Re: [OPE-L] what is irrational in the functioning of capitalism?

From: Jerry Levy (Gerald_A_Levy@MSN.COM)
Date: Thu Nov 30 2006 - 08:53:07 EST

> The object of capital is to control as much surplus value as possible.
> His/her personal choice thereafter regarding how much to use for luxury
> consumption is just that, but a capitalist who likes luxury consumption
> too much is violating his/her social function and that is NOT virtue.
> That's in Marx, but I don't feel like finding the exact passage in
> 'Conversion of  Surplus Value into Capital'.

Hi Paul Z (and Dogan, for reasons that become clearer in the following):

I agree, but think that its important to note that this subject is returned
to by Marx at another level of abstraction, namely, that of capitalist
production as a whole.  In Volume I there is the character mask/capital
personified assertion, but later where 'many capitals' are taken into
account, there is another argument.  In the context of competitive branches
of production,  any capitalists who increase individual consumption at the
expense of  the productive re-investment of their money capital in more
C & V run the risk of being uncompetitive and being driven out of the
market and hence for them is not a 'virtue'.   In this sense, there is a
somewhat modified 'invisible hand' argument: capitalists are led as if by an
invisible hand to productively  re-invest (and engage in technological
changes in constant capital) at a greater scale.  Unlike the Smithian
argument, though, the social-economic consequences are not all or
basically positive.  In this sense, I think that his presentation of the law
of the tendency for the general rate of profit to decline (LTGRPD) is
implicitly a critique of Smithian doctrine.  But, I admit that there isn't
textual evidence to show that Marx intended the LTGRPD in part to
be a critique of Smith.

At a still more concrete level of abstraction (one that goes beyond
_Capital_) it could be claimed that corporations must invest in R&D now
if they expect to remain competitive over the longer-term.  Of course, there
is risk in such expenditures since monies allocated for R&D are in a
sense speculative to the degree that corporations do not know whether
their research will pan out in terms of new product technologies or
advances in the quality of means of production.  In this sense also, firms
are driven to undertake these expenditures in order to remain competitive
and these monies mean that there is less left over (in the short-run) for
individual consumption.

One can also argue that firms for competitive reasons are driven to increase
some *unproductive* expenditures.  For example, firms in oligopolistic
markets tend to spend heavily on advertising and marketing.  This (if there
aren't price increases as a result of increased market power) reduces the
possible amount of monies which can be used for individual consumption
_and_ reduces the amount of monies that can be used for productive
investment.  From the perspective of individual firms the above seems
entirely rational; from a broader social perspective (which Dogan has
been interrogating) it is another question.

In solidarity, Jerry

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