From: Paul Cockshott (wpc@DCS.GLA.AC.UK)
Date: Wed Oct 05 2005 - 08:36:48 EDT
> If the rate of profit is too low relative to long term rates > of interest capitalists decline to accumulate constant capital. > This prevents extended reproduction and, if nothing is done will > lead to contracted reproduction. In either case unemployment will > rise significantly. I get this case. What is the other case? -------- either simple or contracted reproduction are the two cases > > State expenditure on unproductive activities can create additional > demand which allows simple reproduction to take place by converting > some of the output into commodities which are not accumulated. > This corresponds to a shift in the working population out of the > production of means of production and into the production > of weapons etc. Huh? This assumes full employment; there need not be a shift in the working population. --------------- That is true, I was making an implicit assumption in my argument that the economy moved from a phase of expanded reproduction with significant net accumulation of capital to a recesseionary phase in which accumulation stopped. I was assuming that at this point the state stepped in with increased unproductive expenditure on arms which restored full employment. Compared to the period of full employment with expanded reproduction, the subsequent arms boom will involve a shift in employment from means of production to weapons, mediated by the intervening unemployment. The absorbtion of another part of the population > in unproductive financial activities also prevents accumulation since > the people who work in stock exchange offices of banks are people > who are not working in factories producing means of production. Yes but by giving a market to div i and div ii excess capacity can be worked off, possibly creating the conditions for an investment led boom. Do you agree with Keynes or not? ------------------ It is of course possible that the increase in government expenditure will stimulate private investment in means of production. But for those extra means of production to exist, there must be an expansion of labour inputs in dept I. A necessary condition of accumulation is thus a rise in the output of dept I. After the relevant multipliers are applied you will find that this implies a corresponding increase of the surplus value in depts I and II. Thus if dept III carries out net accumulation of 100 million person hours, this will entail a rise in the surplus output of dept I and II ( the Marxian equivalent of the basic sector ) by 100 million person hours. This is only possible if dept I and II produce 100 million person hours more surplus value. Thus accumulation is dependent on the surplus value produced in depts I and II which was my original argument. The investment in dept III will be funded on credit lines from the banks. The additional surplus in dept I will be sold to them and the bank accounts of capitalists in dept I will be credited with the proceeds. Thus the bank accounts in dept III go into overdraft and those in dept I build up credit balances. The net effect is that capitalists in dept III borrow from capitalists in dept I which produced the original surplus value. No accumulable surplus value was produced in dept III. The debts built up in dept III contribute to the continuous accumulation of mutual debt within the capitalist class.
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