From: Rakesh Bhandari (rakeshb@STANFORD.EDU)
Date: Sun Jun 01 2003 - 22:10:41 EDT
Paul C. Not quite getting your point here. You had argued for the possibility of overaccumulation as a result of a rapid rise in the OCC engendered by demographic conversion. This perspective points to a shortage of surplus value. However, below you lay out a scenario in which there are difficulties in the realization or absorption of surplus. So you had written: > >>If the above assumption fails, then this implies either zero >>or negative accumulation. This in turn implies strong >>recesssionary tendancies unless >>a) the capitalists spend their profits unproductively on >> servants and luxuries as they did in the UK 1870-1900. >> b) state expenditure realises the surplus, financing it >> with bond sales, or taxes on profit. >>Option a) is only sustainable if there is no serious competition >>on the world market. (b) is the condition to which capitalist >>economies tend. OK here you point to the possibility of zero to negative accumulation. You seem to rule out the solution of unproductive consumption because of serious competition on the world market, but serious competition on the world market would seem to make impossible zero or negative accumulation as long as accumulation had continued to pay! That is, if there is both serious competition on the world market and technological progress, then capitalists should continuously invest in new capital equipment embodying the latest technical developments out of a fear of falling behind each other; that is, the Keynesian-Kaleckian problem of inadequate effective demand should only prove serious as a result of the fall in absolute profitability consequent upon overaccumulation. Consider the debate between Fred and Paul Z in Anti Capitalism, ed. Alfredo Saad Filho. Since Fred believes that the fundamental contradiction lies in insufficient profitability in production itself, he argues that rising unproductive expenditures can only compound the overaccumulation crisis which then yields the problem of insufficient effective demand. Because Paul Z tends to see accumulation foundering on inadequate effective demand itself, he allows as did Baran and Sweezy for unproductive expenditures to close the "demand" gap and thus move the economy out of an unemployment equilibrium. The argument you suggest here seems in line with Paul Z's, not Fred's. But your overaccumulation argument seems closer to Fred's in its postulation of inadequate surplus value production. I of course agree with Fred. Marx was in fact correct to make provisional acceptance of Say's Law in order to discover a deeper contradiction in the very process of production. Marx's method was well understood by Grossmann, Bernice Shoul and Mattick Sr--all of whom were cited by David Y. Howard and King criticize Grossmann for having been a prisoner of Say's Law but don't seem to have understood why its provisional acceptance undergirded Marx's discovery of the fundamental contradictions of capitalism in production itself. Joan Robinson also does not seem to have understood exactly why Marx provisionally accepted Say's Law. Defending the Sweezy-Kalecki-Steindl point of view, John Bellamy Foster presents the other point of view. Now perhaps the problem of effective demand results from the release of capital as the newest technology is capital-saving (James Galbraith makes this point somewhere; Grossmann of course considered it long ago). Then I can see how either of your options could save the economy from an unemployment equilibrium. Baran and Sweezy did not explicitly relate their ideas about the rising surplus to Marx's analysis of the release of capital (do note that Engels inexplicably pooh-poohed Marx's analysis of this phenomenon), but that would have provided a better support for their revision of Marx's theory than questionable ideas about Steindlean monopoly constraints on the inducement to invest. It was a mistake to title their book Monopoly Capitalism, I believe: the potentially idle surplus can rise even without the monopolization of the economy. I would be interested in what Michael L has to say about this. At any rate, this does not seem to be your interpretation in which overaccumulation is the result of an absolute labor shortage. In this case, wouldn't the doses of extra effective demand from unproductive consumption or debt financed govt spending only compound the underlying problem? I don't see how a or b are solutions to overaccumulation, as you have theorized it on the basis of a demographic conversion. Morever, it's not clear to me whether you accept Marx's theory that as the govt consumes the capital which it borrows, its paper is in fact fictitious capital (Larry Summers has referred to govt paper as a "sterile asset"). Which has the further implication that govt debt can only be paid through the creation of money or taxes--either of which may destabilize the private economy whose anemia gave rise to the need for a "mixed economy" in the first place. Yours, Rakesh
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