>From a Marxist standpoint, there is nothing at all wrong with Lev's
>argument. Capital is the mass of socially necessary labor time
>accumulated to serve as the basis for production of surplus value.
>The capital of each firm is subject to what Marx called "moral wear
>and tear," which we nowadays call "obsolescence." But the obsolescence
>of one firm's capital is produced by a technological advance that
>provides a profitable [temporary] monopoly advantage to the firm
>introducing the new technology. The laggard's capital is "destroyed,"
>but that "destruction" is compensated by the market which capitalizes
>the expected profit of the innovator at a much higher rate. This is how
>capitalist fortunes are made when they are made
>"honestly." From a
>Marxist view, this is a transfer of capital from loser to winner. It is
>also the very essence of capitalism as a continual revolution of the forces
>of production (and the main thing that Schumpeter learned from Marx!)
[...]
>Once you realize this, you can grasp that "profitability" of a technologically
>dynamic firm, as measured by conventional, legally required, standards, is
>not merely irrelevant to the rational capitalist but even tends to be
>correlated with positive investment value.
We're not talking profitability, we're talking profits being greater than zero. And we're not talking Marxian value, we're talking stock market value.
Of course a new drug is likely to increase the "value," however defined, of its producing firm - but not because of some magical conceptual revaluation, but because it's likely to provide the firm with higher profits in the immediate future. The revaluation anticipates more transactions at a nice price. I don't see how a system based on M-C-M' can ever get beyond the transaction, as Lev and his anonymized paraphraser seem to argue.
Doug