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

From: Rakesh Bhandari (rakeshb@STANFORD.EDU)
Date: Sun Jun 01 2003 - 22:10:41 EDT

Paul C.
Not quite getting your point here. You had argued for the possibility
of overaccumulation as a result of a rapid rise in the OCC engendered
by demographic conversion. This perspective points to a shortage of
surplus value. However, below you lay out a scenario in which there
are difficulties in the realization or absorption of surplus.

So you had written:

>>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.

OK here you point to the possibility of zero to negative
accumulation.  You seem to rule out the solution of unproductive
consumption because of serious competition on the world market, but
serious competition on the world market would seem to make impossible
zero or negative accumulation as long as accumulation  had continued
to pay!

That is, if there is both serious competition on the world market and
technological progress, then capitalists should continuously invest
in new capital equipment embodying the latest technical developments
out of a fear of falling behind each other; that is, the
Keynesian-Kaleckian problem of inadequate effective demand should
only prove serious as a result of the fall in absolute profitability
consequent upon overaccumulation.

Consider the debate between Fred and Paul Z in Anti Capitalism, ed.
Alfredo Saad Filho. Since  Fred believes that the fundamental
contradiction lies in insufficient profitability in production
itself, he argues that rising unproductive expenditures can only
compound the overaccumulation crisis which then yields the problem of
insufficient effective demand. Because Paul Z tends to see
accumulation foundering on inadequate effective demand itself, he
allows as did Baran and Sweezy for unproductive expenditures to close
the "demand" gap and thus move the economy out of an unemployment
equilibrium.  The argument you suggest here seems in line with Paul
Z's, not Fred's. But your overaccumulation argument seems closer to
Fred's in its postulation of inadequate surplus value production.

I of course agree with Fred. Marx was in fact correct to make
provisional acceptance of Say's Law in order to discover a deeper
contradiction in the very process of production. Marx's method was
well understood by Grossmann, Bernice Shoul and Mattick Sr--all of
whom were cited by David Y. Howard and King criticize Grossmann for
having been a prisoner of Say's Law but don't seem to have understood
why its provisional acceptance undergirded Marx's discovery of the
fundamental contradictions of capitalism in production itself. Joan
Robinson also does not seem to have understood exactly why Marx
provisionally accepted Say's Law. Defending the
Sweezy-Kalecki-Steindl point of view, John Bellamy Foster presents
the other point of view.

Now perhaps the problem of effective demand results from the release
of capital as the newest technology is capital-saving (James
Galbraith makes this point somewhere; Grossmann of course considered
it long ago). Then I can see how either of your options could save
the economy from an unemployment equilibrium. Baran and Sweezy did
not explicitly relate their ideas about the rising surplus to Marx's
analysis of the release of capital (do note that Engels inexplicably
pooh-poohed Marx's analysis of this phenomenon), but that would have
provided a better support for their revision of Marx's theory than
questionable ideas about Steindlean monopoly constraints on the
inducement to invest.   It was a mistake to title their book Monopoly
Capitalism, I believe: the potentially idle surplus can rise even
without the monopolization of the economy. I would be interested in
what Michael L has to say about this.

At any rate, this does not seem to be your interpretation in which
overaccumulation is the result of an absolute labor shortage.  In
this case, wouldn't the doses of extra effective demand from
unproductive consumption or debt financed govt spending only compound
the underlying problem? I don't see how a or b are solutions to
overaccumulation, as you have theorized it on the basis of a
demographic conversion.

Morever, it's not clear to me whether you accept Marx's theory that
as the govt consumes the capital which it  borrows, its paper is in
fact fictitious capital (Larry Summers has referred to govt paper as
a "sterile asset"). Which has the further implication that govt debt
can only be paid through the creation of money or taxes--either of
which may destabilize the private economy whose anemia gave rise to
the need for a "mixed economy" in the first place.

Yours, Rakesh

This archive was generated by hypermail 2.1.5 : Tue Jun 03 2003 - 00:00:00 EDT