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

From: Rakesh Bhandari (bhandari@BERKELEY.EDU)
Date: Fri Oct 07 2005 - 11:30:24 EDT

At 10:19 AM +0100 10/7/05, Paul Cockshott wrote:
>>  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

Well you seem to be defining productive in terms of activity's effect
on growth and accumulation. Yet activity you call unproductive  is
productive in that sense; in fact that unproductive activity may be
the only real productive option at some point. It seems to me that
you are caught in terminological confusion.

>  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.

This makes it sound like an exception that there is unemployment.

>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,

so it was productive in your sense.

>  the first course of
>action led to a run down of the constant capital stock of the economy

Yes and for this very reason wiped out excess capacity which had stood in
the way of new investments by which OCC was to be lowered and rate of profit
increased (war is often not destructive but regenerative of the
capitalist economy--see Grossmann's critique of Bukharin on this
point). Again in terms of your definition of productive the effect of
running down excess constant capital was productive. So--once
again--are you a Keynesian/Kaleckian or not?

>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.

Not really. See above.

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