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Like Rakesh, I always understood Marx to be showing how unlikely a balance
was and that no forces worked to create such a balance.
> Dear Paolo,
> Well if we accept Marx's premise that the magnitude of fixed capital that
> must be replaced actually does vary in successive years--a reference to a
> certain kind of lumpiness in investment?--then it follows that since
> capacity in dept I must be large enough to meet very large demand in
> certain years, there will then be excessive capacity in smaller years.
> Total production of the means of production must thus be free to increase
> in certain years and decrease in others. Marx thus concludes: "This can
> only be remedied by perpetual relative overproduction; on the one hand, a
> greater quantity of fixed capital is produced than is directly needed; on
> the other hand, and this is particularly important, a stock of raw
> materials, etc. is produced that surpasses the immediate annual need (this
> is particularly true of means of subsistence). Overproduction of this kind
> is equivalent by the society over the objective means of its own
> production. Within capitalist society however it is an anarchic element.
> "This example of fixed capital--and in the context of reprouction on a
> constant scale--is a striking one. A disproportionate production of fixed
> and circulating capital is a factor much favoured by the economists in
> their explanation of crises. It is something new to them that a
> disproportion of this can and must arise from the mere *maintainence* of
> the fixed capital; that it can and msut arise on the assumption of an ideal
> normal functioning, whith simple reproduction of the social capital already
> Capital, Vol II. Vintage1981, pl 544-45. (the end of section 11 of chapter 20).
> As Mattick notes, the last thing on Marx's mind here seems the
> determination of the parameters needed for equilibriated growth.
> Yours, Rakesh
> >Dear Rakesh, doesn't the continuous presence of a group of capitalists which is
> >saving a depreciation fund while another group is replacing fixed capital
> >guarantees a more or less continuous demand for fixed capital? Does this point
> >bear any relationship to your point that after capitalists have replaced ficed
> >capital "there will be no demand for fixed capital for years"?
> >If your proposition eventually incorrect then your derivation of product
> >innovation in the industry of machines (fixed capital in general) will be
> >incorrect also.
> >Rakesh Bhandari wrote:
> >> in his accumulation paper, Paul Z wrote:
> >> _____________
> >> Years later, however, Howard and King (1989, p.121) state that "Luxemburg
> >> dismisses Bauer's treatment of disproportions
> >> between the two departments as involving 'sheer swindles', and deny that
> >> the capitalists in department II could conceivably
> >> purchase the 4666 units of means of production which are needed to
> >> maintain equilibrium growth". Then they flatly say, "this is
> >> simply wrong" (and go on to tell us how she could have been better
> >> spending her time!). They don't explain why she is "simply
> >> wrong".
> >> ______________________
> >> Why was Bauer (see p. 117) simply wrong? As Howard and King put it,
> >> Luxemburg could have then asked the question of whether the possibility of
> >> equilibriated growth in Bauer's or any two department model could ever be
> >> turned into reality. As Mattick notes on p.107-8 of Economic Crisis and
> >> Crisis Theory--of which you are quite dismissve without much
> >> explanation--Marx actually uses these schemes to show that overproduction,
> >> esp in Dept I, is simply unavoidable even in a socialist society, though
> >> it would then reflect social control over production instead of serving as
> >> an element of anarchy as it does in bourgeois society.
> >> Just to put the point in my own terms: after fixed capital is replaced,
> >> there couldn't be sales from Dept I to Dept II for several years. Wouldn't
> >> this mean the idling of the machines with which the newly installed
> >> machines were produced-- leading to the former's moral depreciation, if not
> >> physical destruction?
> >> Shouldn't one expect then that even after fixed capital has been replaced,
> >> there will still be pressure for overproduction of new machines,which
> >> should give rise to hyper competition in the capital goods sector that
> >> leads to tremendous innovation and thereby inducements to quicken the
> >> turnover of capital? From my reading, exactly because of persistent
> >> disequilibrium and overproduction capitalism has been such a dynamic and
> >> technologically innovative system.
> >> At any rate, I think Mattick is correct to criticize Grossmann for having
> >> conceded that if the interdepartmental transfer of value and therewith the
> >> formation of production prices is considered, Bauer's two dept schemes can
> >> show the possibility of equilibriated growth, even if that is then treated
> >> simply as nothing more than ideal average of the accumulation process.
> >> The schemes --even Bauer's into which several more realisitic features are
> >> built--simply could never be turned into reality nor did Marx ever intend
> >> them as a model of reality. I thought Mattick was right about this, and I
> >> couldn't figure out why you disagreed.
> >> Yours, Rakesh
-- Michael Perelman Economics Department California State University Chico, CA 95929
Tel. 530-898-5321 E-Mail firstname.lastname@example.org
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