[OPE] The organic composition of capital in New Zealand

From: Jurriaan Bendien <adsl675281@telfort.nl>
Date: Wed Aug 05 2009 - 19:29:32 EDT

Statistics New Zealand began developing measures for fixed capital stocks
when I was working there, this was in the early 1990s when I was still
mucking around with Bryan Philpott's data set. It is quite a complicated
job, not suitable for an academic theorist.

In principle the stocks and flows should be estimated at current market
value. Total physical capital should include fixed assets, inventories,
(and, for Marxians) labour costs and certain ancillary operating expenses
charged on capital account. Capital can be measured as financial flows,
stocks, financial ratios or quantities of labour hours. The methodologies
for doing this, as well as their limitations, are wellknown, and I would
think I don't need to explain it now again to an economist.

A brief overview of the neoclassical theory of capital is provided by Paul
Schreyer http://www.oecd.org/dataoecd/33/1/35446773.pdf

The NZ Treasury refers to Paul Schreyer's OECD estimates which suggest that
really, on average, the capital-labour ratio is twice as high in the US, and
one-third higher in Australia.

But this is suspect, both because the neoclassical measurements involve
making valuations diverging from actual flows and stocks of money, and
because there are national differences in technostructure and industrial
structure. The survey will show an asset of $10 but a neoclassical economist
will then say that this $10 should really be valued at $30; and in this way
you can cook up any figure that you like, and that fits with your
ideological dogma. The World Bank does this all the time.

The OECD reports make similar arguments.

There are of course many controversies about the measurement of capital, I
don't deny that, but nevertheless I see no reason to deny the empirical
indications that exist, that on average the VCC is signicficantly lower in
New Zealand than in Germany.

My argument is that, because in the 1990s, and until recently, there was
vastly more profit in property deals and financial trading within a high
interest environment, capitalists investing in New Zealand had very little
appetite for expanding and renovating the productive base of the country -
insofar as they could; almost every sector of industry is nowadays mostly
monopolised by a few large corporations, mostly foreign owned. The focus has
been largely on "maximum shortterm net profit". On the other side New
Zealand is nowadays a cheap labour country, and there's little potential for
expanding domestic markets other than by attracting a whole lot more
(well-off or skilled) immigrants; and there isn't much of a capital goods
sector. That means, that developing the productive base mostly takes the
form of promoting export industries, but these export industries actually do
not lead to much additional local industrialisation. They generate tax, but
a lot of the profit income disappears overseas, and they don't create all
that many extra jobs. If you wanted to promote a more balanced local
development of the country with a better strategy, you would first have to
purge all the top functionaries in the Treasury, the Reserve Bank etc.and
weed out the ideological parasites. Because these people, being dogmatic
ideologists, have all the wrong ideas for New Zealand, although they are of
course loved by foreign investors, for providing them with additional wealth
produced by the local workforce.

In Marxism 101, there is only C+V+S and the labour theory of value, but at
Marxism 601 we are concerned with the interaction of all the circuits of


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