Re: [OPE] topics for summer discussion: theories of the crisis

From: Jurriaan Bendien <>
Date: Thu Jul 22 2010 - 09:19:05 EDT

Hi Dave,

Fair enough, but if e.g. there are five tractors of which one is red in
colour, and four are blue, then focusing on the red tractor on the ground
that this is "materialist" seems rather blinkered Althusserianism, since the
other four tractors are also materially there. I tried once to make a very
approximate calculation of asset values in the US, and concluded that means
of production were only about a quarter of total physical assets, and only
perhaps 10% or so of total capital assets, physical and financial. Hence my
emphasis on the need to analyse the services economy and the modalities of

The problem with identifying the "value rate" is, that it is inferred with
theoretical assumptions from data about the "monetary rate", which itself
constructed according to numerous assumptions. I think this creates
scientific problems, since the concluded variability then derives from
inferring constants and variables from each other. A similar problem arises
with regard to the Ochoa method for deriving labour-values from input-output
data, as I mentioned before on OPE-L. Statisticians often aim to extrapolate
a trend using the known movements in related observable variables, but it is
another thing to infer a new variable from known variables, according to a
theory, and then argue that this new variable can predict the trend in the
variables from which it is inferred. That seems to me a rather dubious



---- Original Message -----
From: "Dave Zachariah" <>
To: "Outline on Political Economy mailing list" <>
Cc: "Jurriaan Bendien" <>
Sent: Thursday, July 22, 2010 12:19 PM
Subject: Re: [OPE] topics for summer discussion: theories of the crisis

> Hi Jurriaan,
> Thanks for your comment.
>> [P]roduction capital is in reality only a smallish fraction of total
>> capital assets in advanced capitalist societies, whether or not we
>> consider only the physical capital used, or include also financial
>> assets. Therefore, the Marxist preoccupation with the profitability of
>> production capital ignores a large trade in non-productive assets and
>> thereby a large chunk of economic life.
> I agree, and that is why I think one must separate measures of
> profitability on financial and non-financial assets. The preoccupation
> with the rate of return on production assets is well grounded in a
> materialist conception of capitalism my view; it is reinvestment of profit
> in these assets that is the source of capitalism's expansive dynamism.
> If profitability of these assets are low in relative terms it affects the
> trajectory of the system because it sets a limit to the rate of expansion
> of the production capital stock; reduces the inclination to reinvest in
> such assets; which in turn affects a whole range of variables (growth
> rates of labour and productivity, output, demand, etc.).
>> [T]he profit rate on production capital may decline in value terms, while
>> in price terms the returns on capital don't, or not to the same degree.
>> But in that case, what needs to be explained is what sustains this
>> discrepancy, and indeed whether or how it can be sustained in the long
>> term.
> Yes, but the question is: if there is a systematic difference in the
> trends between directly observed measures of monetary rate of profit and
> some 'value' rate of profit then the information gained by the latter is
> very limited indeed. It is the former that serve as signals in the system
> not the latter.
> But contrary to Hussons rendering of Kliman's 'value rate', one can
> construct a dynamic steady-state rate of profit based on labour value that
> systematically predicts the trend of the average monetary rate of profit.
> //Dave Z

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