follows: even after capitalists are assumed to buy the means of production at value, the transfer of that value requires that these elements of production must be set in motion within that process. If they are simply in crates on the loading dock they are not also transferring value. Any delay in "start-up time" can, assuming a fixed working "life" for the constant fixed capital, thus result in a premature loss of value. Also, especially for means of production that represent "first generation" innovations, there is a "learning by doing" curve that is experienced. Thus, in the beginning if the learning process is protracted and the new means of production are not integrated into the production process efficiently, then some proportion of value may be lost. On the other hand, these technological advances make *possible* (NB: possible not a necessary consequence) a "technological rent" by the innovating firm (s). In value terms, one should see this technological rent as representing a redistribution of surplus value among capitalists -- in this sense there is a similar mechanism to what was discussed above re the undeveloped mine but in this case the means of production represent value rather than exchange-value and potential use-value alone. As for the question of expected profitability, I think that Marx was well aware of this problem. Indeed, his rejection of Say's Law requires a recognition of the issue. More fundamentally, a recognition of the temporal sequence in a circuit of capitalist production and circulation requires a recognition of this problem. I.e. prior to production, i.e. ex ante, capitalists go into the market with M and purchase c and v. Yet, they do not and *can not* know with certainty what the result of their decision will be in terms of profitability ex post. This is because they do not and can not know with certainty whether the output will be sold and, if so, what the prices will be. Thus, even if there is "pre-commensurization" of value prior to sale, value itself is only fully constituted following sale. Obviously they must come to *expect* a RRI for them to purchase the c and v. But, their expectations may be proven ex post to either be the case ... or not. In the latter case, the value that was *presumed* to exist can be "lost" if no buyer for the output is found. In terms of how this plays out in the business cycle, that is an interesting issue. (I seem to have accidentally edited this section of your post where you were referring to the Minsky financial instability thesis). Marx, as we know, made the simplifying assumption at various stages of his analysis that commodities in general, on average, exchange at their values. Yet, I think it could be said that this is the case only if, among other things, we abstract from the different phases of the cycle. Thus, it is entirely possible that some commodities could systematically exchange at market prices above their value during the expansion when aggregate demand and rates of return on investment are increasing and then exchange at market prices below value during the contractionary phase of the cycle. This possibility, from my perspective, in no way contradicts Marx's perspective on value. Indeed, one might see it as an extension and expression of that perspective. > This is something which is fundamental to modern > Post Keynesian > thought--the role of capitalist expectations in > setting asset (and > machinery) prices, the role of uncertainty in > investment decisions, etc. > But they have no theory of value from which to > derive these > observations--they simply take it as a given. Yet > a theory of value which > explains it resides in Marx. I agree with this even though we differ in terms of our perspectives on Marx's theory of value. In solidarity, Jerry
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