From: "John R. Ernst" <ernst-AT-pipeline.com>
Date: Fri, 15 Dec 1995 01:29:34 -0500
Subject: Juan, the unit is ......


VALUE.  A simple answer to your question.  Let's 
again review matters. 
 
Juan says: 
 
 
John Ernst writes: 
 
>I never accepted what you said with respect to the technical 
>composition of capital. 
 
John, since you still say that you can construct a model of the falling 
rate of profit on the basis of measuring the change in the technical 
composition of capital, 
 
Wouldn't you please, please, tell me 
in units of what (or if you prefer, in what units) do you measure the 
technical composition of capital in the unequivocal way that constructing a

model requires? 
 
Isn't this a simple, direct, concrete question that demands a simple, 
direct, concrete answer saying "the unit is ..."? 
 
John says: 
 
Value would be the way and has been the way in which I 
would construct a model of the FRP.  A simple answer to your 
question which contradicts the position you impute to me.   
You state that I claim that I "... can construct a model of 
the falling rate of profit on the basis of measuring the 
change in the technical composition of capital." I do not 
make that claim, have not made that claim, and have published 
a paper sometime ago showing the dangers in relating the  
material side of production to the value side in a  
neo-Ricardian fashion. 
 
    
In the neo-Ricardian world, beginning with Tugan Baranowsky, 
value is seen as redundant and refutations of Marx's rate of 
profit have been put forth at least as often as Marx is  
defended.  In Tugan's one-commodity model, he easily shows that 
in material terms capitalists will not invest in techniques that 
bring about a fall in the rate of profit if the real wage is 
unchanging before and after the change of technique.  The  
so-called "Okishio theorem" generalizes this result to models 
of n-commodities.   
 
 
My point in our discussion is to get at this critique of Marx 
in a way that we (Marxists) do not end up agreeing with the  
his critics, or, worse yet, adopt an all-but neo-classical view  
of technical change.  In this process, you and I got into some  
extended discussions concerning the measurement of the technical 
composition of capital.  For the past few weeks, I have suggested 
dropping that topic and turning to two passages in Marx.  Why  
those two? Given that you and Jim are both readers of CAPITAL, 
I thought that  the problem I was trying to raise by bringing 
up the technical composition thing could  be seen by examining the 
two*  and noting that the pattern of accumulation that Marx  
describes in them cannot fit into framework that neo-Ricardians 
and, sadly, most Marxists describe as Marx's theory of the FRP. 
 
 
 
John 
 
 
*Again, the two are both in Book III of CAPITAL. See Chapter 6, 
 Paragraph 9 and Chapter 15, Sec 4, Paragraph 2. 


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