Re: [OPE-L] J Winternitz's "The Marxist Theory of Crisis" online

From: Rakesh Bhandari (bhandari@BERKELEY.EDU)
Date: Thu Dec 16 2004 - 13:34:22 EST

Within the traditional transformation problem, I think Winternitz
chose the correct invariance condition. I also found the following
piece quite interesting, and it was behind my suggestion several
weeks ago that the Y/K ratio as proxy for OCC is meaningless. It
seems to me that Winternitz is saying that Y should be measured at
the bottom of the slump while K should be measured in terms of
historical costs of capital. Do people agree that this is what
Winternitz's analysis implies?



For the upward phase of the cycle is just the time when, with
increasing investments, accumulation of capital and concentration of
production, technical improvements, etc., the organic composition of
capital is growing, the tendency of the rate of profit to fall is
developing. But here one must bear in mind that the fall in the rate
of profit becomes effective only when market prices go down,
corresponding to a general reduction of values.

If by technical progress costs of production are reduced while prices
of finished goods remain stable or are even rising, then evidently
the rate of profit will rise and not fall. And this is just what
normally happens in the upward phase of the cycle.

So just when the value of commodities is falling, prices tend to
rise. This is not a logical contradiction in the labour theory of
value, but a real contradiction in capitalist economy.

Prices are kept above values as long as demand exceeds supply. At the
end of a depression stocks are at an ebb, the productive apparatus is
run down, necessary replacements have not been made, there is a low
rate of interest, reflecting an abundant supply of capital looking
out for profitable investment. The possibilities of satisfying this
pent-up demand are, however, limited by a productive capacity reduced
in crisis and depression. A substantial increase in the supply of
consumption goods will not begin before a re-equipment and expansion
of industrial plant has been effected.

This is the basis of the revival in production goods industries.
Growing employment in the investment goods industries increases
workers' incomes, and so the demand for consumption goods expands
again. This is the way in which one cogwheel drives the other in the
upward phase of the cycle.

Reproduction of fixed capital is concentrated in the upward phases of
the cycle. In crisis and depression hardly any net investments take
place and even replacements are reduced to a minimum. Marx stresses
the connection between this discontinuity in the reproduction of
fixed capital and the trade cycle:

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