[OPE-L] Capital reproduction theories and the facts

From: Jurriaan Bendien (adsl675281@TISCALI.NL)
Date: Fri Sep 08 2006 - 12:24:44 EDT

Paul wrote:

One must surely distinguish between financial claims and real capital
stocks. The former are information, the latter are values.


Well I did already refer to financial assets... I would say the distinction
is not between real and unreal capital, but between physical (tangible)
capital assets and non-physical (intangible) capital assets.

It is very difficult to estimate any meaningful national "stock value" for
net financial assets, but arguably it is larger than the stock of physical
assets. Of course, in part the financial assets refer to claims on physical
assets. Financial claims I think are not just information, but tradeable
values (though not labor-values in Marx's sense, because these apply to
product-values - at most financial claims can be *expressions or
representations* of product-values.

At a certain level of abstraction, Marx conceives of capital as existing
either in the form of money-capital (financial assets), commodity capital
(products, either goods or marketable supplies of services) and production
capital (means of production). But in reality this is a simplication, and
the boundaries are in reality not so clear. For example, purely financial
assets may have the status of either money-capital or commodity-capital.
Residential buildings may be either owner-occupied durable consumer goods,
or capital assets (objects of investment for profit). Part of the capital
tied up in production may function only as financial asset, and so on.

I suppose Marx was talking about the capitalist mode of production as the
unity of production and circulation of commodities, but capitalist society
as whole contains far more capital assets, both physical and financial, and
point is, these assets - which may have distinct circuits of exchange - have
an impact on the process of economic reproduction as a whole. With the aid
of credit and legal enforcement, capital can mutate fairly smoothly from one
form into another form, and it is the distribution of total capital between
these different forms that shapes the pattern of economic reproduction.
Typically a falling average profit rate in production causes capital to exit
from the sphere of production, but obviously this exit does not mean at all
that it ceases to accumulate (at a lower or higher profit rate as the case
might be). It merely assumes another form. Within large corporate entities,
the profit accounting may become less meaningful macroeconomically speaking
since profit from the same outputs is extracted by different companies in
the corporate group.

We could argue (as Grossman does) that ultimately the amount of gross profit
contained in new output must grow sufficiently to back all the financial
claims that are staked on it, but it is also true that: (1) with the aid of
credit you can displace the payments for current activity in space and time,
and thus the trade in financial assets can attain a degree of independence
from the sphere of production, (2) there exist a lot of capital assets, both
physical and financial - external to the sphere of production - as I
illustrated - with circuits which may become largely separated from the
sphere of production. Marx never dealt systematically with the profits
involved here, referring only vaguely to "profits upon alienation" (in the
juridical sense), meaning these profits do not represent a net addition to
new value or total wealth, but a transfer of value. Basically the wealthier
a society is, the more assets it has accumulated which exist *external* to
the sphere of production.

About half of the value of net output in the US economy is nowadays
classified as services, and as a corollary more or less the same applies to
intermediate consumption.  Some services are simply products (straightword
commodity production) or a direct input into the production of goods; with
other services (e.g. personal services), however, the moment of production
and consumption coincides, or they are financial services, and this again
impacts on the process of economic reproduction.

The Marxian analysis of the services economy is not well-developed yet (see
however Christian Girschner's book in German), but basically I would say the
overall, longrun tendency of capitalism is to transform the results of human
labor more and more into mass-reproducible commodity products. Typically, as
the long term trend, first services are split out in the division of labour
as separate, independent activities, then services are transformed into more
or less standardised "service products" produced by workers who can be
easily replaced (the labor is effectively deskilled or become less
specialized), and finally a tangible mass-reproducible good
replaces/substitutes for the service. This reflects, in part, the
transformation of capitalistically unproductive labour into capitalistically
productive labour, i.e. the modification of the division of labour in
conformity with the requirements of organising the valorisation of capital
more efficiently, imposing the specifically capitalist mode of production on
the labour involved. However, the possibility of this transition occurring
itself depends technically greatly on the specific nature of the use-value
involved, and possibly also on power and property relations or ethnic
peculiarities - in some cases the complete process occurs, in some cases
only in part - because it is technically not possible (yet) to substitute a
mass-reproducible commodity. An example I sometimes use is pop music.
Initially, you have bands and singers performing live in pubs, and so on.
Then you have mass-produced studio recordings (a more profitable activity)
and mass concerts. Finally, you have people downloading songs for their
Ipods. In the process, a transition occurs from a shared live experience, to
a service, to a privately consumed marketable product, a commodity. Since,
dialectically speaking, form and content "interprenetrate", however, the
very fact that the song becomes a marketable product, privately consumed,
also begins to affect the content of the song.

Some time ago I provided a statistical summary of the US division of labor

The picture you get from that is obviously very different from the
capitalist society Marx knew. You don't simply have a sector which produces
consumer goods,  a sector which produces means of production, and a luxury
goods/arms sector. As regards armaments production and the military, SIPRI
nowadays publishes (German-produced) data on this:


Year  Employment in arms production    Total armed forces personnel
1990  3115000                                             2181000
1991  3045000                                             2115000
1992  2840000                                             1919000
1993  2620000                                             1815000
1994  2460000                                             1715000
1995  2315000                                             1620000
1996  2210000                                             1575000
1997  2215000                                             1539000
1998  2180000                                             1505000
1999  2240000                                             1486000
2000  2425000                                             1483000
2001  2510000                                             1487000
2002  2600000                                             1506000
2003  2700000                                             1496000

as far as I know, "Employment in arms production" refers specifically here
to producing commissioned military hardware, not ancillary goods (uniforms,
certain vehicles, buildings etc.) but I could be wrong about that.

After the falling of the Berlin Wall in 1989 and the easing of geopolitical
tensions, both the number of US military personnel and the US weapons
industry went into decline (the weapons industry oriented more and more to
export, and also shifted production to an extent overseas). With the Bush
administration, however, there is however again a significant upswing. The
staff of the Dept of Defense itself has remained fairly stable at about
650,000 employees. http://www.whitehouse.gov/omb/budget/fy2007/pdf/hist.pdf

But as regards arms production, the general law of motion of capital
applies: fewer workers employing bigger, more efficient machines can produce
much more military hardware in the same amount of time. See for example
http://www.time.com/time/photoessays/2006/ammunition_plant/ It shows how
2,000+ workers can assemble 6 million bullets per day.


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