From: Rakesh Bhandari (rakeshb@stanford.edu)
Date: Wed Nov 13 2002 - 14:14:59 EST
I attended Robert Brenner's lecture at a Berkeley bookstore last night. Fact filled and well organized and extremely thoroughly argued, Brenner's lecture held the non academic audience in rapt attention for close to two hours. Before I raise a few questions, just a few highlights from Brenner's argument (I assume that most know of his novel explanation for the falling rate of profit the tendency to which is based on the severity of international competition rather than a rising OCC or enhanced worker power and the countertendencies to which include currency devaluation and wage repression): *most recent corporate crimes have been perfectly legal, e.g., companies could defraud the public because of the often enormous gap in pro forma earnings which they report to the public and GAP earnings which they report months later to the SEC. RB emphasized that the gap did not hold just for fly-by-night start ups but for the grey eminences of NASDAQ--Cisco, Dell, MSFT, Intel. *RB argued that Greenspan, though probably aware that actual profitability had peaked in 1996, fed the bubble because he hoped that it would make it easier for companies to raise capital and restructure on easier terms. Which in fact did lead to an investment boom, which in turn led to productivity and wage advances. But profitability was still falling on new investments, so that there was in fact no financial justification for further investment. Which meant that a whole new layer of overcapacity was added to the system, no where more so than in telecom which has now lost almost 95% of its market capitalization. More than 700,000 workers were laid off in the telecom industry in one year while it took the US auto industry two decades to release 500,000 workers. *RB put forth in absorbing detail the extent of insider and investment fraud during the bubble. Which led to one audience member plaintively wondering how his pension fund managers who were putatatively looking out for his long term could have been so caught up in the hype when little to no profit growth and often profits themselves had been reported by the overwhelming number of high tech companies whose astronomical market caps should have been clear evidence that a bubble had formed. RB did not say what percentage of IPOs are now trading below their offering price, if still trading at all. I remember Intel Founder Andrew Grove saying in press that the IPO market was proof of the democratization of the venture capital business as it allowed the mass of people to make bets on future technological stalwarts; of course what IPO's did was transfer capital to insiders and investment banks in what amounted to a massive expropriation of the small investor. *In question and answer RB made some provocative claims about the nature of US foreign policy towards Iraq which tied in to his analysis of how profound the underlying problems are in the US economy. But I'll save that for another post. Here are a couple of empirical questions: +If the Plaza dollar devaluation helped the US to recover market share and boost profitability, why hasn't the reverse Plaza Accord helped Japan in the same way? Moreover, does Brenner think that US profitability hit its peak in 1996 because the post 95 strong dollar--both an engineered and natural consequence of recession elsewhere--came to bite on US profit growth? ++In terms of RB's own theory, shouldn't have the 2 year credit crunch led by now to the bankruptcy of enough high cost/low profit capacity that the conditions for a new boom have been created? Moreover, since the debt which was incurred was so cheap, will interest payments prove unmanageable if there is some resurgence in profit growth to which tech led increases in productivity and efficiency (reduced circulation costs as a result of on line buying, massively reduced telephony costs, better inventory management, etc.) will contribute? And here are a couple of theoretical questions: +If capital is existentialy the appropriation of unpaid labor time, won't major crises in the functioning of the capitalist system tend to have resulted from difficulties in said appropriation, that is, in capital's inability to attain a sufficient rate of exploitation in the abode of production? And doesn't Brenner's focus on the horizontal relations of production--that is, competitive intercapitalist relations of production--obfuscate the vertical relations between capital and labor? ++Doesn't Brenner's argument that with a constant real wage technical change only results in a declining average rate of profit with a defacto relapse in the productive forces depend on the assumptions of bourgeois equilibrium economics, viz., input=output prices as in the comparative static Okishio Theorem, now repudiated by its own author? Wasn't it Marx's intention to demonstrate the the development of the productive roces would increase difficulties in the appropriation of unpaid labor time even with a rising rate of exploitation? Didn't Marx intend to show how those difficulties would then lead to intercapitalist competition, a termination of co-respective competition and a breakdown in the global fraternity of capitalist brotherhood? Yet if one makes competition and international competition in particular explanatorily fundamental, then monopoly and intl capitalist coordination may succeed in stabilizing the system. National protection of markets may also be stabiizing. But Marx wanted to show why all truces could only be temporary. All the best, Rakesh
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