[lbo-talk] technical conditions approach

Rakesh Bhandari bhandari at berkeley.edu
Tue Dec 12 07:48:27 PST 2006


For those OPE-L'ers who are wondering what Justin and I were talking about....

To see how the technical conditions approach to the determination of prices and profits seems to undermine the labor theory of value, consider the following example in which it is shown that not unpaid labor time but a surplus of use values determines what the profit rate will be. The surplus of use values need not be caused by unpaid labor time at all; it may just be a result of the technical conditions, the knowledge embodied therein.

A model of total automation; Spencer Pack gives a simple example.

28 56 0 0 16 0 48 0 12 0 0 8 56 56 48 8

What we have in the first column is inputs of computers (28,16,12, 56 total) needed to make 56 computers, 48 units of gold, and 8 units of wheat.

That is, 28 computers => 56 computers

16 computers => 48 units of gold

12 computers => 8 units of wheat

56 computers => 56 computers, 48 units of gold, 8 units of wheat

The economy is in simple reproduction because it produces only 56 new computers, and 56 computers are needed to produce computers, gold and wheat at the same scale again.

There is no direct labor in this economy; there is not even indirect labor as computers, gold and wheat are themselves the products of commodities--the literal production of commodities by commodities.

According to Pack this economy can be solved for relative prices and a uniform profit and absolute prices as well if we assume by definition that the price of one unit of gold equals $1.

(1 + r) (28pc) = 56 pc (1 + r) (16pc) = 48 (1 + r) (12pc) = 8pw

r is the profit rate while pc and pw are the unit prices of computers and wheat.

From the first equation we know the profit rate has to be 100%; price of one computer is $1.50 and price of one unit of wheat is $4.50.

So contrary to the LTV, there can be a positive rate of profit and relative prices in a totally automated economy. -------------- next part -------------- An HTML attachment was scrubbed... URL: <../attachments/20061212/3092b4db/attachment.htm>



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