[OPE-L:4329] Re: Re: Re: Re: Re: Re: Re: Re: Part Two of Volume III of Capital

From: Rakesh Narpat Bhandari (rakeshb@Stanford.EDU)
Date: Fri Oct 27 2000 - 12:05:28 EDT

Re Paul C's 4328:

>On Fri, 27 Oct 2000, you wrote:
>>  >On Tue, 24 Oct 2000, you wrote:
>>  > Paul
>>  >The point is that something must happen to cool the
>>  >system down and narrow the dispersion of profit rates
>>  >if you are going to have a single average profit rate.
>>  >The question at issue is not whether the rate is the same
>>  >in two time periods, but how you can achieve such
>>  >a low entropy in the first place. I would have thought
>>  >that it is only concievable over a long time period in
>>  >the absence of changes in technology or external
>>  >perturbations.
>>  Rakesh
>>  At a low level of capitalist development, technology would be
>>  relatively stable, but even with this 'absence of changes', the
>>  system would not move  towards an equalisation of profit rates.
>>  "Entropy" in terms of the random distribution of profit rates would
>>  easily obtain in a relatively stable system: there would neither be
>>  the capital mobility nor labor mobility to achieve the order of
>>  equalisation of the same average profit rate.
>This seems the obverse of what Farjoun and Machover argue.
>They argue that it is technical change which is constantly
>disrupting the profit rate.

But I didn't deny that.

>I dont see why capital mobility should be low if technical change
>is slow.

Capital mobility is not low because technical change is slow. In a 
less developed capitalism capital mobility is low and technical 
change is slow. An advanced capitalism gives rise to a real tendency 
towards the ever more rapid equalization of profit rates due to the 
development of capital markets and the freer mobility of labor power 
(both are consequences of capitalist development, historical results) 
and an ever strenghthening tendency of the search of surplus profit 
on the basis of on going technical change due to the endogenization 
of science and technology (also a historical result of capitalist 
development).  An advanced capitalist system is ridden with 
contradiction, and is by its nature turbulent.

>  In the absence of technical change investors can
>have  pretty accurate idea of which branches of production
>are the most profitable and can transfer funds into these. This
>is what is supposed to equalise the rate of profit.

Societies characterized by the absence of technical change have not 
had the capital markets and labor mobility to make equalisation a 
real tendency. There are *historic preconditions* for the 
equalisation of the profit rate.

>If you dont know what production conditions will be like next
>year, movement of capital will be much more driven by guesses
>than accurate foresight and will be less effective in equalising
>rates of profit.

But this period does give some real evidence of where profitability 
is faltering and where it is spiking. There are indeed data to effect 
a movement of capital towards an equalisation of the profit rates. 
However there is no perfect foresight and no actual equalisation of 
profit rates. The (oft unsuccessful) management of risk in both 
technical and legal terms is just what investment is (haven't had a 
chance to read Peter L Bernstein Against The Odds: The Remarkable 
Story of Risk yet).

I would think also that as the global general rate of profit rate 
falls, some capitals (centralized ones, technological monopolies) 
will be successful in staving off its consequence at the expense of 
others. That is, the real tendency towards the equalisation of profit 
rates may not be as effective at certain points in the business cycle 
and the course of accumulation as others??

All the best, Rakesh

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