From: Rakesh Bhandari (bhandari@BERKELEY.EDU)
Date: Tue Nov 02 2004 - 11:52:17 EST
At 9:30 AM +0000 11/2/04, Paul Cockshott wrote: > >Paul C > >Unproductive expenditure has both effects. It augments the level >of monetary profits, but investment has the same effect. Investment >however raises the capital labour ratio which unproductive expenditure >does not. If autonomous investment falters as a result of declining profitability from previous overaccumulation, autonomous increases in the other components of effective demand, e.g. luxury and state deficit financed spending, may only weakly and temporarily boost effective demand and therewith profitability. The restoration of profitability may require the context of at least a recessionary phase in the business cycle. Or at the very least it may require regressive tax reform, anti-labor legislation, and control of export markets--that is, neo mercantilism of the type that Bush has practiced. As for military expenditures their main positive effect is not through the increase in effective demand per se but in the consumption of higher cost or morally depreciated capital equipment that military spending and even more war cause. High cost capacity used up, opportunities for investment in lower cost capital goods are thereby widened and anticipated profitability improved: war thus allows for the destruction of capital that depression would otherwise effect. What the sterile science of economics supresses is that depression, war and social regression are endogeneous to capital accumulation. From William J. Blake in an unpublished mss Imperialism from 1948: One cannot abstract from the history of capitalism its constant wars, either at home or in the colonies, its armaments, its large military establishments, its struggles for plunders, its terrible human and material costs, and then assert that such things, enormous as they are, are excrescencies. The idea of abstraction is dear to these economists, but it is not an act of legitimate abstraction. They choose to assume that an ideal system of production and exchange goes on: that this system operates without political consequences, that it can thus be viewed as having a normal existence independent of its action in most countries, in a large part of the course of economic history. Now, abstraction is legitimate as a weapon of exploration. One can go beneath the great indicative appearance of capitalism and seek to isolate its law of wages, prices, interest, rent, profit, etc. But from that to refusing to consider the costs of its actual working out, when making a specific analysis, there is no relationship at all. The persistent tendencies of any system culminate in its political manifestations, and wars and destruction are no more to be reckoned out of the costs of capitalism than its payments for machinery. The system of supply and demand does not achieve economic harmony such that it avoids crises and wars. These inflect its course. It is a masquerade of inflation, bankruptcy, boom and bust, fraud, unemployment, race hatred, colonial oppression, war, devastation, reconstruction. This Satanic medley is what it is: there is no pure system operating outside of all these consequences and which would prevail, a Platonic ideal, were it not disturbed by these recurrent miseries and shame, apparently arising out of another world?" More later.
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