Re: [OPE-L] [Fwd: Re: [OPE-L] basics vs. non-basics and financial services]

From: Paul Cockshott (wpc@DCS.GLA.AC.UK)
Date: Wed Oct 05 2005 - 08:36:48 EDT

> If the rate of profit is too low relative to long term rates
> of interest capitalists decline to accumulate constant capital.
> This prevents extended reproduction and, if nothing is done will
> lead to contracted reproduction. In either case unemployment will
> rise significantly.

I get this case. What is the other case?
either simple or contracted reproduction are the two cases

> State expenditure on unproductive activities can create additional
> demand which allows simple reproduction to take place by converting
> some of the output into commodities which are not accumulated.
> This corresponds to a shift in the working population out of the
> production of means of production and into  the production
> of weapons etc.

Huh? This assumes full employment; there need not be a shift in the
That is true, I was making an implicit assumption in my argument
that the economy moved from a phase of expanded reproduction with
significant net accumulation of capital to a recesseionary phase
in which accumulation stopped. I was assuming that at this point
the state stepped in with increased unproductive expenditure on
arms which restored full employment. Compared to the period of
full employment with expanded reproduction, the subsequent arms
boom will involve a shift in employment from means of production
to weapons, mediated by the intervening unemployment.

The absorbtion of another part of the population
> in unproductive financial activities also prevents accumulation since
> the people who work in stock exchange offices of banks are people
> who are not working in factories producing means of production.

Yes but by giving a market to div i and div ii excess capacity can be
worked off, possibly
creating the conditions for an investment led boom.

Do you agree with Keynes or not?
It is of course possible that the increase in government expenditure
will stimulate private investment in means of production. But for
those extra means of production to exist, there must be an expansion of
labour inputs in dept I. A necessary condition of accumulation is
thus a rise in the output of dept I. After the relevant multipliers
are applied you will find that this implies a corresponding increase
of the surplus value in depts I and II.

Thus if dept III carries out net accumulation of 100 million person
this will entail a rise in the surplus output of dept I and II ( the
Marxian equivalent of the basic sector ) by 100 million person hours.
This is only possible if dept I and II produce 100 million person hours
more surplus value.
Thus accumulation is dependent on the surplus value produced in 
depts I and II which was my original argument.

The investment in dept III will be funded on credit lines from
the banks. The additional surplus in dept I will be sold to them
and the bank accounts of capitalists in dept I will be credited with
the proceeds. Thus the bank accounts in dept III go into overdraft
and those in dept I build up credit balances.

The net effect is that capitalists in dept III borrow from
capitalists in dept I which produced the original surplus value.
No accumulable surplus value was produced in dept III.

The debts built up in dept III contribute to the continuous
accumulation of mutual debt within the capitalist class.

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