Re: zero average profit

From: Rakesh Bhandari (rakeshb@STANFORD.EDU)
Date: Thu Jun 05 2003 - 11:32:07 EDT

>On Tue, 3 Jun 2003, Paul Cockshott wrote:
>>  Ian Wright wrote:
>>  > Ah, I understand now. This was the flaw. I was conflating changes
>>  > in aggregate money holdings with profits. Therefore my previous post
>>  > does not apply to the profit rate but applies to aggregate money
>>  > holdings. I'll take your advice and read Kalecki on this. Thanks
>>  > for pin-pointing the source of my confusion. Are there any
>>particular works
>>  > of Kalecki that you'd recommend?
>>  It is probably best to read the collection
>>  'Essays in the dynamics of the capitalist economy' first and
>>  then read 'Theory of economic dynamics'
>Agreed.  A good starting point is the essay "The determinants of
>profits" in Selected Eassys on the Dynamics of the Capitalist Economy
>(Cambridge U.P., 1971).

I am not so impressed with "The Determinants of Profits" in Theory of
Economic Dynamics (Monthly Review, 1971).

While Kalecki establishes some interesting accounting identities and
shows that investment determines savings rather than vice versa, the
analysis leaves open too many questions.

1. Why does investment tend not to grow such that the economy becomes
dependent on govt debt financed spending and/or exports? He says
profits in the preceding period are one of the important determinants
of capitalists' consumption and investment but provides no theory of
what the objective determinants of that are.

2. He proposes the fantastic idea, effectively criticized by
Grossmann, that classic colonialism was meant first and foremost to
secure markets for the export of goods as if poor colonies could have
and did absorb the collosal output of the developed capitalist world.

3. His ideas about govt debt are quite narrow: he doesn't theorize
what kinds of govt spending are favored by the property structure of
the bourgeois order and he doesn't deal with the question of with
whether a permanently indebted govt would ever have to destabilize
the economy in order to make interest payments. He doesn't deal with
Marx's idea that govt paper is fictitous capital. Consequently, as
Duncan Foley points out in Understanding Capital, Kalecki was able to
reach the false conclusion that the govt through debt financed
expenditures is in fact capable of moving the economy to full
employment as long as the state keeps real wage growth under control.

4. Kalecki has nothing to say about the effects of the accumulation
process itself on the constitution of class struggle in the abode of
production. Again he compares quite unfavorably to the truly greatest
Polish Marxist of the 20th century. In fact despite Kalecki's
interest in Marx's reproduction schemes, his work seems to me hardly
Marxist at all.


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