re 5303 >On Sat, 31 Mar 2001, Gerald_A_Levy wrote: > >> Re Paul C's [5203]: >> >> No one has answered the above post (which >> is reproduced at the end of this post). > >Paul's post was closely argued and took a bit of digesting. I printed >it out and studied it the other day. I find it very persuasive. The >gist of it is that if an armaments industry is transferred from state >to private capitalist ownership, with no change in the technical >conditions of production, the effects are (a) that the >armaments-producing capitalists make a profit, but (b) the capitalist >class a a whole must pay higher taxes to finance the arms-producers' >profits, so that the net effect on profits is zero. > >The shift of the arms industry to the capitalist sector could augment >aggregate profits only it it were accompanied by (a) a shift in the >tax burden towards the working class, raising the general rate of >surplus labour, or (b) an increase in deficit financing on the part of >the state. But both of these factors are "extraneous", in the sense >that they are not logically associated with the change in ownership of >the arms industry and could equally well occur in the absence of such >a change in ownership. > >Paul makes a good case for the proposition that the "classical" >marxian analysis of productive and unproductive labour is not adequate >to grasp the issue. > >Allin Cottrell. I disagree, Allin. If privately produced, the arms are a value; the arms dealer alienates a commodity which comes through the market to represent some aliquot of socially necessary labor time. Since they are a value, it follows that the labor expended in the production thereof was labor productive of value and surplus value for the arms mfg, if not for the capitalist class as a whole. What is important is not whether the labor employed by the arms mfg is productive but rather--and here the point can easily be made in terms of the categories of Capital, vol I which Paul C argues is not up to the task--that arms are not values which in the production process are not only preserved but also used to absorb surplus labor. Arms, like luxuries, are unreproductive goods. Thus, from the perspective of total capital, state spending on its own direct productin of arms or on purchases from private contractors represents a pulverization of value, for no matter how the arms are used, their value (to the extent that they are values) will not only not be valorized, it will be destroyed--though the state will still owe interest if it has borrowed for the purchase. Why then would the capitalist state embark on an arms build up? This non important state of affairs you and Paul are not explaining. Aside from so called security concerns, the state may turn to arms production as a temporary economic stimulant which seems all the more attractive since it is not immediately clear that state spending on arms represents an annihilation of value; after all, arms producers enjoy a rapid enrichment; higher levels of production can be maintained and due to multiplier effects total profits are--contrary to what you say--higher than they would have otherwise been had surplus value remained uncapitalized and idle, instead of deployed through govt taxation or borrowing on the purchase of arms; and rentiers who would have had no other outlet for excess savings have amassed a portfolio of government bonds, seemingly safe and stable assets (which however are simply fictitious capital). That an arms build up represents the same annihilation of value which has historically been effected by outright depressions is the fundamental illusion through which we fail to see since an arms build up can stimulate production and aggregate profits in the short run. While the chaos and unemployment of depressions can be avoided through an arms build up, the state is left in debt and thus desperate to leverage the military assets which it has accumulated. This is an exit from crisis which only results in greater horrors. By the way, I fully expect especially medium to small cap high tech companies to report terrible quarterly reports starting next week; the Nasdaq should give another 300 to 400 points in the next month; and this should be enough to ensure that a recession hits hard by the end of the year. In this context, Bush will be tempted by ever bigger arms build ups. Yours, Rakesh
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