Value (to John Ernst 3/4)

John R. Ernst ernst at pipeline.com
Sat Nov 11 02:17:30 MST 1995


Juan, 
 
 
Your post reproduced below is simply absurd. You have just  
defended in our own unique fashion the neo-Ricardian 
view of value.  You do not even know it.  You mount  
some high horse about ideal  and abstract and yammer 
away.   Now that I have vented, let's return to basics.    
 
1. Note that in example, I asked Jim about, I said nothing 
    about a drop in price.  Like Marx, I am unwilling to simply 
    assume that such dramatic drops take place. Thus,  
    I never assumed anything about a fall in price.  You did. 
    Why should it fall?  Because something called an LTV 
    tells us it will fall?   Nonsense.  We, adherents to Marx's 
    theory, have to show the how and why of the drop   
    in price takes place as the law of value takes control 
    of matters behind the backs of the producers. 
 
2. You mention the notion of "moral depreciation."  The concept 
    itself is rather underdeveloped in Marx.  When he does intro- 
    duce the notion in Chapter 15 of Book I of CAPITAL, he  
    notes that capitalists allow for it in determining how long a 
    machine will be of use to them.  I will not say that that has 
    nothing to do with technical change, but it is unclear what 
    you are talking about in the case in question as no price 
    change is specified.  Thus, if you are going to refer to  
    accountants, you should at least note that they would  
    be concerned about changes in prices.  Since we do 
    not have any idea about why there would be a price  
    change in this case, your references to accounting  
    practices seem, at best, premature and, at worst, 
    absurd. 
    
    
3.  I urge you to read more of CAPITAL.  We are not talking 
     about a commodity producing society allocating quantities of  
     abstract labor.  We are talking about capitalist society 
     which allocates abstract labor on the basis of prices and 
     profits. Again, you can simply assert that prices change 
     because the LTV tells you they will.  You have to show  
     the how's and why's of those price changes based upon 
     prices and profits. (Hint: try working with the accumulation 
     process itself and cut the "philosophical" jargon.  It does 
     not impress.)       
 
4.  If you do assume a price change in the example, note that 
     the capitalists  would take a rather severe hit. Why would 
     they do it?   Here try looking in Chapter 13 of Book I of  
     CAPITAL and note how Marx uses the ideas of individual 
     value and social value  ---  concepts that seem absent 
     from your "discourse."  
 
5.  Unlike Steve Keen, I am not trying to develop any ideas 
     in our conversations that are not in Marx's CAPITAL I  
     actually think he is right, although at times unclear. 
     Clearly his work was unfinished.  The jargon from the 
     first few chapters of CAPITAL won't work with me as  
     I am not questioning Marx; I am simply one of many trying 
     to work a bit or two that he never did.  To do so, I have 
     to read all three books of CAPITAL.  It's not hard, try it. 
 
6.  You should also be aware that as you argued for your 
     position, you stand with many other who argue against 
     Marx's falling rate of profit since if I were to agree with 
     your notion of value in the post below, the rate of profit 
     would not fall, but rise with technical change.  Perhaps, 
     this accounts for a portion of my anger with you,  
     for, unlike most neo-Ricardians,  who attack Marx, 
     you attack him in the guise of defending him.  I do  
     think you do so not out of dishonesty and will let others 
     come to their own conclusions about the value of your 
     defenses of value. 
 
I know I'll hear from you on this. So for now, so long. 
 
 
John 
    
On  Fri, 10 Nov 1995 Juan Inigo <jinigo at inscri.org.ar> said: 
 
 
>"Simultaneous or historical determination" 
> 
>John Ernst wrote: 
> 
>>is the value of constant capital 
>>determined simultaneously or historically? That 
>>is, are input values equal to output unit 
>>values? 
> 
>When Jim Miller replied John's question by starting from Marx's
development 
>of "moral depreciation", thus showing the "simultaneity" (just to keep 
>John's definition) of the determination, John replied in the following
way, 
>accordingly with what he defines as his "ideal method": 
> 
>>John says: 
>>Boy, you should teach this stuff.  I think you 
>>just dodged another question.  Here, it's a 
>>good dodge though as you seem to have answered 
>>it.  Try the problem that follows. 
>> 
>>If I buy a machine produced in, say, Period I for $500 
>>and that machine "embodies" 50 hours of abstract 
>>labor, then I am ready to begin production in Period II 
>>with my fine new machine.   Now, if, as I produce, the 
>>producers of my machine are able to produce it in less 
>>time, say 25 hours, do we then say that I am out $250? 
>>Where's the loss in usual method of assigning 
>>values to constant capital?   Is there a loss?  If my 
>>workers only created $50 in surplus value, I would be 
>>short $250 as I gain $50. 
>> 
>>It would seem that assigning values in usual fashion would 
>>force us to take up our erasers in earnest as replacement 
>>costs fall.  Note that I have tried to follow the ideal method, 
>>heaven only knows what happens when we look at National 
>>Income Stats. 
> 
>I will start from the most simple specific form of the determination in 
>question: 
> 
>By acting, living labor transforms the use-value of the means of
production 
>it consumes into that newly produced use-value. The labor materialized in 
>these means of production (therefore, dead labor by now) has once been 
>confirmed as being socially necessary through the realization of their 
>value at the time they were purchased. Still, after they are productively 
>consumed by living labor, society has yet to confirm that it is determined

>to allocate the labor originally performed to produce them into the new 
>concrete material form they have acquired. Therefore, the abstract labor 
>originally materialized in them reappears in the value of the use-values 
>produced by using them, as it is confirmed again as being socially 
>necessary. 
> 
>As soon as an increase in productivity takes place in the production of 
>means of production, commodity-producing society has to "decide," through 
>its autonomous system of general regulation, if it has to allocate or not 
>living labor to replace the means of production whose use-value has not 
>been completely consumed yet, but in which a larger amount of socially 
>necessary abstract labor than that required now, has been materialized 
>once. Commodity-production solves this question in the only way it can, in

>an indirect way, by confirming as being socially necessary only the part
of 
>the original labor that corresponds to the amount of living-labor that 
>society would have to consume now to replace the means of production in 
>question. 
> 
>So, in effect, when this real determination develops as a specific form of

>capitalist production, the increase in productivity that lowers the value 
>of the new means of production results in the corresponding fall in the 
>value of the constant capital already in action and, therefore, in the 
>corresponding fall in the value of the constant part of this capital that 
>is transferred to the product. And since capital accumulation constantly 
>pushes towards the increase in productivity, that simple determination 
>takes the concrete form of the "moral depreciation" of constant capital. 
> 
>Maybe Jim should teach about "moral depreciation," but, John, boy, has 
>quite a lot to learn about it. And since he claims so much about taking 
>into consideration the concrete forms, he could start by learning the ABC 
>of the accounting of individual capital. This accounting reflects, from
the 
>operative point of view that concerns the individual agents of capital 
>accumulation, the concrete forms taken by the valorization process of the 
>capital that they personify. One of the basic principles of this
accounting 
>(and principles are needed here to place the concrete real forms of
capital 
>valorization as immediately given) states: "Cost or market, that which is 
>the lowest." Which means that the individual capital must immediately 
>"erase" any part of the original purchase or production cost of a means of

>production as soon as its replacement price falls bellow it in the market.

> 
>And this criterion is consequently reflected in national accounting, since

>the change from the basic circuit of individual capital, M ... M', to the 
>basic circuit that corresponds to the turnover of total social capital, C'

>... C', is completely alien to it. The assertion that only heaven knows
how 
>the real movements in the value of capital is reflected (however 
>imperfectly in national accounts) seems, let's say, rather religious, 
>specially coming from someone that enjoys associating the scientific 
>necessity of following the development of the concrete forms starting from

>their abstract forms, with a "religious" attitude. 
> 
>But, maybe, this is only "the usual fashion" in which the value of
constant 
>capital is "assigned," let alone determined, in reality! Maybe John's 
>"ideal method" will turn reality upside-down and free capitalists from 
>their loses caused by moral depreciation and my colleague accountants from

>their erasers. And, according to the way in which John presented his
"ideal 
>method" here, it does has the power to turn reality upside down, indeed: 
>all its secret comes down to not producing a single substantiated
argument, 
>and covering this emptiness under the ironical assertion that his opponent

>has dodged the question, and, yes, a "concrete example" that is boldly 
>presented as an abstraction. 
> 
>But no, the "ideality" of John's "ideal method" has no effect upon the
real 
>determinations we have considered here; it does not go beyond being that, 
>an ideal construction emptied of any real content; in other words, an 
>abstraction. 
> 
>Juan Inigo 
>jinigo at inscri.org.ar 
> 
> 
> 
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