" The application of machinery reduces the price of the commodities produced with that machinery owing to various factors,which can always be reduced to the decline in [direct?rnb] labor absorbed by each individual commodity; but in addition to this there is the decline in the portion of value that goes into the individual commodity as the depreciation element of the machinery. The slower the machinery's depreciation, the more commodities it is distributed over, the more living labour it replaces before the day when its reproduction falls due. In both cases the quantity and value of the fixed constant capital are increased as against the variable."
I am not sure what this passage means.
Let's say we work from Prof Duncan Foley's example of an economy in which the only output is corn and the only input seed corn and labor. See his Understanding Capital: Marx's Economic Theory. Harvard (pp.131-32).
Marx seems to be talking about "corn-intensive" (!) technological change that reduces on the input side cost prices by reducing direct labor costs more than the incuring of additional costs from the use of more seed corn in material terms. Only at prevailing prices or a constant real wage will such seed corn intensive technical change not reduce the rate of profit if the value of the net output is determined by labor time (we are in Andrew Kliman territory here.) Foley shows that if the value of the output is determined by labor time, "corn intensive" technological change will lower the profit rate as long as the real wage is not held constant.
But there is a further complication.
Once we treat fixed capital instead of seed corn (there are alas no one sector corn only economies) we understand that the reduction of cost price can even be steeper. The longer the machine is used, the less the depreciation cost and thus the less the cost price per unit.
That is, once the move has been made to a capital intensive technology, there are further reductions in cost prices the longer the machine is used.
Not only then does the machine replace direct labor, its slower turnover displaces the labor that would have been required for the construction of replacement machinery if machines were not enjoying such a leisurely depreciation. Sturdier machines enjoy a slower turnover, which means that Dept I absorbs less labor to use the existing means of production to produce additional means of production.
Marx makes the fascinating argument that we tend to understand only how machinery replaces labor directly, not how machinery in its fixedness and thus inherently slower turnover time displaces the labor that would have been required to reproduce it if its turnover were up to speed with, say, circulating capital.
Here seems to be an additional reason to reject Brenner: if intl competition speeds up the rate of turnover by disallowing capitalists to sit on mountains of antiquated fixed capital--a problem central to Michael Perelman's work on Keynes--Dept I should absorb more labor to use the means of prod there to produce ever more advanced means of production; and this addition of labor should thus increase the mass of surplus value in the system, thereby exterting upward pressure on the profit rate.
Yours, Rakesh
ps there is precious little work on the turnover of fixed capital in work on the Marxian theory of dynamics--please tell me what I am missing. In bourgeois economics Spiethoff seems to have been the one who focused on it most sharply (see Hansen, Business Cycles and National Income); it is important in Preobrazhensky's last book and in Grossmann's book on dynamics. Geoff Kay discusses it in his book on underdevelopment. And Michael Perelman has made the scrapping of fixed capital the pivot of his critique of Keynes.