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Well if we accept Marx's premise that the magnitude of fixed capital that
must be replaced actually does vary in successive years--a reference to a
certain kind of lumpiness in investment?--then it follows that since
capacity in dept I must be large enough to meet very large demand in
certain years, there will then be excessive capacity in smaller years.
Total production of the means of production must thus be free to increase
in certain years and decrease in others. Marx thus concludes: "This can
only be remedied by perpetual relative overproduction; on the one hand, a
greater quantity of fixed capital is produced than is directly needed; on
the other hand, and this is particularly important, a stock of raw
materials, etc. is produced that surpasses the immediate annual need (this
is particularly true of means of subsistence). Overproduction of this kind
is equivalent by the society over the objective means of its own
production. Within capitalist society however it is an anarchic element.
"This example of fixed capital--and in the context of reprouction on a
constant scale--is a striking one. A disproportionate production of fixed
and circulating capital is a factor much favoured by the economists in
their explanation of crises. It is something new to them that a
disproportion of this can and must arise from the mere *maintainence* of
the fixed capital; that it can and msut arise on the assumption of an ideal
normal functioning, whith simple reproduction of the social capital already
Capital, Vol II. Vintage1981, pl 544-45. (the end of section 11 of chapter 20).
As Mattick notes, the last thing on Marx's mind here seems the
determination of the parameters needed for equilibriated growth.
>Dear Rakesh, doesn't the continuous presence of a group of capitalists which is
>saving a depreciation fund while another group is replacing fixed capital
>guarantees a more or less continuous demand for fixed capital? Does this point
>bear any relationship to your point that after capitalists have replaced ficed
>capital "there will be no demand for fixed capital for years"?
>If your proposition eventually incorrect then your derivation of product
>innovation in the industry of machines (fixed capital in general) will be
>Rakesh Bhandari wrote:
>> in his accumulation paper, Paul Z wrote:
>> Years later, however, Howard and King (1989, p.121) state that "Luxemburg
>> dismisses Bauer's treatment of disproportions
>> between the two departments as involving 'sheer swindles', and deny that
>> the capitalists in department II could conceivably
>> purchase the 4666 units of means of production which are needed to
>> maintain equilibrium growth". Then they flatly say, "this is
>> simply wrong" (and go on to tell us how she could have been better
>> spending her time!). They don't explain why she is "simply
>> Why was Bauer (see p. 117) simply wrong? As Howard and King put it,
>> Luxemburg could have then asked the question of whether the possibility of
>> equilibriated growth in Bauer's or any two department model could ever be
>> turned into reality. As Mattick notes on p.107-8 of Economic Crisis and
>> Crisis Theory--of which you are quite dismissve without much
>> explanation--Marx actually uses these schemes to show that overproduction,
>> esp in Dept I, is simply unavoidable even in a socialist society, though
>> it would then reflect social control over production instead of serving as
>> an element of anarchy as it does in bourgeois society.
>> Just to put the point in my own terms: after fixed capital is replaced,
>> there couldn't be sales from Dept I to Dept II for several years. Wouldn't
>> this mean the idling of the machines with which the newly installed
>> machines were produced-- leading to the former's moral depreciation, if not
>> physical destruction?
>> Shouldn't one expect then that even after fixed capital has been replaced,
>> there will still be pressure for overproduction of new machines,which
>> should give rise to hyper competition in the capital goods sector that
>> leads to tremendous innovation and thereby inducements to quicken the
>> turnover of capital? From my reading, exactly because of persistent
>> disequilibrium and overproduction capitalism has been such a dynamic and
>> technologically innovative system.
>> At any rate, I think Mattick is correct to criticize Grossmann for having
>> conceded that if the interdepartmental transfer of value and therewith the
>> formation of production prices is considered, Bauer's two dept schemes can
>> show the possibility of equilibriated growth, even if that is then treated
>> simply as nothing more than ideal average of the accumulation process.
>> The schemes --even Bauer's into which several more realisitic features are
>> built--simply could never be turned into reality nor did Marx ever intend
>> them as a model of reality. I thought Mattick was right about this, and I
>> couldn't figure out why you disagreed.
>> Yours, Rakesh
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