[OPE] Rober Brenner and empiricism

adsl675281@tiscali.nl

Here's Anwar Shaikh's criticism:

"Brenner's own explanation is that the decline in the advanced capitalist world originates in the period
from1965-73, when excessive competition between U.S. manufacturers and their German and Japanese
counterparts triggered a sharp fall in the U.S. manufacturing prices and hence profit rates. According to
Brenner, this fall in U.S. manufacturing profit rates led to a long term fall in the general rate of profit in the
U.S., in that of the manufacturing sectors of other advanced capitalist countries, and indeed in the general
rate of profit of the advanced world as a whole. In this way, the original fall in U.S. manufacturing
profitability suddenly transformed the global boom into a global crisis. What followed was a slowdown in
the growth of investment, productivity, and real wages, and a consequent rise in intensified class conflict
(36-37, 93-96).

Central to Brenner's thesis is the claim that the fortunes of U.S. manufacturing in the period from 1965-73
determined the subsequent economic health of the whole advanced world. But in those times US
manufacturing accounted for about 25% of US Gross Domestic Product (GDP), and a mere 12 % of the
advanced world's GDP. Yet, according to Brenner, this one sector was the lever which moved the world.

The central theoretical question, of course, is how this could possibly be so? If one recalls that postwar
inflation meant that individual sectoral prices were steadily rising, the question sharpens: precisely how could
a fall in relative U.S. manufacturing prices reduce the rate of profit of the global economy? One answer
might be that this fall was a trigger which precipitated a phase change in an already tottering global structure
of accumulation. But this would then require some prior grounding, such as a secular fall in international
profit rates, to explain why global accumulation had become so weakened in the first place. Brenner rejects
any such explanations on theoretical grounds, which as we shall see depend critically on the neoclassical
theory of perfect competition. Instead, he explicitly argues that the travails of U.S. manufacturing during
1965-73 transformed the boom into crisis.

All account of the long boom and its subsequent decay, including Brenner's, rest upon particular theoretical
foundations, even if these are sometimes only implicit. And since there are a limited number of available
theoretical bases, such accounts frequently end up recombining arguments developed earlier, stretching as
far back as Smith, Ricardo and Marx. In this regard it is somewhat ironic that Brenner, who has severely
criticized others for their 'Smithian' errors, himself ends up invoking Adam Smith's claim that excessive
competition in individual industries can lead to a secular fall in the general rate profit (Shaikh 1978; Fine,
Lapavitsas et al. 1999). 

But since Ricardo and Marx long ago showed that in itself a fall in a sector's relative
price has no essential impact on the general rate of profit, at a theoretical level Brenner is forced to try to
link the fall in U.S. manufacturing prices to a consequent global rise in real wages which is sufficiently
large to bring down the global rate of profit. In this, he shares the 'consensus of today's economists' that only
an unsustainable rise in real wages can account for secular fall in the general rate of profit, precisely because
he shares their theoretical foundation on this issue. But at the same time, he seeks to distinguish himself from
the rest by arguing that the ultimate cause of this rise in real wages was an outbreak of 'unplanned-for,
unforeseen' price competition which drove U.S. manufacturing prices down between 1965-73 (29).

Excessive wages are the proximate cause, but excessive competition, is the ultimate cause, at a theoretical
level. Unfortunately, when he comes to the empirical analysis, he concludes that real wages increases are
too modest to induce falling profit rates. And so he reverts to a purely Smithian explanation of falling
profitability, in which a fall in one sector's profitability drags down the general rate of profit without any
reference to excessively rising real wages (136-8). We will see that in the end Brenner is unable to bridge
such theoretical and empirical contradictions."

Complete text: http://homepage.newschool.edu/~AShaikh/brentext.pdf

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