I would make two points.
1.. Profits are increased on an annual basis by the decreasing of the lags needed to sell the product and secure financing. But that does not mean that profits have an origin in something that happens at the point of production. It only means that production can be more continuous and the mass of surplus value thereby increased. Recall Marx's analysis of turnover. If the advanced variable capital can be made to return earlier, it can be used again to appropriate unpaid labor time. Time--turnover speed--plays an important role in Marx's theory of surplus value, but it is not made an autonomous factor such that waiting itself fetishistically yields profit.
The annual rate of surplus value, the ratio of total surplus value over a year to the original variable capital, is increased. Most Marxists are thus mistaken to describe the financial and commercial sectors as simply unproductive. Those sectors can decrease what Duncan Foley has called lags and speed up the rotation of capital and thus increase the amount of surplus value yielded on an annual basis. That is, if industrial capitalists don't have to wait to secure financing or sell output themselves, they can more quickly resume production. I think workers in all three sectors--production, finance, and commerce--contribute to the production of surplus value, and are thus productive. In other words, commercial and financial capitalists are not likely deducing more surplus value than they are making possible the production of. Commercial and financial capital are thus not necessarily a burden on the growth of capital. Their overall contribution to the reproduction of capital seems likely to me to be positive, though to be sure finance may at times sabotage industry. As I have long argued on this list, the charge of unproductive connotes a kind of parasitism. The whole history of anti Marxian (viz national) socialism has been based on images of parasitic merchants and bankers, i.e. demonized Jews.
2. There is no good alternative to Marx's theory of the origins and nature of surplus value. The Sraffian alternative is based (surprisingly enough) on abstraction from material conditions.
Samuelson and Steedman are probably correct that the fundamental Sraffian challenge to Marx's value theory is the charge of redundancy.
What Samuelson and Steedman emphasize is that the quantitative allocation of social labor time is determined by the techniques of production. If advanced techniques are available in one branch and not another, it could be that less social labor time will have to be allocated to the former branch than the latter even if demand is relatively higher for its output.
But once we have the techniques of production in terms of which the allocation of social labor time is ultimately determined, prices and profits can be determined, it could be argued, without any reference to values.
But can one really move from techniques of production, coupled with a political resolution of the distributional question, to determination of prices and profits? What are the questionable assumptions built into this theory of determination? What happens when the techniques of production,themselves the evanaescent objectifications of social labor, are changing from period to period? Is there anything solid there on the basis of which to do the determination? Isn't freezing the technical conditions metaphysical in its own way?
Can we avoid determination of market phenomena of price and profit in terms of social labor time magnitudes in a dynamic setting? I think not.
Again: technical conditions are themselves the objectification of labor, and if they are changing interperiodically there is in fact nothing material there with which to determine prices and profits. For this reason, In any analysis of the dynamics of accumulation, the technical conditions approach is less materialist, more based on an ideal construct than the theory of value.
Where in THIS world is this economy in which all the kinds of outputs are the same as all the kinds of inputs and the techniques used to produce the inputs are the same as the techniques used to produce to produce the outputs?
Where does this fixed technical conditions economy exist except in the mind as a mental construct, indeed a fantasy?
How can given technical conditions, something which only exists in the mind as a counterfactual (given technical conditions are only what WOULD exist if technical conditions do not change as they in fact do), provide a more materialist grounding for a theory of prices and profits than the labor theory of value?
I am not saying that we cannot fix the technical conditions of production for an analysis of interdepartmental exchange in the cases of simple and expanded production. But this is an analysis of the conditions of exchange (and realization of surplus value)in any actually reproducing economy (also will the elements of production continue to be available). Marx's Capital II models are not about the determination of prices and profits in a dynamic setting. In terms of that problem there are no fixed technical conditions of production except through an ideal construct; there is no empirical data about fixed technical conditions because they don't actually exist. There are no fixed technical conditions in terms of which one can provide a materialist grounding for a theory of prices and profits
But the expenditure of social labor time is real and material.
The labor theory of value provides a more solid materialist grounding. It's not meta-physical. It's in fact more physical and materialist than the appeal to fixed technical conditions of production which is in fact nothing more than a mental abstraction. It's not labor value that is a mental abstraction as Sombart charged in another context.
The Sraffian theory of value seems to be metaphysical in a way that Marx's theory of value is not. It's metaphysical because it depends on an alchemical transformation of something which is evanescent (the technical conditions of production) into something that is timelessly material and physical. It timelessness meets the very definition of metaphysics; it shares the same unreal character of equilibrium economics.
Rakesh
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