From: Rakesh Bhandari (bhandari@BERKELEY.EDU)
Date: Sat Mar 31 2007 - 20:04:56 EDT
Extremely well explained and illuminating to me. Thank you for clarifying the issue for me. rb > On Fri, 30 Mar 2007, Rakesh Bhandari wrote: > >> I should have appended this quote to my post: >> >> This example of fixed capital--and in the context of reprouction >> on a constant scale--is a striking one. A disproportionate >> production of fixed and circulating capital is a factor much >> favoured by the economists in their explanation of crises. It is >> something new to them that a disproportion of this can and must >> arise from the mere *maintainence* of the fixed capital; that it >> can and msut arise on the assumption of an ideal normal >> functioning, whith simple reproduction of the social capital >> already functioning." [from Capital, II] > > Looking at Capital II, I think I see what the issue is. Marx > explicitly assumes a constant scale of production and constant > productivity of labour, but there's one other issue that can cause > problems, namely, an uneven demand over time for replacement of > the means of production corresponding to the fixed capital. > > Suppose each capitalist uses a machine that costs $100,000 and > lasts 4 years before it becomes useless. > > From the micro perspective there's no problem: the capitalist sets > aside $25,000 per year by way of depreciation allowance > (abstracting from interest paid on such funds) and buys a new > machine every 4 years. > > From the macro perspective there's no problem if the vintages of > the machines are conveniently staggered such that an equal number > come up for replacement each year. (In a sense this is the > "natural" assumption for a tidy-minded economist contemplating > simple reproduction.) > > But Marx raises the possibility that this convenient staggering > does not obtain: that is, "a greater part of IIc expires [this > year] than did the year before". > > If there's a temporal lumpiness to the replacement of fixed > capital, it's easy enough to see how this could create problems > for simple reproduction. "All of a sudden" there's a greater > demand for machines than in the previous year. The price of > machines rises. Resources are diverted into machine production. > There's a corresponding shortage of the goods figuring as > circulating capital. Simple reproduction is screwed. > > Allin. >
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