Re: [OPE] Rober Brenner and empiricism

From: paul bullock (
Date: Wed May 21 2008 - 05:06:22 EDT

Anwar was quite right, 

Brenner never seemed to grasp the central issue of the rising organic composition of capital and its contradictory consequences: intense competition, the falling rate of profit, yet a growing mass of profit (which he muddles with the over production of capital in his 'overhang'), centralisation and concentration of capital, a period of rising real incomes for only a section of the working class, polarisation of the conditions of life, and so on. Indeed it has bee ironic to see the earlier anti smithian smithify much of the process -  a point some of us over here have made since the 1998 New Left Review publication - although in the end he remains essentially a simple demand and supply merchant throughout.

  ----- Original Message ----- 
  From: Jurriaan Bendien 
  Sent: Tuesday, May 20, 2008 9:43 PM
  Subject: [OPE] Rober Brenner and empiricism

  Here's Anwar Shaikh's criticism:

  "Brenner's own explanation is that the decline in the advanced capitalist world originates in the period
  from1965-73, when excessive competition between U.S. manufacturers and their German and Japanese
  counterparts triggered a sharp fall in the U.S. manufacturing prices and hence profit rates. According to
  Brenner, this fall in U.S. manufacturing profit rates led to a long term fall in the general rate of profit in the
  U.S., in that of the manufacturing sectors of other advanced capitalist countries, and indeed in the general
  rate of profit of the advanced world as a whole. In this way, the original fall in U.S. manufacturing
  profitability suddenly transformed the global boom into a global crisis. What followed was a slowdown in
  the growth of investment, productivity, and real wages, and a consequent rise in intensified class conflict
  (36-37, 93-96).

  Central to Brenner's thesis is the claim that the fortunes of U.S. manufacturing in the period from 1965-73
  determined the subsequent economic health of the whole advanced world. But in those times US
  manufacturing accounted for about 25% of US Gross Domestic Product (GDP), and a mere 12 % of the
  advanced world's GDP. Yet, according to Brenner, this one sector was the lever which moved the world.

  The central theoretical question, of course, is how this could possibly be so? If one recalls that postwar
  inflation meant that individual sectoral prices were steadily rising, the question sharpens: precisely how could
  a fall in relative U.S. manufacturing prices reduce the rate of profit of the global economy? One answer
  might be that this fall was a trigger which precipitated a phase change in an already tottering global structure
  of accumulation. But this would then require some prior grounding, such as a secular fall in international
  profit rates, to explain why global accumulation had become so weakened in the first place. Brenner rejects
  any such explanations on theoretical grounds, which as we shall see depend critically on the neoclassical
  theory of perfect competition. Instead, he explicitly argues that the travails of U.S. manufacturing during
  1965-73 transformed the boom into crisis.

  All account of the long boom and its subsequent decay, including Brenner's, rest upon particular theoretical
  foundations, even if these are sometimes only implicit. And since there are a limited number of available
  theoretical bases, such accounts frequently end up recombining arguments developed earlier, stretching as
  far back as Smith, Ricardo and Marx. In this regard it is somewhat ironic that Brenner, who has severely
  criticized others for their 'Smithian' errors, himself ends up invoking Adam Smith's claim that excessive
  competition in individual industries can lead to a secular fall in the general rate profit (Shaikh 1978; Fine,
  Lapavitsas et al. 1999). 

  But since Ricardo and Marx long ago showed that in itself a fall in a sector's relative
  price has no essential impact on the general rate of profit, at a theoretical level Brenner is forced to try to
  link the fall in U.S. manufacturing prices to a consequent global rise in real wages which is sufficiently
  large to bring down the global rate of profit. In this, he shares the 'consensus of today's economists' that only
  an unsustainable rise in real wages can account for secular fall in the general rate of profit, precisely because
  he shares their theoretical foundation on this issue. But at the same time, he seeks to distinguish himself from
  the rest by arguing that the ultimate cause of this rise in real wages was an outbreak of 'unplanned-for,
  unforeseen' price competition which drove U.S. manufacturing prices down between 1965-73 (29).

  Excessive wages are the proximate cause, but excessive competition, is the ultimate cause, at a theoretical
  level. Unfortunately, when he comes to the empirical analysis, he concludes that real wages increases are
  too modest to induce falling profit rates. And so he reverts to a purely Smithian explanation of falling
  profitability, in which a fall in one sector's profitability drags down the general rate of profit without any
  reference to excessively rising real wages (136-8). We will see that in the end Brenner is unable to bridge
  such theoretical and empirical contradictions."

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