[OPE] No rise is s/v? Kliman's empirical work on the falling rate of profit

Paul,

>From the point of view of the basic concepts of net new capital formation
and net new output, which are fundamental to modern social accounting,
obviously capital gains do not represent net new income generated in the
economy but a redistribution of already existing capital. And thus in that
sense capital gains are not "net" gains.

But it is quite easy to show that if asset values are revalued upwards in
response to demand growth, they create completely new and additional claims
to income, which are not a zero-sum game, in the first instance if you
understand that those claims can claim foreign wealth. They represent an
expansion of the domestic market, and this very expansion generates new
incomes.

If you look at the statistical estimates, it's clear that the increase in
physical capital in the US since 1980 far exceeded the measured net capital
formation in the domestic economy. How is that possible? Well, simply
because of a net gain in imports of foreign goods. What made these imports
possible, may I ask? Three main factors seem important: credit economy,
domestic asset revaluations, and import of foreign capital. National
accounts are called "national" accounts but in reality they are more
"territorial" accounts. The real "national" accounts are the accounts of
governments.

When Karl Marx studied the capitalist mode of production, he was primarily
concerned with physical capital, with means of production and consumer
goods. But he was well aware that this does not exhaust the meaning of
capital, and thus he distinguished between "real" capital (capital invested
in tangible assets) and "fictitious" capital (financial claims staked on
property ownership, a capitalization on property ownership). He did not
consider the credit system as a whole, but only - as he himself says -
insofar as it impacted on the capitalist mode of production. We should not
of course conflate the capitalist mode of production with capitalist society
as a whole, as in primitive Marxism.

As I explain in my paper "Karl Marx and the results of accumulation", there
is a basic fault in Marxist reproduction schemas because they ignore that in
the course of the accumulation process, more and more capital assets are
built up external to the sphere of production - fixed assets, durables and
financial assets. In reality, the total of these non-productive assets are,
in wealthy countries, nowadays larger in value than the total productive
assets. It would be foolish to think, that these non-productive assets do
not generate income, that they are just a stock of consumables, because they
do generate income, through resale, rents and the like. Consequently they
function as capital, and this affects the general level of profitability as
well as monetary relations.

In general, Marx acknowledged that profit could be obtained either from
surplus value newly produced, from the capitalization of property or from
resale of property. Thus, Marx himself rejected the "fundamental Marxist
theorem" of fundamentalist Marxists. Marx referred to "profit upon
alienation", alienation in the old juridical sense of relinquishing
ownership. Nowadays the profit volume from already existing non-productive
assets is very substantial, and in fact it is the basis of what some writers
call "rentier capitalism".

As I have frequently pointed out, the concept of capital accumulation
contains an ambiguity. Namely, wealth can be amassed through producing new
assets or by redistributing existing assets (whether this redistribution
occurs through trade or through expropriation). Since both processes occur
at the same time, that is what makes the ultimate source of wealth and
profits often so difficult to understand. If Marx focused primarily on the
production of new wealth, it was among other things because he knew very
well that you cannot distribute or redistribute more than there is to
distribute. If e.g. I trade ten red marbles for seven blue marbles, this
does not of itself create anymore marbles than the seventeen marbles there
are. For the trading system to grow, there must be a constant supply of more
marbles.

The irony is really that David Ricardo endorsed a labour theory of value,
but nevertheless opined that the proper subject of political economy should
be the distribution of wealth. That is an idea which Marx quite justifiably
denied - we cannot consider the distribution of wealth independently of its
production, and the challenge is to understand their relationship. Nowadays
however we would also add that production and distribution cannot be
understood independently of consumption either. One of the articles I plan
to write concerns that point. It would be simply a myth to think that
consumption is only the sphere of use-values, since consumption becomes
fully integrated in the circuits of capital. The reality of this has to be
critically extracted and theorized, in order to put paid to the ideologies
of "consumer society", "commodification" and "consumerism".

Jurriaan

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Received on Tue Oct 27 02:27:22 2009