Jim Devine wrote:
"I agree that price falls _can_ cause falls in profitability."
Good.
"But I don't see why "Output prices must fall BEFORE input prices fall.""
Because the input prices that are relevant to profit and profit rate computations are prices of earlier times than the output prices. E.g., investments are made at time t; sales of output occur at time t+1. Profits and the profit rate are computed for the time span between t and t+1. If prices fall between t and t+1, the fall affects the sales revenue of this period, but not the input prices of *this* period. It affects input prices of the period t+1 to t+2.
"A counter-example: it happens all the time that production is sped up -- raising output per unit of labor-power hired and thus lowers cost per unit of output (given the wage rate) -- which has the immediate effect of raising profits."
This isn't a counter-example. That is, it is not an example of input prices falling before output prices. It is an example of a fall in per-unit costs that is not accompanied by a fall in prices. Again, the impact of technological changes that do not trigger price reductions is obvious, and not at issue.
"I don't see why we should assume that "continual technological change" exists. Sometimes it does, sometimes it doesn't."
Technological change is always occurring at some firm in some industry. At least the situation is close enough to "always" to make this a reasonable abstraction.
Andrew Kliman
-----Original Message-----
From: PEN-L list [mailto:[EMAIL PROTECTED]On Behalf Of Devine, James
Sent: Saturday, June 14, 2003 1:39 PM
To: [EMAIL PROTECTED]
Subject: Re: Falsifiability and the law of valueI agree that price falls _can_ cause falls in profitability. But I don't see why "Output prices must fall BEFORE input prices fall." A counter-example: it happens all the time that production is sped up -- raising output per unit of labor-power hired and thus lowers cost per unit of output (given the wage rate) -- which has the immediate effect of raising profits. After all, businesses do not simply cancel out their profit-seeking actions by cutting prices in step (or more)! Over time, however, as the speed-up becomes general in the industry, prices will likely fall, counteracting the initial profit boost. This example doesn't suggest that prices should fall enough to actually hurt profits in the end.
I don't see why we should assume that "continual technological change" exists. Sometimes it does, sometimes it doesn't.
Jim
