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

From: Rakesh Bhandari (rakeshb@STANFORD.EDU)
Date: Sat May 31 2003 - 12:44:13 EDT

Well Allin it's interesting that Michael E and Paul C--despite their
grave metaphysical differences--seem to believe that real world
capitalism is no where near having exhausted its possibilities for
its further development; of course Michael E is more willing announce
himself a reformist and gradualist, an adherent of piecemeal
transformation on the basis of it being an "unripe time" for any
other politics. But the same political orientation would seem to be
implicit in Paul's estimation that capitalist mode of production
should be capable of further development for another fifty or so
years until the demographic conversion finally sets in.

I, for one, would be enthused if they are right; I am very unsettled
by the  possibility that they are wrong. These are troubling
times--the state has become more authoritarian, inter imperial rifts
seem severe, public health problems are profound, colonial occupation
has made a come back; social services are being gutted for militarism
and rentier capitalism.

You write in response to me.

>On Fri, 30 May 2003, Rakesh Bhandari wrote:
>>  And an unrelated point: that superfluous and idle capital has
>>  hitherto warded off the complete collapse of profitability through
>>  purely speculative investments in the US securities' market...
>Rakesh, that is complete nonsense.  Capital does not "disappear" when
>people use it to buy financial paper, because for every buyer of such
>paper there is a seller.  Capitalist consumption, on the other hand,
>is a true means of "warding off" overaccumulation.
>Allin Cottrell.

Let me add the next paragraph of my own quote:

>Lenin has already been vindicated ironically as the collapse of the
>Soviet Union allowed for a renewal of inter-imperial rivalries; the
>collapse of speculative frenzy could well mean new inter-imperial
>rivalries for the control of potentially productive investment
>outlets for overaccumulated capital--Lenin would be vindicated
>again. (Emphasis new)

Well yes speculation is a nonsense solution to overaccumulation. It
can pose as one however for some time! Capitalist consumption however
only wards off  overaccumulation through the elimination of capital
itself--a suicide of the rentier. Yet it's not the elimination of
surplus capital which is sought but its profitable employment.

Through consumption capital extinguishes itself or is extinguished;
as capital chases itself in a speculative bout, there is the illusion
of profit until credit lines, mortgage refinancings and nerve run
out. Until a point, those who reap gains from the sale of corporate
paper only throw the "profits" back into the speculative wirlwind.
Speculative "investment" does not raise the question of the
disappearance of capital but the illusion of its capitalistically
productive employment. Even those insiders who attracted huge amounts
of speculative capital through dubious IPOs may well have invested
their 'gains' in speculative 'investments' of their own as this was
where the 'profits' were to be had. As the selling began, some
doubtless got out before others.

So once that illusion is dissipated, then overaccumulated capital has
to struggle to secure control over truly productive investment
outlets if it is not to be dissipated in consumption.

The issuance of debt by the government provides another illusory
productive outlet for overaccumulated capital. Govt paper was
properly classified by Marx, following Sismondi, as fictitious
capital. Mattick Sr was one of the first to think through the
implication of this classification.  Duncan Foley is one of the few
contemporary theorists who  so classifies govt paper (so do Mario
Cogoy, Geoffrey Pilling, and Guglielmo Carchedi).

Of course the effects of govt debt spending are not fictitious though
the govt expenditure of capital does consume it; the debt financed
expenditures may provide effective demand and counteract a
deflationary spiral in the short term but usually at the expense of
the govt debt financed construction of a military apparatus which may
then have to be used (as Trotsky long ago noted) to secure national
power and wealth  so that the govt will be able to honor its debt
without encroaching on or destabilizing what may still remain an
anemic private economy. That is, the govt assets will have to be put
to "productive" use.

The point: it's too soon quite unfortunately to write off as
antiquated Lenin's vision of imperialism as intensified, nation
state-based competition over the control of productive investment
outlets and sources of tribute in the world economy. The US
installation of a viceroy in Iraq does not bode well.

I would certainly sleep better if you can show me how this is all
nonsense. As my posts on value and history were meant to show, I have
tired of Marxism. It's a Marxist dogma that the Labor Theory of Value
or the theory of the FROP can be derived with the same logical rigor
as a theorem in Euclidean geometry; historical materialism makes too
much of internal contradictions as the key to history tout court.

Yet my point is that Grossmann seems (unfortunately) to have
successfully located the rational kernel in Lenin's catastrophic
vision. I wouldn't expect Michael E to take such a theoretical
analysis seriously, but I am interested in what you and Paul C have
to say about it.

Yours, Rakesh

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