Re: [OPE-L] simple reproduction

[ajit sinha <sinha_a99@xxxxxxxxx>]

--- Allin Cottrell <cottrell@xxxxxxx> wrote:

> Looking at Capital II, I think I see what the issue
> is.  Marx
> explicitly assumes a constant scale of production
> and constant
> productivity of labour, but there's one other issue
> that can cause
> problems, namely, an uneven demand over time for
> replacement of
> the means of production corresponding to the fixed
> capital.
>
> Suppose each capitalist uses a machine that costs
> $100,000 and
> lasts 4 years before it becomes useless.
>
> From the micro perspective there's no problem: the
> capitalist sets
> aside $25,000 per year by way of depreciation
> allowance
> (abstracting from interest paid on such funds) and
> buys a new
> machine every 4 years.
>
> From the macro perspective there's no problem if the
> vintages of
> the machines are conveniently staggered such that an
> equal number
> come up for replacement each year.  (In a sense this
> is the
> "natural" assumption for a tidy-minded economist
> contemplating
> simple reproduction.)
>
> But Marx raises the possibility that this convenient
> staggering
> does not obtain: that is, "a greater part of IIc
> expires [this
> year] than did the year before".
>
> If there's a temporal lumpiness to the replacement
> of fixed
> capital, it's easy enough to see how this could
> create problems
> for simple reproduction.  "All of a sudden" there's
> a greater
> demand for machines than in the previous year.  The
> price of
> machines rises.  Resources are diverted into machine
> production.
> There's a corresponding shortage of the goods
> figuring as
> circulating capital.  Simple reproduction is
> screwed.
>
> Allin.
_______________________
Allin,

I suppose the idea of lumpiness in the context of
investment in fixed capital is, of course, one of the
arguments for business cycles. However, the above
explanation as a cause for disrupting simple
reproduction is problematic. If there is depriciation
of fixed capital worth one machine every year 5let's
suppose there are four machines in the system) but no
machine is being produced till the 4th or 5th year,
then it cannot be called simple reproduction to begin
with, as the system is consuming more than it is
putting back. We (or Marx) have simply assumed that
simple reproduction is not happening from year one. If
the condition for simple reproduction is strictly
adhered to, then I think one will have to allow
production of one new machine every year, and
therefore at the end of the four years, we have simply
no problem. Cheers, ajit sinha




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