From: Paul Cockshott (wpc@DCS.GLA.AC.UK)
Date: Mon Jun 02 2003 - 05:38:45 EDT
Rakesh Bhandari wrote: > 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. >> My take on it is that there are various factors which can lead to a falling rate of profit - rise in organic composition of capital, fall in the rate of surplus value, higher unproductive overheads, higher share of surplus value going in rent - etc. A consequence of all or any of these is to lower the rate of profit relative to the long term rate of interest. If this happens, then accumulation will slacken, and the slackening of accumulation, will by Kalecki's formula further reduce profits. Under these circumstances you get a deflationary pressure in the economy which can be partially offset by state expenditure - or in principle by luxury expenditure by the wealthy. You dont have to chose either realisation problems or rate of profit problems when looking at real economies. Both phenomena occur. >> > >> > 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! I was considering the situation of the UK in the late 19th century, when world market competition was slight, and the wealthy could just live off the income of their capital with little pressure to accumulate to modernise. The other factor is that in those days there was a higher portion of private firms as opposed to public companies. This is less the case now that there is intense international competition. But this in itself would not totally rule out unproductive consumption as an absorber of profits, since a major part of profit can be absorbed in pension payments under private pension schemes. This however, depends on regulatory circumstances - are the pension schemes allowed to back annuities with equity or must they hold government bonds for this purpose. In the UK they must do the latter, I dont know the regulations in other countries. > 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. In a system of joint stock companies with well developed financial markets any significant company has open to it the pseudo-rentier option - it can accumulate its capital indirectly via the financial markets - which it will do if the rate of return there appears better or safer than direct investment. I suspect this is happening in Japan. > 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? It does not solve the problem, but capitalist economies are forced into this if they are to sustain economic activity, and also because the state is the debtor of last resort in the system of aggregate financial circulation. Any serious fall back in accumulation has the effect of increasing the public sector deficit since public expenditure either grows in a recession, or shrinks slower than tax revenues. > I don't see how a or b are solutions to overaccumulation, as you have theorized it on the basis of a demographic conversion. They are not solutions but consequences. > 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"). Govt debt is clearly not capital in the sense of accumulated value it is a capitalisation of future revenue. This does not imply that government dept may not be backed by assets of real value, which potentially can be sold off. It depends on whether the debt has been used to finance material assets of not. -- Paul Cockshott Dept Computing Science University of Glasgow 0141 330 3125
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