James Miller jamiller at
Mon Nov 13 18:26:10 MST 1995

   John Ernst asked me a question about the increase
of the technical composition of capital. Is it faster
or slower than the change in productivity of labor?
   I think I said something to the effect that these
rates of change are hard to measure. Productivity,
of course, is easy to measure. Physical output per
worker hour. But the growth in TCC is harder to measure
since there are so many different types of contrivances
that are added on to the means of production.
   Juan Inigo gave a good example of the difficulties
involved in making a quantitative measurement of the
TCC by pointing to the changes made in shoe-making.
Different types of hammers, gluing brushes or gluing
machines, different ways of operating the equipment,
etc. When you go over from hand tools to machines, you
not only have to discuss the change in tooling, but
also the factory infrastructure: steam, pneumatic
or electric, and all the paraphernalia that goes with
these different power systems.
   You can often get an idea of changes in TCC by such
measures as spindles per operator (in spinning) or
hoppers per digger (in mining). But these are not
complete or absolute measures of the TCC, since they
don't include other elements of the factory or mine
productive apparatus that have also been added on.
So my question is: how do you arrive at a quantitative
measure of the rate of change of TCC when so many
disparate elements are involved? If you say you could
measure it simply as "tons of means of production
per worker-hour," I would say, o.k., you could do that,
but how useful would such a measurement be?
   I would appreciate it if John would give more
information about the significance of this question.
I feel like a student being suddenly given a pop
quiz. The problem is that the homework has not been
assigned, and no one knows what chapter we're studying
this week.
   John says that Keen came up with a quote from the
_Grundrisse_ where Marx said that the TCC increases
at a slower rate than outputs. I have to apologize.
I'm busy and I haven't had time to read every post.
I missed that. If someone could point that out to me
it would be greatly appreciated.
   I like this discussion. I'd like to hear some
responses from John from my last two posts. I realize
that we're all pretty busy, and I'm not complaining.
I'll be patient.


   I'd like to add something here to back up what I
said before about the relationship between the increasing
organic composition of capital and the effect of the
cheapening of the elements of constant capital. In the
long run, the profit rate will fall because the declining
valuation of the elements of constant capital cannot
keep up with the falling profit rate. Thus, as Marx
argued, the cheapening of the elements of constant
capital can retard, but cannot permanently block the
tendency of the rate of profit to fall.
   Marx discusses this topic in _Theories of Surplus
Value_, Vol. III, Chap. 23, Sec. 2. He goes through
a number of questions relating to the mechanization
of production, considers the effects of the relative
devaluation of the elements of constant capital, and
concludes, "it is therefore self-evident or a
tautological proposition that the increasing productivity
of labor caused by machinery corresponds to increased
value of the machinery relative to the amount of labor
employed (consequently to the value of labor, the
variable capital)." (p. 366)
   He then proceeds to discuss the increased rate of
the processing of raw materials, which also signifies
an increase in constant capital relative to variable
capital, likewise discussing the cheapening effect,
and then concludes, "the cheapening of raw materials,
and of auxiliary materials, etc., checks but does not
cancel the growth in the value of this part of capital.
It checks it to the degree that it brings about a fall
in profit." (p. 369)
   These are the issues on which Sweezy and many other
recent Marxist economists have challenged Marx. They
remain unconvinced that the cheapening of constant
capital cannot permanently block the tendency of the
rate of profit to fall. I feel that Marx still has the
upper hand in this dispute. I haven't seen any really
effective arguments against him. But perhaps I've missed


   John says, "Okishio ...proved that if you use the
usual definitions of value, then 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 FRP."
   I started to read Okishio a few years ago but quickly
lost interest. His writing seemed to me to be remarkably
convoluted. Perhaps it was the translation. In any case,
the way the argument is stated here seems considerably
less than powerful.
   In the first place, capitalists choose techniques that
will lower their production costs and raise their rate
(or margin) of profit at a given market price. Whether
this process may or may not contribute to a long-term
downward evolution of the rate of profit is hardly of
any concern to them. Innovate or die. What difference
does it make to a dead capitalist whether the profit
rate is high or low? He's out of the profit game anyway.
   How rational are capitalists? Marx pointed to the
fact that they were trapped by the nature of their
capital. They are personifications of capital. They
don't have a free hand to choose how to produce. They
must compete with other capitalists. (If competition is
totally eliminated, then you'll have a different sort
of system. We can discuss that, if you like.)
   Furthermore, what capitalist is likely to know that
technological innovation causes a long-term decline in
the profit rate? Do they read Marx? How are they supposed
to know this? And even if they did, what difference
would it make? I just don't see where Okishio has made
any substantive contribution at all.


   Re: the discussion between Inigo and Ernst over the
last few days.
   Juan argued that the value transferred from the means
of production to the product by the labor process is
calculated in accordance with the current replacement
value of the machinery, equipment, etc. that is being
used. Juan stated, "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 below it in the
   I would add that, since this process takes place by
competition in the market, the technological devaluation
of the means of production is not sudden or immediate.
The fall in value of current productive equipment (the
"moral depreciation") is not immediate when the first
competitors within a sphere of production introduce
cheaper machinery. I would argue that the value of the
means of production currently in use is constantly being
lowered by the introduction of cheaper tools and machines,
but that, at any given moment, the value of a particular
type of productive apparatus is best understood as a
weighted average of the original values of all currently-
functioning examples of that particular type of apparatus,
minus the fraction of the apparatus already used up.
   The newly-introduced machine does lower the replacement
value of all current examples of this type of machine,
but at the early phase of introduction, only one or two
innovator-capitalists possess the equipment. They then
receive the superprofit of innovation. The fact that they
are receiving this superprofit is an indication that the
market is still appreciating the value of these means of
production in accordance with the old standard, and the
buyers of the products coming out of these machines
are still paying the relatively higher price, reflecting
the continued dominance of the older machines. Only as
more units of the new type of machine are introduced in
firm after firm does the new, lower replacement value
take effect, and the superprofit of innovation is
whittled down. Marx discussed these issues in Vol. III,
Chaper 10.
   Juan's discussion of the fall in prices attendant upon
a devaluation of the elements of the means of production
prompted a strange response from John: "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...)"
   I have begun to notice a flaw in John's approach on this
list. Sometimes, instead of countering with his own argument,
he keeps quiet about what he thinks, and offers advice to
his opponent about how to improve their own argument. This
gives the appearance of evasiveness. But it might well stem
from John's busy schedule, and his lack of time to devote to
these debates on the Marxism list.
   Following that was an exchange of posts between John and
Juan dealing with Marxian vs. Ricardian value definitions.
That went nowhere. The main problem we have now in these
discussions is an inadequate response from John as to
what his views are on the issues of the rate of growth of
the TCC in relation to productivity growth, and the question
of the impact of the devaluation of the means of production.
   I have given some of my views in this post. I would like
to hear more from John. (And if John is really busy, and I
don't doubt that he is, I would urge him to use his limited
time in such a way as to express his own views more fully,
even if briefly.) 

Jim Miller

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