Julio Huato wrote:
However, with all due respect to Anwar and Marx, an increasing labor
productivity over time *need not* express itself in a falling L/C.
Why? Because, C is not machines, buildings, inventories, etc. (use
values), but the *value* of machines, buildings, inventories, etc.
And higher productivity means ability to produce more machines,
buildings, etc. in same labor time.
I'm not saying that Anwar was not aware of this. He was, but I think
that he slipped a little. Marx himself was, of course, well aware of
this. In ch. 25 (vol. 1, Capital), he distinguished between the
"technical" or *physical* composition of capital (the ratio of an
physical index of MP to a physical index of LP) and the *value*
composition of capital (the ratio of a value index of MP to a value
index of LP).
With respect to what Marx was aware of, here's an excerpt from a chapter
'the general and the specific in Marx's theory of crisis' from my long
forthcoming Brill book, 'Following Marx'. This section is itself updated
from the original article in 1982 in Studies in Political Economy:
-----
In short, the whole familiar FROP picture may be seen to rest on the
assumption of an uneven growth in productivity, on a lag in the growth
of productivity of labour in the sector producing means of production
(Department I). But, how can this special assumption be an explanation
for a /necessary/ tendency for the rate of profit to decline? If we
think of capital-as-a-whole, surely its intrinsic laws should result
from a general rather than a specific assumption about productivity.
Capital's tendency to develop productive forces and to reduce the
quantity of labour necessary to produce particular use-values obviously
applies to the production of means of production as well as to articles
of consumption. For this reason, 'economies in constant capital' as such
are not a /counter/-tendency to capital's general tendency.
Nevertheless, Marx explicitly treated the reduction in the value of
elements of constant capital (as the result of productivity growth) as
merely a 'counter-acting' tendency; only in 'isolated cases' did he
suggest that the value of constant capital might remain the same (or
fall) as its mass increased.[1] <#_ftn1> But why /only/ in 'isolated cases'?
It is important to understand that the problem in the FROP-scenario is
not at all that Marx failed to recognise the importance of an assumption
about productivity in the production of means of production. Indeed, he
was far more aware of this critical point than many subsequent
disciples. Writing in the /Grundrisse/ (where the basic elements of his
FROP argument were first developed), Marx argued that the composition of
capital would remain the same if 'productivity increases at the same
time not only in the given branch of production, but also in its
conditions.' On the other hand, a rise in the constant component of
capital emerges 'if the objective conditions of production. . . remain
unchanged in value'.[2] <#_ftn2> In short, Marx's very argument for the
growth in the composition of capital explicitly rested upon the uneven
development of productivity:
If the force of production increased simultaneously in the production of
the different conditions of production, raw material, means of
production and means of subsistence, and in the [ of production]
determined [ them], then their growth would bring about no change in the
relation between the different component parts of the capital.[3] <#_ftn3>
He returned to this same question several years later in his
/Economic Manuscripts of 1861-63./ There, he did extended calculations
for the rate of profit, demonstrating the effect of increases in
productivity in the sector producing means of production. Productivity
increases in cotton weaving involve increases in raw materials per
worker; assuming productivity in the production of yarn constant, there
is an increase in the value composition of capital (C/V), and if the
rate of surplus value remains unchanged, the effect is that the rate of
profit falls: 'In I b), where the productivity of weaving increases
threefold and wages remain the same, but the yarn, etc., retains its old
price, we have a fall in the rate of profit. In this case the rate of
profit falls from 50% to 25%'.[4] <#_ftn4> Further, Marx indicated that,
where the rate of surplus value rose as the result of productivity
increases, the rate of profit also fell (but in this case only to 36%):
'We have equally a fall in the /rate of profit/ under III, where wages
fall in the same proportion as the productivity of labour [rises]. But
raw materials, etc., remain the same here as before the threefold
increase in the productivity of labour, as under I a).'
In contrast, in the two cases where Marx considered equal
productivity increases in the production of the input (yarn) to those
occurring in weaving, there was /no/ fall in the profit rate. Where the
rate of surplus value was constant, the rate of profit remained the
same, whereas in the case where necessary labour falls 'in the same
proportion as the productivity of labour grows', the rate of profit
rises to 80%.[5] <#_ftn5> In short, the /only/ case that corresponds to
the FROP story introduced in Chapter 13 of Volume III of /Capital/ is
where productivity in the sector producing material inputs is assumed
constant. Marx concluded in his 1861-63 Manuscript that it would appear
'that the rate of profit cannot /fall/ unless' (1) the value of
labour-power rises ('Ricardo's assertion') or (2) 'there is a rise in
the /value of constant capital in relation to variable/. And the latter
would appear to be restricted to cases where the productive power of
labour does not rise /equally/ and /simultaneously/ in all the branches
of production which contribute to produce the commodity'.[6] <#_ftn6>
Again, the same point about uniform productivity changes is made in the
very exposition of FROP in Chapter 13 of /Capital/ III. Marx clearly
indicated there that the rate of profit would tend to fall despite a
higher rate of surplus value 'outside of a few cases (for instance, /if
the productiveness of labour uniformly cheapens all elements of the
constant, and the variable, capital/)'.[7] <#_ftn7> Of course, the
probability of achieving equal and simultaneous increases in
productivity for all sectors approaches zero, and among the many
contingencies we can imagine (which Marx did not explore above) is a
threefold increase in productivity in the sector producing means of
production but none in the using sectors. But Marx's specification of
this condition in which the rate of profit would not fall was
deliberate: not only did he repeatedly acknowledge the importance for
FROP of lagging productivity in Department I but he also offered an
unequivocal explanation as to why a uniform increase in productivity
would be limited to 'isolated cases'.
------------------------------------------------------------------------
[1] <#_ftnref1> Marx, 1959: 231.
[2] <#_ftnref2> Marx, 1973: 773, 771.
[3] <#_ftnref3> Marx, 1973: 770.
[4] <#_ftnref4> Marx, 1994:29.
[5] <#_ftnref5> Marx, 1994: 26-29.
[6] <#_ftnref6> Marx, 1994: 33-4.
[7] <#_ftnref7> Marx, 1959: 222. Emphasis added.
--
Michael A. Lebowitz
Professor Emeritus
Economics Department
Simon Fraser University
Burnaby, B.C., Canada V5A 1S6
Director, Programme in 'Transformative Practice and Human Development'
Centro Internacional Miranda, P.H.
Residencias Anauco Suites, Parque Central, final Av. Bolivar
Caracas, Venezuela
fax: 0212 5768274/0212 5777231
http//:centrointernacionalmiranda.gob.ve
[EMAIL PROTECTED]
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