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

From: Paul Cockshott (wpc@DCS.GLA.AC.UK)
Date: Mon Oct 10 2005 - 08:55:21 EDT

>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.
I regard labour as productive if it contributes to a surplus product
in the economy which, when this surplus product is sold, will in turn
appear as surplus value.
This surplus product is the source of growth and accumulation.

This is different from an "activity's effect on growth and

There may be activities which, in the presence of unutilised labour and
other resources can stimulate growth and accumulation. For example if
Chairman of the Federal Reserve decides to lower interest rates, this
stimulate accumulation, the spreading of stock exchange rumours about
great profits to be made on the internet also stimulated accumulation,
this does not make the work of the Chairman of the Fed or of the rumour 
mongers productive labour.

On the other hand, the labour of a construction worker is productive
they are in department I and so is the labour of a MacDonalds burger
since they are in department II.

A rise in the productivity of either of these workers will directly, in
the Macdonalds case, and indirectly in the construction work case, lead
to a rise in surplus value by reducing the necessary labour time in
the economy as a whole.

The same is not true of dept III. An improvement in technology there
leads to a greater physical surplus, but no increase in its value.
the change in Hydrogen Bomb design in the mid 50s from using liquid
to using lithium deutride, the result was a big increase in the number
of bombs that the US was able to produce. But since these bombs did not
enter as means of production back into the economy, there was no 
concomitant rise in the rate of surplus value.

>  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.
No, it it just that there is not always sufficient spare labour
and periods of rapid accumulation exhaust the supply.

>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.
No, employment is not necessarily productive employment.

>  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
the way of new investments by which OCC was to be lowered and rate of
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.

No by my definition a running down of the capital stock is
not accumulation.

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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