[OPE-L:5063] arms, roads and fictitiouscapital

From: Rakesh Narpat Bhandari (rakeshb@Stanford.EDU)
Date: Sat Feb 24 2001 - 15:18:27 EST

re 5010,

Dear Paul B,

You wrote to me:

>  Rakesh,  you are muddling up 2 different relations. A) In the first 
>the contractor extorts surplus labour time from his employees which 
>becomes realised as value and surplus value when the customer (the 
>State) pays. Then as I said before the infrastructure is used (after 
>a charge is levied) by other capitalists as if they had bought it, 
>but by their collective agreement - which includes the collective 
>provision of their own capital to the state to do this

So if taxed, the capitalists have bought the infrastructure out of 
surplus value. The costs of this infrastructure, much like building 
costs, are recovered in the realization of the commodity product. 
Infrastructure is thus a public form of constant capital. This is a 
very good argument; let me think about it.

So let me assume this is true for some state induced production of 

What then do you make of the situation in Japan today where there is 
lavish government waste productin in the form of bridges to sparsely 
populated islands, concrete linings for rivers and roads to nowhere?

How will these costs be recovered since this infrastructure is not 
assisting the transportation and realization of any commodity output?

These infrastructure projects are not directly or indirectly part of 
surplus value production. Such state induced production is induced by 
the weakness of private accumulation.

Here the state is maintaining the existing level of production 
through debt financed expenditures on non capitalist production.  In 
this case this state induced production is not itself contributing to 
surplus value production directly or indirectly. At some point, the 
interest obligations require the state to impose a higher taxes on 
productive capital. Which of course is exactly what happened in Japan 
a few years ago, catapulting the economy into an immediate downturn. 
The interest payments, being a source of income for the state's 
creditors, could re-enter consumption or be invested in the private 
economy or in state paper. But in these cases, we are dealing with 
one and the same sum which is given up as profit in order to appear 
as interest elsewhere.

See Mattick, Sr Economic Crisis and Crisis Theory, p. 141.

>  B) in your second sentence we find purchases  which enter 
>educational provision. The degree to which training labourers (not 
>the students)  are to be classified as productive or not requires, 
>in my mind, a further assessment, ie the degree to which they 
>themselves are part of the socially necessary consumption of the 
>workers . I see the two examples as conceretely different. Marx made 
>the point on several occasions that one cannot force a move from 
>general definitions to emprical reality in one leap.

I'll leave this aside for now.

>(State Loans are of course different, repaid out of future taxation, 
>however the degree to whci any state uses such Loans as Capital  or 
>spends them as Revenue is a practical, not an automatic, matter)

You are correct. As private accumulation weakens, the state may find 
itself able to organize surplus value production which the private 
sector cannot. But this can  meet its limits quickly since it cannot 
interfere on private production; and if private accumulation is 
faltering, then the state must finance production, whether it is 
capitalistically productive or not, in order to maintain existing 
levels of income and prevent a full scale slaughter of capital values.

>(No I would not, and I do so only to the degree that capitaolists 
>use them for business. Where wear and tear is imposed by you and me 
>our taxes are indeed spent as revenue, out of our wages. You may now 
>see why I made the point above)

Good, agreement.

Best regards, Rakesh

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