In the context of Capital Marx, according to the labor theory of value, the value of a commodity comprises of the value of constant capital c, the value of variable capital v, and surplus value s. Thus, the rate of profit is
Usually, under the assumption that for each homogenous labor, the value created
by the same time of labor is equal. However, Marx ”incorrectly” assumed
that for each complex labor, while the value created by complex labor xw is
the scalar of simple homogenous labor w (where x is the scalar), the variable
capital v′ for the complex labor needed is also x times of the variable capital for
homogenous labor v, i.e. v′ = xv. Under this widely used assumption, many
economists (and Marx himself) found that the rate of exploitation s
v is constant across all industries. Under a fixed s v/c, only if the organic composition of capital v for all industries are equal, one can obtain a rate of profit that can be applied
to all industries.
However, the organic composition of capital are obviously not equal across all
industries in society. Marx attempted to solve this by assuming the redistribution
of surplus value across industries, and the overall (summed up) profit rate
can be obtained from
where capital letters represent the overall value in society. Then Marx tried to
find an ”average” organic composition of capital that could be used. Petri (2021)
thought one could use Sraffa’s standard commodity to replace the labor theory
of value and keep the main idea of Marx to avoid the problem of Marxism’s
determination of the rate of profit.
However, the power of the value of the labor theory of value is concealed here.
People tend to use the rate of profit as given, instead of surplus value, then the
human labor disappears, and the increase in wealth goes back to the neoclassic
explanation, the fetishism on means of production comes back. Therefore, here
I try to propose a model that considers the surplus value and the even rate of
profit across industries which is embedded with the labor value of theory.
The more yu can watch the attached pdf file.
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