[OPE-L:7284] [OPE-L:813] Re: Tech Change

John R. Ernst (ernst@PIPELINE.COM)
Thu, 01 Apr 1999 15:48:26

Re Jerry's [OPE-L:812]:
I wrote:
> Yes, we need a general case. But as we search
> the data I fail to see the need to immediately locate it.

Jerry wrote:

The issue is not "the data". The issue is how we see technical change
developing during the period of large-scale industry and the relation of
different forms of technical change to the FRP. We seem to be stuck since
we have somewhat different perspectives on the predominant, or general,
form that technical change takes. Until we can locate a credible example
of what might be considered a "general case" (or at least discuss several
different examples), then we will simply be repeating assertions without
discussing the concrete nature of how technical change develops during
the course of capital accumulation.

My comment: I claim we do have a general notion of technical change.
We find it in Marx. Was he wrong? To answer this question a bit
of data might be helpful.

I had written:

> No, I don't want a literature survey; I'd like to know more of the data.

Again, you are fixated on "the data". What would "the data" tell us about
specific markets or sectors of the economy without a knowledge on our
part of the dynamics of those markets and sectors? If we want that
understanding then I think we have to be familiar with the literature on
the economics of technological change.

My comment: What I am looking for is how much a new machine(s) costs
and how much that machine will increase output. That was the problem
at hand. If you find this type of stuff in the literature on the
economics of technological change, please share it.

Jerry wrote:

On the mailing industry:

> Most of
> the larger firms turn away business these days (unused capacity?).

Jerry wrote:

What is the "workweek" of fixed capital in this branch of production? If
there is unused capacity, then capitalists in this industry can expand
output by hiring more workers (e.g. adding a 2nd shift) without purchasing
more constant fixed capital (although, the increase in capacity would
require an increase in the requirement for constant circulating capital).

My comment: I think the capitalists know something about this and do
it to the extent it pays.

I wrote:
> I do
> not think you place an industry in the period of manufacture based upon
> what you've asserted -- constant fixed capital per firm.

Jerry wrote:

I didn't assert that. I simply asserted that "the investment in constant
fixed capital per firm is relatively low" (relative to firms in other

> If constant fixed per firm is low, what is the figure and with what
> are you comparing it?

I'm comparing it to firms in the industrial sector of the economy, such as
the metalworking sector.

My comment: In your comparison, what numbers do you use?

I wrote:

> Can you name one firm in the industry with unused capacity?

Jerry wrote:

There is a firm in the Lower East Side of NYC that has unused capacity.

My comment: Trying to be part of mailing industry in Manhattan is
clearly a losing proposition.

I had written:

> My comment: What are you talking about? You buy a computer and some
> software
> and you're able to send out a few million pieces of mail? Again, the use
> of computers in the industry is minor. Where are you getting your ideas
> of the mailing industry?

It's true that there are other technologies involved besides computers and
printers (which are how the mailing addresses, labels, and actual letters
themselves are generated, isn't it?) such as postage-metering machines
and machines, including photocopiers, that can collate, staple, and fold.

My comment: My point is that less than 5% of the total investment would
be in computers.

I wrote:

> Rather than talk about the existence of this
> vast literature, again why not pull a case or two? Then let's deal with
> it.

Jerry wrote:

For now, I'd rather stick to this example since you raised it. But, if you
want to talk about larger markets in the industrial sector (e.g. many
branches of production in the metalworking sector), then that's OK with
me (especially since there's a lot more literature on it).

My comment: Within this literature, what are you finding? Is there
any data at all on the increasing cost of fixed capital and the
consequent increases in output? If not, what are we talking about?

My point with the mailing industry is that I've never seen a new
machine or a new set of machinery that does not cost more than the
older machine or older set of machinery did when it was new. At
the same time, the % increases in output that result from use of
the new equipment are greater than the % increases in investment.
I think it is legitimate to question whether or not this
represents the general case. Part of that questioning process
would involve looking at other industries and comparing % increases
in investment with % increases in output.

Jerry wrote:

Yet, we don't seem to be getting anywhere and no one has joined our
conversation so I'm not sure, after all, if we should continue. Mind
you -- it's not that I don't mind talking to you, but I think it would
be a better conversation if others joined in.

My comment: It's your choice. Frankly, I think there is an absence of
concrete information on the subject. Why? Firms generally don't
report how much particular processes cost. If you know of any, I'd
be interested. Data on the macro level seems easier to come by than
that on the micro level.