As Marx describes, the same rise in productivity would also reduce the value of wage goods/value of labour-power, and so raise the rate of surplus value. So, what we would actually have would be 2340 c + 540 v + 660 s, and so a rate of profit of 22.92%. Indeed, if we were to look even more closely, we find that the cost of reproducing the exploiting classes is also reduced by 10%, so that the proportion of profit left over for accumulation would grow even more.
What is correct in Roberts's statement, however, is that, as a result of this rise in productivity, the unit value of commodities, on average, would fall. If, in Year 1, total output consisted of 3,000 commodities, with total output value being £3000, average unit value is £1. In year 2, 3,900 commodities are produced with an output value of £3,800, an average unit value of £0.97, and, in Year 3, assuming no further accumulation, the 3900 commodities would have an output value of 3540, giving an average unit value of £0.91.
The total values of output have gone from £3,000 to £3,800, to £3540. Consequently, the money equivalent has changed accordingly. As Marx sets out in A Contribution To The Critique of Political Economy, and in Capital III, the amount of currency – what Roberts calls “money supply” - would have to change accordingly, if prices were to reflect values. Assume that currency takes the form of Pound coins, and that each coin circulates 10 times a year. In Year 1, 300 coins are required in circulation, and in Year 2, 380 coins, falling to 354, in Year 3. That, of course, assumes no change in the value of the £ coin itself. But, as Marx sets out, there is no reason to believe that to be the case either.
If the Pound coins are themselves tokens representing a quantity of gold, the same fall in unit values arising from changed productivity, also affects the value of gold, and thereby of the £ coin. Or, to maintain stable rather than falling unit prices, the state might reduce the amount of gold/social labour-time, represented by the £. With a fiat currency, the state determines the value of the currency/standard of prices simply by increasing the supply of currency by more or less than is required to reflect the changed value of total output. To be fair that is what Roberts and Carchedi also say, in their own way, even though the path by which they reach this conclusion is littered with errors. Roberts says,
“Because the monetary authorities in capitalist governments are tied to a monetarist theory that claims that, if they boost money supply, that will restore any slowdown in the growth of value. That leads to a gap between the growth in (circulating) money and new value growth. The difference between the two is the ‘value rate of inflation’.”
What they describe, here, is not a “value rate of inflation”, but simply inflation, as analysed by Marx, i.e. an inflation of the currency supply, in excess of that required to circulate the value of commodities. They choose this tortuous definition in order to justify their acceptance of the popular definition of “inflation” as being a rise in the general level of prices. They recoil from the actual Marxist definition of inflation as a monetary phenomenon, because they want to distance themselves from the association of that definition with Monetarism, and its right-wing political associations.
Moreover, whilst Keynesians put forward the idea that a rise in currency supply can restore a slowdown in economic growth, usually, in combination with the use of such additional liquidity to finance a budget deficit, that is not the position of Monetarists or Miseans. Only if you equate currency supply with central bank interest rates can that argument be made, but these are two different things, as Marx and Engels set out in Capital III, and elsewhere.
The Monetarists and Miseans argued that, in the 1930's, for example, interest rates were too high, and that a reduction in interest rates would lead to firms borrowing more, to accumulate additional capital, so as to increase growth. Mandel, whose work Roberts is assessing in his article, noted, as did Keynes, that in conditions where there is already a glut of commodities on the market, and inadequate demand for them, a reduction in interest rates is not going to encourage firms to borrow more to produce more, and add to that glut.
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