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

From: Paul Zarembka (zarembka@BUFFALO.EDU)
Date: Thu Nov 30 2006 - 09:16:36 EST


OK.  But I was really surprised at Rakesh's 'maximize luxury consumption'
frame of reference for somebody's theory (Marx? Grossmann?).  I just didn't
think it should pass unnoticed (I wasn't wanting to start a whole new
thread).  If Rakesh hadn't pushed it, I still might have let it pass as a
slip.  But...

Now I think I have a better handle on where he is coming from.


--On Thursday, November 30, 2006 8:53 AM -0500 Jerry Levy
<Gerald_A_Levy@MSN.COM> wrote:

>> 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

THE HIDDEN HISTORY OF 9-11-2001   --"a benchmark in 9/11 research", review
Volume 23 (2006), RESEARCH IN POLITICAL ECONOMY, P.Zarembka, ed., Elsevier

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