[OPE-L:4447] Re: Mandel vs. Baran-Sweezy

A.B.Trigg -Andrew Trig (A.B.Trigg@open.ac.uk)
Wed, 19 Mar 1997 10:55:06 -0800 (PST)

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Sorry for the delay in responding to your questions Michael.

In answer to your first question/point (below), I agree that the rational
kernel of the monopoly capital approach is whether the increase in potential
profits is realised. The feedback from capacity utilisation to investment
is not a Kalecki story. Note, however, that there is also an increase in
potential profits which is the neoclassical story.

The reference on Kalecki using the falling rate of profit is Kalecki 1945,
"Full Employment by Stimulating Private Investment". In Jerzy Osiatynski
(ed.), Collected Works of Michal Kalecki, vol. 1, Capitalism: Business
Cycles and Full Employment. Oxford: Clarendon Press, 1990, pp. 377-386.
The quote I picked is where Kalecki says, "There comes into the picture
another contradiction of the capitalist system formulated by Marx in his law
of the falling rate of profit" (p. 385). He then reveals his true socialist
colours by saying that "state-owned factories should be built to fill the
deficiency of private investment" (p.385).

I should also say that the falling rate of profit runs right through
Kalecki's main body of work, as is agreed for example by Malcolm Sawyer in
his book on Kalecki.

On your final question, the argument is that Sweezy says that his book with
Baran was part "of a line of thought which originated with Michal Kalecki"
(Monthly Review 1980, 32(5)). But in Monopoly Capital he(they) write of
"substituting the law of rising surplus for the law of falling profit" (p.
80), which, on the above interpretation does not originate with Kalecki.

Somebody asked who were the monopoly capital people still working in this
area. A good source is the article by Lavoi in the December 1996 issue of
Review of Radical Political Economics.

In solidarity.

Andrew Trigg
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>Subject: [OPE-L:4336] Re: Mandel vs. Baran-Sweezy
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>In message Sun, 9 Mar 1997 13:27:00 -0800 (PST),
> "A.B.Trigg -Andrew Trigg" <A.B.Trigg@open.ac.uk> writes:
>> I think it is important in looking for a way to handle monopoly in
>> Marxian economics, to emphasize your statement that the Baran/Sweezy
>> monopoly capital model is based on a particular reading of Kalecki. In
>> a paper published in the Journal of Post Keynesain Economic (1994), "On
>> the relationship between Kalecki and the Kaleckians", I have argued that
>> the Baran/Sweezy model has nothing much to do with Kalecki. Their
>> argument that potential profits will rise with monopoly is shown to have
>> more to do with the neoclassical monopoly diagram. Kalecki himself
>> argues that monopoly does not impact on either total profits or the
>> profit rate.
> But, Kalecki proposes (in Theory of Economic Dynamics) that:
> "Imagine, for instance, that as a result of the increase in the degree
>monopoly the relative share of profits in the gross income rises. Profits
>will remain unchanged because they continue to be determined by
>investment.... The level of income or product will decline to the point at
>which the higher relative share of profits yield the same absolute level of
>profits" (61).
> This statement is consistent with Marx and with Baran/Sweezy. For any
>given level of income, the potential profits (and also the unrealised
>surplus value) rise as the degree of monopoly increases--- assuming
>investment,etc unchanged. Off-hand, I do not see how this argument depends
>upon the neoclassical position. Note also that Steindl made the same
>argument--- that the rise of oligopoly increases the production of surplus
>value but it can be realised only if capitalist expenditures
>increase. This is, I think, the rational kernel in the Baran/Sweezy
>Capital argument.
>> He even has a model in which turning points in the
>> business cycle are based on a falling rate of profit mechanism.
> I'd love to get the reference on this, Andrew. Is it from the 1933
>> Sweezy
>> misreads Kalecki as badly as I am told that apparantly he has misread
>> Marx!
> Are these examples of misreading to be found other than in Monopoly
>Capital? If so, I'd be very interested in seeing such examples.
>> In looking for a way of handling monopoly I think that Kalecki deserves a
>> close reading. In addition to modelling a falling rate of profit
>> mechanism, Kalecki's use of departments of production has much in common
>> with Marx; whilst at the same time introducing new ways of handling
>> phenomena such as monopoly.
>I agree, Andrew.
> in solidarity,
> mike
>Michael A. Lebowitz
>Economics Department, Simon Fraser University
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