I wrote:>>To be serious, it seems to me that how one measures the degree of "capital intensity" of production (the OCC) depends on one's theory and the purpose of one's research.
>>For example, I would measure the OCC in a deliberately "incorrect" way. I use K/Y, the ratio of the stock of fixed capital to total output. This would measure who was winning in the race between the tendency for capital intensity (K/L, where L = labor hired) to rise and the tendency for labor productivity (Y/L) to rise. The former tendency (that Marx stressed) is only relevant to determining profit rates when the latter tendency (which is often an effect of the former) is weaker.<<
Shane Mage replies:>This leaves the problem of units of measure. If K is a quantity
of Marxian labor-time-units, then K/L is just Marx's Organic
Composition of Capital when L is *productive* labor performed;
if L is total labor (productive+unproductive) then "labor
productivity" becomes meaningless; if K is a so-called
"real" quantity then all the measurement problems in
calculating the "real" capital stock--especially the
totally defective price indices for capital goods and the
grossly approximative allowances for depreciation and
obsolescence--deprive the resulting numbers of any
relevance.<
>In addition, this approach can never give a theoretical grounding
to the "Law of the Falling Tendency of the Rate of Profit"
because under it there is no necessity for the productivity
of labor to tend to increase less rapidly than capital intensity.
However, when the Marxian units of measure are used
consistently it can be proven that, whatever rate of
increase of labor productivity results on average and over
time from increasing Organic Composition, the rate of
profit *must* tend historically to fall (even though, for
limited periods, this tendency can be denied expression by the
"countervailing factors" discussed by Marx).<
Shane, you've opened up a can of worms much larger than I can stomach at this point. Instead of trying to do so, I'll simply agree to disagree:
1) I find that Marx's theory of unproductive vs. productive labor to be superior to other versions of that theory (e.g., those of Smith or the neoclassicals). However, it's not very useful, as far as I can tell, for understanding the laws of motion of capital. It's the rate of profit that is calculated treating unproductive labor-power costs as _costs_ (as capitalists treat them) rather than as part of surplus-value (as some Marxists treat them) that seems most relevant to empirical work. In addition, some unproductive labor is indirectly productive (raising the productivity of productive labor), which makes the theory quite fuzzy.
2) I have not been convinced by the various presentations of the theory of the tendency for the rate of profit to fall that I've seen. I have been convinced by an alternative crisis theory, which I'll summarize if anyone is interested.
3) As I said in my original missive, "how one measures the degree of "capital intensity" of production (the OCC) depends on one's theory and the purpose of one's research." As far as I'm concerned, since I'm not convinced by _a priori_ assertions that the degree of capital intensity rises, I'm interested in measuring whether or not it does empirically -- or rather, whether or not it does so enough to depress the rate of profit.
4) Of course, I think that the kind of issue that Shane Mage and Michael Perelman brings up (the issues of the incorrect measurement of the capital stock) are quite relevant. However, sometimes empirical research must rely on imperfect measures in order to get a preliminary understanding. (It's not like the neoclassical theory of the aggregate production function, which _must_ be based on totally unrealistic assumptions about the nature of capital goods.)
BTW, I found that Mage's dissertation was quite useful to my research. I was lucky enough to get a photocopy.
Jim Devine
