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

From: Paul Cockshott (wpc@DCS.GLA.AC.UK)
Date: Fri Oct 07 2005 - 05:19:40 EDT

> A stimulation of employment may pull the economy out of recession
> and allow the expansion of the basic sector which in turn will allow
> the physical surplus of the basic sector to grow, and this, when
> expressed in money terms will represent surplus exchange value.
> Unproductive employment in the military may stimulate this but
> that does not make employment in the military productive.
Well it is productive enough to have pulled the economy out of recession
allowed the expansion of the basic sector. Your choice not to call it
seems arbitrary in what you have conceded.
Moreover, do remember that you defended Andrew Trigg's argument
that the whole economy could be pulled forward as long as banks were
willing to finance and capitalists were will to indulge in ever more
luxury spending. Now you are arguing that luxury spending is not truly
productive, but this runs against Trigg's, Kalecki's and Keynes'
You simply have to choose between Smith and Keynes.

I am distinguishing between first order and second order effects.
The first order effect of for example expenditure on armaments is
unproductive. As a second order effect, through the 'accelerator'
you can subsequently get a growth in the productive sector but
only provided that there is sufficient spare labour and means
of production to allow for this.

The effect is clearer if you look at two hypothetical routes out
of recession:

1) The state builds aircraft carriers and battleships as happened
   1939 - 45 in UK and the USA.

2) The state expands publicly owned industries investing in real
   means of production in the railways, steel, gas electricity.
   This happened in the UK from 45 to 52 and averted a post-war
   recession of the type that occurred in the early 20s.

Although both cases led to full employment, the first course of
action led to a run down of the constant capital stock of the economy
the second course of action led to a rapid growth in that stock.
The first involved a growth in unproductive sectors the second
a growth in the productive sectors.

This distinction is crucial to understanding the long term trajectory
of the organic composition of capital and the rate of profit.

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