Re: (OPE-L) Rising organic composition (was: From Ian Wright on Weeks....)

From: Paul Cockshott (wpc@DCS.GLA.AC.UK)
Date: Tue May 27 2003 - 06:17:06 EDT

"michael a. lebowitz" wrote: Paul answered on 22/05/2003 +0100 with respect to my comment re #1:

>> This is a serious misconception.
>> Organic compisition rises if the rate of accumulation of capital is
>> greater than the rate of growth of the employed population of wage labourers.
>> This is compatible both with a shrinking employed population
>> or a rising employed population .
>> The rest of your argument depends on this point.
> It is certainly possible that I have misconceived Marx's argument.

I am not accusing you of misconeiving Marx's argument. The misconception is to
assume that Marx's argument covers the whole case or even the most general case.

> So, let's go through this step by step to see if this is true:
> A. Paul's statement about the organic composition is true. Indeed, it is true by definition.
> B. But, WHY does the organic composition of capital rise?
> 1. Does it have anything to do with the relative rates of accumulation and the additions to the labour supply.

> 2. Does the rise in the organic composition have anything to do with the substitution of means of production for direct labour?

The general condition for a falling rate of profit, s/v being constant is that
capital stock grows faster than the employed population.

To investigate this further we need theores of  the determinants
of aggregate accumulation and of the determinants of the growth
of the employed population.

Marx deals with a special case where no assumptions are
made about population growth and technological determinats
drive the accumulation of a larger capital stock. This is
not a general treatment of the problem, and is unconvincing
on its own grounds, since it does not explain why technical
change should raise the organic composition rather than
lowering it.

If we make the parsimonious assumption that a non-zero
percent of profit is accumulated, then if the working population
is stagnant - once the country has undergone demographic
conversion for example - we will get a falling rate of profit.
This makes no assumptions about technology.

If the above assumption fails, then this implies either zero
or negative accumulation. This in turn implies strong
recesssionary tendancies unless
a) the capitalists spend their profits unproductively on
     servants and luxuries as they did in the UK 1870-1900.
 b) state expenditure realises the surplus, financing it
    with bond sales, or taxes on profit.
Option a) is only sustainable if there is no serious competition
on the world market. (b) is the condition to which capitalist
economies tend.

It implies serious and sustained deflationary tendencies,
in capitalist economies. These were very evident in the
mid 20th century. In what Hobsbawn terms the golden
age - from 1950 - 1970, the operation of option b) allowed
continued growth in the presence of declining profit
rates. The rates became critically low in the oldest
capitalist economies after that. The neo-liberal opening
of world capital markets was designed to offset
the stagnant labour forces by allowing capital to
move to labour. But this does not suffice to
prevent chronic recessions in highly capitalised
economies such as Japan.

The stability pact impairs the current ability of
European economies to maintain full capacity by
state expenditure, thus blocking one of
the historic avenues out of the problem.

> C. Does the substitution of means of production for direct labour replenish the reserve army of labour?

Not necessarily, if the rate of accumulation exceeds the rate of substitution.

> D. Does the rise in the organic composition of capital have anything to do with the rate of surplus value?

In the limiting case of no surplus value there would be no accumulation
and so no rise in organic composition.

> I think these relations are necessary to specify before concluding, as Paul has, that a rising organic composition leads to inadequate production of
> surplus value and a strengthening of the working class.
> in solidarity,
> Michael L
>  ---------------------Michael A. LebowitzProfessor EmeritusEconomics DepartmentSimon Fraser UniversityBurnaby, B.C., Canada V5A 1S6Currently based
> in Cuba. Can be reached via:Michael Lebowitzc/o MEPLACalle 13 No. 504 ent. D y E, Vedado, La Habana, CubaCodigo Postal 10 4000(537) 33 30 75 or 832
> 21 54telefax (at night): (537) 33 30 75

Paul Cockshott
Dept Computing Science
University of Glasgow

0141 330 3125

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