Keen/Ernst Discussion (Topic I)

jones/bhandari djones at
Thu Oct 19 03:09:42 MDT 1995

A comment on one of John's points:  

>1. As I stated in a prior post, the GRUNDRISSE example 
>   teaches us much about the way in which Marx thought 
>   of technical change.  That is, the capital inputs  
>   (here, the fixed capital inputs) increase more slowly 
>   than outputs.  For me, this is significant as those 
>   who simultaneously value inputs and outputs would 
>   never see a falling rate of profit as possible under 
>   that condition save cases where the wage changes  
>   make the rate of profit fall.  

One tough problem this post is not about :  As Andrew Kliman has pointed
out, the critique of simultaneous valuation requires that value be
differentiated from exchange value. So the very foundations of value theory
are at stake in this debate.  Another tough problem I bracket: the
relationship between value and price.  Does a fall in the value rate of
profit mean a fall in price terms? 

However,  even if the unit value of the outputs were to fall below that of
the inputs, the value profit rate may still not fall.  Or at least the mass
of value may still increase.  

How could this be possible?

It depends on the *use-value* characteristics of the increased output.  For
if that increased output is in the use-value form of div I or div II goods,
it may enable the  absorption of more living labor into the system, thus
the production of  more surplus value and perhaps even  an increase in the
average rate of profit. 

And of course Rosdolsky quotes Grossmann on this exact point:    

"'More products which may be converted into capital, WHATEVER THEIR
EXCHANGE VALUE, are created with the same capital and the same labour. 
These products may serve to absorb additional labour, hence also additional
surplus labour and therefore create additional capital.' For 'the amount of
labour which a capital can command does not depend on its value but on the
mass of raw and auxialliary materials, machinery and elements of fixed
capital and necessities of life, all of which it comprises WHATEVER THEIR
VALUE MAY BE. As the mass of labour employed and that of surplus labour
increases, there is also a growth in the value of the reproduceed and in
the surplus value newly added.'" (Quoted in Rosdolsky, p. 88). 

This effect obtains even with the assumption of a constant rate of

A historical point.   According to Grossmann (and I have been long confused
about this particular point), the Malthusian fears of early captitalism
were the result of the incapacity of capital to sufficiently increase in
physical terms the means by which additional labor could be exploited. 
Overpopulation threatened to overrun a capitalism too developmentally
immature to exploit ever greater masses of labor-power. 

This of course raises the tremendously important problem of why Malthusian
fears of over- population would viciously reappear at a late stage when
there is now idle capital.  If the means are already and potentially
available to exploit ever more labor and if capital is nothing but the
production of surplus value, why then the juxtaposition at a late stage of
accumulation of idle capital with idle populations? 



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