[OPE-L:7023] [OPE-L:517] brenner

David Laibman (DLaibman@brooklyn.cuny.edu)
Thu, 25 Feb 99 13:22:00 EST

Hi again.

I appreciated the comments by Rakesh and Allin on my little editorial on
Brenner's monograph. As I said there, I don't think a short statement can
"dispose" of his work, which should continue to be studied.

A few short points.

Rakesh refers to Brenner's dismissal of Fred's work relating profit rate
trends to the rising share of unproductive labor. I appreciate Fred's
empirical work in this area -- in particular, his attempts to measure the
relative importance of circulatory and supervisory labor over time. I do
not, however, think that the argument from this to a falling rate of profit
and crisis is sustainable; my review-essay on Fred's book appeared in
*Science & Society*, Summer 1993, and a related comment on Simon Mohun's
article on the theoretical aspects will be out soon in RRPE. So I guess I
share Brenner's skepticism on this point.

Rakesh asks me to be specific about where in Brenner's chain of argument I
find a need for a careful, formal statement. I think it is mainly where he
states that technical change by innovators forces existing firms, which are
locked in with fixed capital, to lower their prices (and profit rates), and
that this forces down the economy-wide rate (despite an offsetting upward
influence from the spread effects of the technical change). Someone should
work up a two-sector model: impose a technical change in one sector (with
constant capital-output ratio and real wage); allow this change in one
sub-sector within the sector; explicitly state and explore some assumption
about how the temporary surplus from the technical change will be used by the
innovators (i.e., do they keep it, or do they "spend" some of it in lower
prices to improve market share at the expense of the non-innovating firms?).
Do the innovators gain at the expense of their competitors in the same
sector, or at the expense of the other sector? Many questions. Then, we
must let the dust settle! (Sorry, TSS people: I will try not to use the "e"
word, but unless we let the dust settle, we simply can't get answers.) The
final situation will have the same partitioning of the innovating sector into
two parts; one profit rate (let's say) for the innovating firms in the
innovating sector and the other sector, and another lower one for the
non-innovating firms in the innovating sector. Object: to compare the
weighted average profit rate in this situation with the uniform pre-existing
one. Brenner says it will be lower, as long as wages are positive. I have my
doubts, but the issue cannot be settled by long verbal arguments, not even
when these are made in the 9-pt type used by NLR.

Finally, Allin points out that the deteriorated situation post-1979/80 can be
interpreted precisely as the result of a profit squeeze occuring earlier. I
agree. I was summarizing Brenner's rejection of profit-squeeze theory here,
and he would have to show that the opportunities to evade tight labor markets
existed in the earlier period, not the later one. I think (as I argued
in my last entry in the Thompson-Laibman discussion in RRPE) that there is in
all likelihood a profit-squeeze/accumulation cycle of the sort that Andrew
Glyn and co-workers have traced in the post-World War II period, but that
this process cannot be invoked to explain *long-term* trends in the profit
rate, or *secular* crisis.

Best to all,


David Laibman