Re: [OPE-L] simple reproduction

From: Rakesh Bhandari (bhandari@BERKELEY.EDU)
Date: Sat Mar 31 2007 - 20:04:56 EDT

Extremely well explained and illuminating to me. Thank you for clarifying
the issue for me.

> On Fri, 30 Mar 2007, Rakesh Bhandari wrote:
>> I should have appended this quote to my post:
>> This example of fixed capital--and in the context of reprouction
>> on a constant scale--is a striking one. A disproportionate
>> production of fixed and circulating capital is a factor much
>> favoured by the economists in their explanation of crises. It is
>> something new to them that a disproportion of this can and must
>> arise from the mere *maintainence* of the fixed capital; that it
>> can and msut arise on the assumption of an ideal normal
>> functioning, whith simple reproduction of the social capital
>> already functioning."  [from Capital, II]
> Looking at Capital II, I think I see what the issue is.  Marx
> explicitly assumes a constant scale of production and constant
> productivity of labour, but there's one other issue that can cause
> problems, namely, an uneven demand over time for replacement of
> the means of production corresponding to the fixed capital.
> Suppose each capitalist uses a machine that costs $100,000 and
> lasts 4 years before it becomes useless.
> From the micro perspective there's no problem: the capitalist sets
> aside $25,000 per year by way of depreciation allowance
> (abstracting from interest paid on such funds) and buys a new
> machine every 4 years.
> From the macro perspective there's no problem if the vintages of
> the machines are conveniently staggered such that an equal number
> come up for replacement each year.  (In a sense this is the
> "natural" assumption for a tidy-minded economist contemplating
> simple reproduction.)
> But Marx raises the possibility that this convenient staggering
> does not obtain: that is, "a greater part of IIc expires [this
> year] than did the year before".
> If there's a temporal lumpiness to the replacement of fixed
> capital, it's easy enough to see how this could create problems
> for simple reproduction.  "All of a sudden" there's a greater
> demand for machines than in the previous year.  The price of
> machines rises.  Resources are diverted into machine production.
> There's a corresponding shortage of the goods figuring as
> circulating capital.  Simple reproduction is screwed.
> Allin.

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