Julio, further replies to your latest post below.
On Mon, Jan 14, 2013 at 12:45 PM, Julio Huato <[email protected]> wrote:
> Fred,
>
> > 1. *quantity and quality*
>
> I tried my best to explain my view on this, but I obviously didn't get
> my point across.
>
> > Thus, according to marginal productivity theory, the quantity of profit
> is
> > independent of wages; but according to Marx’s theory, the quantity of
> > profit varies inversely with wages. Thus an increase of wages has no
> > effect on the quantity of profit according to marginal productivity
> theory,
> > but causes a reduction of profit according to Marx’s theory.
>
> But the marginal productivity theory cannot (repeat, *cannot*) claim
> such a thing, i.e. that the quantity of profit is independent of
> wages. How could it? Precisely, the cost function is the dual of the
> production function (linearly transformed, just "scaled" by the input
> price vector). The conditions of the class struggle are embedded in
> the cost function via the production function and/or input prices
> (e.g. the wage rate).
>
Yes, you are right that, according to marginal productivity theory, an
increase of wages will have a negative effect on the MPK, but I argue in a
completely different way from Marx’s theory and due to different
determinants.
According to marginal productivity theory:
↑W → ↓Ld → ↑ K / L → ↓MPK
I presume this is what you had in mind, right?
How much ↓MPK depends on the physical characteristics of the production
function.
In Marx’s theory, on the other hand, the amount of profit depends on the
difference between the new-value produced by workers and the wages paid. New
value in turn depends on the product of the MELT and the quantity of
SNLT. That
is:
Profit = (MELT)(SNLT) – wages
Thus an increase of wages results in a $ for $ reduction of profit.
So I spoke too strongly when I said that MPK is independent of wages. The
MPK does vary inversely on wages, but is a completely different way from
the relation between profit and wages in Marx’s theory.
These are two different theories of the *quantity* of profit. In order to
show that they are the same theory, you would have to show that the
physical characteristics of the production which determine the MPK are
somehow related to the Marxian determinants of profit: SNLT, the MELT, and
wages. I don’t think this can be done.
> >
> > Michael P. mentioned Georgesen-Rogen, who is one of the few who has
> > discussed raw materials in marginal productivity. In the article by GR
> > that I have read (“Coefficients of Production and the Marginal
> Productivity
> > Theory”, *Review of Economic Studies*, 1935-36), he calls raw materials
> > “limitational inputs” – by which he means that an increase of these
> inputs
> > is a *necessary condition* for the increase of output (i.e. fixed ratios
> > between these inputs and output). And he concludes that when we take
> these
> > limitational inputs into account “we can no longer make use of the
> concept
> > of physical marginal product.” (p. 46)
>
> All one needs to get around GR's objection is to redefine a few
> concepts.
Which concepts would have to be redefined, and how?
> Julio, please explain in further detail how an increase in the working day
> shifts the production function and how it affects the quantity of profit
> produced.
Okay. Arbitrary example: Let "labor" be a variable input in some
apple production function, measured in worker-day units, with working
days defined as 8 hours/day. If L = 1 worker-day, Q = 16 apples.
Technology, etc. are all fixed. Now, change the working day to 10
hours/day. With L = 1 worker-day, say, Q = 20 apples (or 18 with
decreasing returns to labor hours). Etc. The entire production
function shifts upwards. Similarly, if the intensity of labor
increases.
FM:
How does Q increase if both L and K remain the same? Magic? If L is
measured in terms of worker-days, then an increase in the hours in a
working day has no effect on the number of working days. K/L remains the
same and thus profit/wage remains the same. Which is contrary to Marx’s
theory, according to which an increase of the working day increases SNLT
and therefore increases the new-value produced and profit.
On the other hand, if L were measured in hours in marginal productivity
theory, then capital inputs should also be measured in hours, so that an
increase in the working day would increase K and L by the same proportion
and thus would have no effect on K/L and profit/wages.
Julio, I obviously disagree strongly with your interpretation and
acceptance of marginal productivity theory, but I appreciate very much this
discussion, which had helped me see some of the issues more clearly.
Comradely,
Fred
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