From: Paul Zarembka (zarembka@BUFFALO.EDU)
Date: Mon Sep 10 2007 - 09:58:34 EDT
Jurriaan,
Thanks very much for your detailed response. I must say it is rather
disconcerting: there is so much movement in your description that we'd
almost seem to have to thrown in the towel.
For the U.S. economy as a whole, Fred Moseley's work does show a rising
turnover of circulating constant capital between 1947 and 1976, but I
wouldn't characterize it as jumping around so much as fluctuations one sees
in any data work. Webber and Rigby for Canadian manufacturing only from
1950 to 1981 also show in a rising turnover. In other words, there is a
suggestion of increasing efficiency in circulating constant capital.
As to the level of fixed capital relative to circulating constant capital,
it increases -- for Moseley from 2.07 in 1947 if based on current dollars,
3.14 on 1972 dollars, to 4.18 in 1987 current dollars, or 4.88 on 1972
dollars.
Surely, the movement toward services has a major impact so I can easily
accept that the changing economic structure makes an important difference.
Now, Shaikh and Tonak avoid the issue by simply not calculating circulating
constant capital, unlike other authors I have examined.
Marx's schemes of reproduction go the other way and avoid fixed capital
altogether -- Marx is explicit about this although he is quite aware of the
role of fixed capital.
I'd prefer to include both fixed and circulating constant capital and am
struggling for the most cogent representation.
Thanks again, Paul
--On Sunday, September 09, 2007 4:40 PM +0200 Jurriaan Bendien
<adsl675281@TISCALI.NL> wrote:
> I studied this a bit empirically 20 years ago using New Zealand
> manufacturing data, economic census data, national accounts data and
> unpublished data on inventory valuations. More recently I also looked at
> the
> NIPAs. A few observations:
>
> In rich countries such as the US, nowadays about half of all intermediate
> consumption (flow of expenditure on inputs used up in production, i.e. Cc)
> consist not of goods purchased/rented, but services purchased/rented.
> Because this is so, there is in fact no fixed relationship between Cf and
> Cc. The proportions of services purchased versus services produced
> in-house
> can fluctuate, and I/O tables show that over time the amount of services
> purchased can vary significantly across time, in different sectors.
>
> If you take the goods-producing industries, you can strike a ratio between
> the average inventory level during the year, and the total intermediate
> expenditure during the year, to obtain a rough indication of the number of
> stock rotations (inventory cycles). You can do this for about 10 or 20
> years, and you will see that inventory levels and the inventory
> turnover-times can change quite a bit even from year to year. The
> historical
> trend is one of increasing throughput.
>
> You can also establish that for different branches of industry, Cc/Cf and
> the Cc turnover speeds are quite different.
>
> In times of of high inflation (e.g. first half of the 1970s) the inventory
> valuation adjustment can be very great, i.e. more than 1% of GDP.
>
> In national accounts, intermediate consumption includes only operating
> expenses which are considered to be directly related to production. Thus,
> total operating expenses of producing entities can be larger than included
> in official intermediate consumption, because they include expenses
> considered to be not directly related to production. They are used up in a
> "financial" sense, but not in the official "production" sense.
>
> If businesses decide for economic reasons to rent more physical assets, or
> alternatively buy more physical assets, this can independently affect the
> size of GDP components and the size of intermediate consumption. If they
> buy, this boosts GDP; if they rent or lease, this lowers GDP.
>
> The true value of fixed capital assets is empirically very difficult to
> tell, because of lack of uniformity and reliability in valuation methods
> (historic cost, current replacement value, current sale value, book value,
> scrap value etc.) and because of the divergence between economic
> depreciation, actual depreciation charged, and tax-assessed depreciation.
> Additionally, national accounts often include costs in the depreciation
> aggregate which are not strictly related to depreciation itself, but to
> the
> maintenance, installation or insurance of fixed assets. Consequently,
> inferences made about the relationship between depreciation and other
> aggregates should keep this in mind; the economic depreciation rate
> diverges
> from actual write-offs.
>
> Empirically, I never found any fixed, permanent relationship between Cc
> and
> Cf, and if there seemed to be a fairly stable historic proportionality in
> given cases for some time, that could be attributable to an artifact of
> statistical estimation, i.e. a result of interpolations, extrapolations
> and
> imputations (among other things, estimations are "smoothed" by projections
> from the past; plus, statisticians typically distrust the reality of
> unusual, large fluctuations in the data).
>
> Modern corporations these days will often buy assets, including fixed
> assets, without using them for production - these are more speculative
> investments, resulting in property income. They may be treated and
> depreciated as production capital, but in reality do not enter into
> production.
>
> Jurriaan
>
>
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