Amongst Jerry's posers was:
* If, for example, we consider Marx's theory of crisis, where is his
> theory of the trade cycle? Not a small question -- I think you would
> agree. We know that Marx considered the turnover time of fixed capital
> to be "one of the material foundations for the periodic cycle" (V2,
> Penguin ed., p. 264), but the only part of V3, Ch. 4 on "The Effect of
> the Turnover on the Rate of Profit" that Marx wrote was the title of
> the chapter! Furthermore, where is his explanation of the relation of
> the LTGRPD, credit, and the turnover of fixed capital to the trade
> cycle? These are very significant "gaps" indeed. [NB: In our
> discussions of "moral depreciation", no one has yet attempted to
> connect this issue -- as Marx suggested -- to the "periodic cycle"].
The quickest answer is that it's in Chapter 25:
Either the price of labour keeps on rising, because its rise does not
interfere with the progress of accumulation. In this there is nothing
wonderful, for, says Adam Smith, "after these (profits) are diminished,
stock may not only continue to increase, but to increase much faster than
before.... A great stock, though with small profits, generally increases
faster than a small stock with great profits." (l. c., ii, p. 189.) In this
case it is evident that a diminution in the unpaid labour in no way
interferes with the extension of the domain of capital. -- Or, on the other
hand, accumulation slackens in consequence of the rise in the price of
labour, because the stimulus of gain is blunted. The rate of accumulation
lessens; but with its lessening, the primary cause of that lessening
vanishes, i.e., the disproportion between capital and exploitable
labour-power. The mechanism of the process of capitalist production removes
the very obstacles that it temporarily creates. The price of labour falls
again to a level corresponding with the needs of the self-expansion of
capital, whether the level be below, the same as, or above the one which was
normal before the rise of wages took place. We see thus: In the first case,
it is not the diminished rate either of the absolute, or of the
proportional, increase in labour-power, or labouring population, which
causes capital to be in excess, but conversely the excess of capital that
makes exploitable labour-power insufficient. In the second case, it is not
the increased rate either of the absolute, or of the proportional, increase
in labour-power, or labouring population, that makes capital insufficient;
but, conversely, the relative diminution of capital that causes the
exploitable labour-power, or rather its price, to be in excess. It is these
absolute movements of the accumulation of capital which are reflected as
relative movements of the mass of exploitable
labour-power, and therefore seem produced by the latter's own independent
movement. To put it mathematically: the rate of accumulation is the
independent, not the dependent, variable; the rate of wages, the dependent,
not the independent, variable. Thus, when the industrial cycle is in the
phase of crisis, a general fall in the price of commodities is expressed as
a rise in the value of money, and, in the phase of prosperity, a general
rise in the price of commodities, as a fall in the value of money. The
so-called currency school concludes from this that with high prices too
much, with low prices too little [8] money is in circulation. Their
ignorance and complete misunderstanding of facts [9] are worthily paralleled
by the economists, who interpret the above phenomena of accumulation by
saying that there are now too few, now too many wage-labourers.
(Excerpted from the ME Archive)
This has been developed by Goodwin (1967) in his predator-prey model of the
trade cycle. It has been extended by many (including some on this list!).
But it contains no reference to the LTV. And it is also quite clearly a
beginning only, not a complete theory.
Cheers,
Steve
Steve Keen
Senior Lecturer
Economics & Finance
Faculty of Business & Technology
University of Western Sydney
PO Box 555 Campbelltown NSW 2560
Australia
s.keen@uws.edu.au (046) 20-3254 Fax (046) 26-6683
Home: (02) 9558 8018
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