[OPE-L] Capital reproduction theories and the facts

From: Jurriaan Bendien (adsl675281@TISCALI.NL)
Date: Sat Sep 09 2006 - 16:03:20 EDT

Jerry wrote:

The material form which constant fixed capital takes often
serves as an obstacle to the "mutation" of that form of capital
into another form.

I would agree with that, there is no perfect mobility of capital and labor,
and there can be both entry and exit barriers. Indeed you could argue that
this contributes to economic crises. All I was really trying to argue here
is, that the sphere of production is only one avenue for the accumulation of
capital, and if the mass of assets external to that sphere becomes very
large, this becomes highly significant for the accumulation process as a
whole. I think to an extent conventional macroeconomic statistics do not
make this very explicit, insofar as total net income from rents and
interest, and pure property income, is not as clearly itemised in social
accounts as it could be. And in Marxist theories it is often ignored,
insofar as "accumulation" is thought to have something to do with

But anyway I'm taking a break from OPE-L after this as my thoughts are
running ahead of myself, causing stupid errors.

As regards imports of fuel supplies into the US, of course they do exist
more or less permanently as a "stock" of continually replenished reserves,
and in that sense they are a physical capital asset too.

I was just trying to look at the question of to what extent the net
additions to the value of the physical capital stock in the US are due to
domestic value-adding production, and to what extent they could be due to
net imports from other countries (trading "real wealth" for paper dollars,
as Henry Liu suggests).

The impression I had was, that the net gain in value terms to the total
physical capital stock from imports into the US is proportionally not as
great as you might think, once you factor in the exports of goods - even
though the physical quantities of goods involved could be very large. Just
checking the figures again,

(Imports less exports by type of good, rounded billions of dollars, US

foods/feeds/bevs +$9.1 billion
industrial supplies +$290.8 billion
capital goods +$16.5 billion
vehicles and parts +$140.9 billion
consumer goods +$291.5 billion
other goods +$18.6 billion
Total net gain by value from foreign trade in goods +$767.5 billion

nominal increase in US GDP 2004-2005 = +$743.3 billion (BEA)
Nominal increase in sales of goods included in GDP = +$172.8 billion (BEA)
Nominal increase in value-adfde by private goods-producing industries
=+$139.6 (BEA)
nominal increase in US total private fixed investment 2004-2005 = +$205.6
billion (BEA)
nominal increase  in US total fixed assets 2004-2005 = +$2.1 trillion (BEA)
real increase in total US privately owned physical assets 2004-2005= +$3.2
trillion (Budget data)
real increase in the value of total US land 2004-2005= +$2.2 trillion
(Budget data)
real increase in the value of total US durable consumer goods 2004-2005=
+$100 billion (Budget data)
Nominal increase in the value of total US durable consumer goods  2004-2005=
+$171.2 billion (BEA)
real increase in the value of plant/eqpt/inventories 2004-2005= about +$300
billion (Budget data)
real increase in the value of residential structures 2004-2005 = about +$700
billion (Budget data)
nominal increase in the value of residential structures 2004-2005 = +$1.1
trillion billion (BEA)

Well, what can I say. The net gain from imported goods 2004-2005 does seem
to be large after all, it is larger than the nominal increase in US GDP!
There are discrepancies between US Budget and BEA data.

But, basically, I would say reported total values for physical assets within
the USA are increasing *far beyond* what is can be attributed to gains in
domestic output and fixed investment and net imports. It is as though the
whole society is revaluing itself upwards, or in any case, there's a major
case of "physical asset inflation" happening, especially real estate of all
types (not just housing, also business structures and land).

Generally I think we can arrive at better theories by looking at the readily
available facts, which can help us understand the real proportions and
dimensions of different problems. This is not really a true "empiricist"
stance though, since I acknowledge that there is always a difference
possible between systematically gathered observations and the objective
phenomenon they seek to represent. Nevertheless a bit of factual inquiry can
often put theoretical issues in better perspective, so that we don't make
mountains out of molehills or vice versa. If my life had gone differently, I
would have explored the issue more systematically... all I can offer here is
a quick sketch of what I am talking about, in a Colin Clarkish sort of way.


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