> Rakesh wrote:
>
> >But in the real economy, technical change is continuous, prices are
> not stationary, and there is disruption to the system before any one
> innovation works its way through along the way to a new stationary
> state in which input and output prices are stationary. And if one
> allows for this much reality, the rate of profit can indeed fall from
> on going technical change.
>
> I'm not sure on why you say technical change is continuous. It seems
actually fairly discontinuous, relying mostly upon business cycles. The
effects of it seem more continuous, if by that you mean less prone to big
qualitative changes. Why do you say continuous?
I would say that there is a permanent tendency for unit values to fall; whether this is due to better utilization of already installed capital goods (learning by doing) or the *periodic* introduction of new capital goods in which radical technical change is embodied does not matter (at any rate, firms in any one one industry may be installing new technology at different points, so for the industry as a whole unit values will tend to decline continuously). The point is that the assumption of stationary prices is highly questionable in regards to the course of capitalist development. So at the least it is an interesting question what happens when Marx is tested in terms of models in which that assumption is disallowed.
> To say that the rate of profit _can_ fall from technical change isn't the
same thing as saying it will fall as the result of rising organic composition.
Christian, this is absolutely correct. If the course of capitalist development is punctuated by crises, the devaluation of constant capital can relieve upward pressure on the organic composition of capital. The tendency towards a higher rate of exploitation, coupled with the introduction of whole new labor intensive branches of production and increases in the turnover time of capital, can all at the least counteract any fall in the rate of profit from upwards pressure on the organic composition of capital. Sweezy questioned why the tendency had to be dominant over the counter-tendencies over time (I like Carchedi's discussion of this). But it's easy to see that rate of exploitation has to converge on its limit before the organic composition of capital, that new branches will tend to be less labor intensive over time (are microchips labor intensive?!), etc.
It doesn't seem to affirm Marx's theory at all, do you think? I'm just becoming familiar with these debates and it seems to me the preponderance of historical evidence weighs against that part of Marx's theory. (Thanks for the refs also; and I'll have to go back and re-look at Gilpin.)
That's a brand new book by Gilpin.
YOurs, Rakesh
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