[OPE-L:3284] Re: RE: Re: RE: Re: Accelerated ACcumulation

From: Rakesh Bhandari (bhandari@Princeton.EDU)
Date: Mon May 22 2000 - 13:29:25 EDT

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Andrew (T),

In his initial model, Kalecki simply assumes the value of consumer goods
industry is set to equal wages while capitalists through investment
decisions alone determine value of producer goods industry ("capitalists
get what they spend").

If you introduce an autonomous increase in capitalist consumption (or
worker dissaving) in this setting, you may get goods producers tapping the
financial system to advance production beyond what present profits and
consumption allow and then through those very decisions generating the
profit or income to retire the debt from having done so (I am going by
James Galbraith's summary in Balancing Acts).

But you could get the widow's cruse. Such high living by capitalists will
raise the share of profits in income, bid real consumer goods away from
workers who would otherwise enjoy them. Capitalists still get what they
spend but investment may not change in this case.

Or I could say, if I understood the theory of limit pricing, that consumer
goods price rise following upon autonomous increase in capitalist
consumption could stimulate entry of a new producer with superior capital
and lower unit costs that wipes out the old producers, thus depressing the
average rate of profit in Div II as a whole. And in this way, I could get
the upward pressure on the OCC in successive stages in Grossmann's model,
which is being driven forward each period by more advanced producers whose
superior profits are in turn whittled down by competitors until we have a
lower average rate of profit in successive periods.

But of course I'll need to study this. A crucial difference between
Marxists (Mattick) and Kaleckians (Galbraith) of course is over the long
run effects on profits and investment from government orders, whether
financed by taxes, debt or money creation.

Yours, Rakesh

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