From: Paul Cockshott (wpc@DCS.GLA.AC.UK)
Date: Mon Oct 10 2005 - 08:55:21 EDT
Rakesh >Moreover, do remember that you defended Andrew Trigg's argument >that the whole economy could be pulled forward as long as banks were >willing to finance and capitalists were will to indulge in ever more >orgiastic >luxury spending. Now you are arguing that luxury spending is not truly >productive, but this runs against Trigg's, Kalecki's and Keynes' >argument. >You simply have to choose between Smith and Keynes. > >Paul >---- >I am distinguishing between first order and second order effects. >The first order effect of for example expenditure on armaments is >unproductive. Rakesh ----- Well you seem to be defining productive in terms of activity's effect on growth and accumulation. Yet activity you call unproductive is productive in that sense; in fact that unproductive activity may be the only real productive option at some point. It seems to me that you are caught in terminological confusion. ------------------------------- Paul ---- I regard labour as productive if it contributes to a surplus product in the economy which, when this surplus product is sold, will in turn appear as surplus value. This surplus product is the source of growth and accumulation. This is different from an "activity's effect on growth and accumulation". There may be activities which, in the presence of unutilised labour and other resources can stimulate growth and accumulation. For example if the Chairman of the Federal Reserve decides to lower interest rates, this may stimulate accumulation, the spreading of stock exchange rumours about the great profits to be made on the internet also stimulated accumulation, but this does not make the work of the Chairman of the Fed or of the rumour mongers productive labour. On the other hand, the labour of a construction worker is productive because they are in department I and so is the labour of a MacDonalds burger flipper since they are in department II. A rise in the productivity of either of these workers will directly, in the Macdonalds case, and indirectly in the construction work case, lead to a rise in surplus value by reducing the necessary labour time in the economy as a whole. The same is not true of dept III. An improvement in technology there just leads to a greater physical surplus, but no increase in its value. Consider the change in Hydrogen Bomb design in the mid 50s from using liquid deuterium to using lithium deutride, the result was a big increase in the number of bombs that the US was able to produce. But since these bombs did not enter as means of production back into the economy, there was no concomitant rise in the rate of surplus value. > As a second order effect, through the 'accelerator' >you can subsequently get a growth in the productive sector but >only provided that there is sufficient spare labour and means >of production to allow for this. This makes it sound like an exception that there is unemployment. PAUL ---- No, it it just that there is not always sufficient spare labour and periods of rapid accumulation exhaust the supply. > >The effect is clearer if you look at two hypothetical routes out >of recession: > >1) The state builds aircraft carriers and battleships as happened > 1939 - 45 in UK and the USA. > >2) The state expands publicly owned industries investing in real > means of production in the railways, steel, gas electricity. > This happened in the UK from 45 to 52 and averted a post-war > recession of the type that occurred in the early 20s. > >Although both cases led to full employment, so it was productive in your sense. Paul ---- No, employment is not necessarily productive employment. > the first course of >action led to a run down of the constant capital stock of the economy Yes and for this very reason wiped out excess capacity which had stood in the way of new investments by which OCC was to be lowered and rate of profit increased (war is often not destructive but regenerative of the capitalist economy--see Grossmann's critique of Bukharin on this point). Again in terms of your definition of productive the effect of running down excess constant capital was productive. Paul ---- No by my definition a running down of the capital stock is de-accumulation not accumulation. So--once again--are you a Keynesian/Kaleckian or not? >but >the second course of action led to a rapid growth in that stock. >The first involved a growth in unproductive sectors the second >a growth in the productive sectors. > >This distinction is crucial to understanding the long term trajectory >of the organic composition of capital and the rate of profit. Not really. See above.
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