More Economics & Miller

John R. Ernst ernst at
Thu Nov 9 23:03:26 MST 1995


I liked your last post.  But I still think you
do not appreciate all the difficulty many of
us who consider ourselves "orthodox" Marxists
have in defending Marx against the neo-
Ricardian criticisms.  Perhaps, the most
fundamental criticism is the Okishio Theorem.
Okishio (and he had forerunners) proved that
if you use the usual definitions of value, then
the no rational capitalist will choose a technique
that will lead to an overall fall in the rate of profit
if the real wage is constant.  This criticism is far
more powerful than Sweezy's objections to the

You still have not answered what I consider a
basic question.   In CAPITAL, does the technical
compostion of capital grow faster, slower, or
at the same rate as productivity?   For me,
following Marx, the answer is slower.  For many
Marxists,  it is the opposite.

Note as well that the FRP may not be useful as a
theory of crisis.  In the paper I wrote that Steve
referred to in one of his posts, using a non-Ricardian
conception of value, I showed that capitalists may
actually see an increasing rate of profit as the rate
of profit falls.  At this point, I think the task is to follow
Marx's thought that "the material basis" for a theory of
crisis is related to the turnover of fixed capital.  Michael
Perelman points out that soon after the publication of
the CAPITAL, Marx was all but obsessed with this idea.

Why bother with this "turnover" stull?  I'm glad you
asked. (smile)

Given that if we look at the rate of profit, using a
set of constant prices, it rises and that if we look at the
rate of profit using "changing prices", it falls; our mission
should be to show how the crisis which brings on the
competitive struggle to change prices is brought into
being.  We can't just say competition lowers prices without
showing how the competitive struggle causes capitalists
to behave as a "band of hostile brothers."  We can't say
that the falling rate of profit makes for greater competiion as
we need competition to show a falling rate of profit.  On to
turnover time and fixed capital, I say.  Meanwhile, I'll keep
asking you about the technical compostion of capital and


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