Marx suggested something like an echo cycle occurring every ten years, but
he never gave a reason for the original bunching.
On Thu, Feb 01, 2001 at 03:44:41PM -0500, J. Barkley Rosser, Jr. wrote:
> Michael,
> We are all in full agreement on this business of
> the replacement cycles and Marx, and Jim D. has
> even helpfully noted where in Capital Vol. II it appears
> (possibly elsewhere as well). The issue is that you
> identified Marx as the father of the "bunching" theory
> of technologically related waves of investment. Clearly
> he gets a cycle from some kind of bunching, which could
> be due to demand factors. But, did he ever identify the
> (at least initial) bunching with waves of investment in
> particular technologies in the way that Schumpeter,
> Trotsky, and others did?
> Barkley Rosser
> -----Original Message-----
> From: Michael Perelman <[EMAIL PROTECTED]>
> To: [EMAIL PROTECTED] <[EMAIL PROTECTED]>
> Date: Thursday, February 01, 2001 2:33 PM
> Subject: [PEN-L:7672] Re: recent economic trends
>
>
> >Here is a section from my Marx book regarding Marx's theory of replacement
> >cycles. Notice Engel's firm rejection at the end.
> >
> > The simplest of these versions of a reproduction crisis reflected the
> life
> >cycle of fixed capital. This idea was first broached when Marx was reading
> the
> >works of Charles Babbage. He was skeptical about Babbage's notion that
> most
> >capital equipment turns over within five years (see Marx to Engels, 2
> March
> >1858; in Marx and Engels 1983: 40, pp. 278). He requested that Engels send
> him
> >some information on the typical patterns of turnover of fixed capital.
> Engels
> >quickly supplied Marx with figures that contradicted Babbage's conjecture
> >(Engels to Marx, 4 March 1858; in Marx and Engels 1983: 40, pp. 279-81).
> >According to Engels' estimates, the average piece of equipment lasted about
> 13
> >years (Ibid.). More importantly, relatively little has been written about
> >devalorization and replacement investment, which has gone beyond Engels'
> brief
> >comments on the subject. He began: The most reliable criterion [of
> the
> >turnover of capital] is the percentage by which a manufacturer writes down
> his
> >machinery each year for wear and tear and repairs, thus recovering the
> entire
> >cost of his machines within a given period. This percentage is normally 7
> 1/2,
> >in which case the machinery will be paid for over 13 1/3 years by an annual
> >deduction from profits. . . . Now 13 1/3 years is admittedly a long time
> in
> >the course of which numerous bankruptcies may occur; you may enter other
> >branches, sell your old machinery, introduce new improvements, but if this
> >calculation wasn't more or less right, practice would have changed it long
> ago
> >[given the absence of taxes on profits at the time]. Nor does the old
> >machinery that has been sold promptly become old iron; it finds takers
> among
> >the small spinners, etc., etc., who continue to use it. We ourselves have
> >machines in operation that are certainly 20 years old and, when one
> >occasionally takes a glance inside some of the more ancient and ramshackle
> >concerns up here, one can see antiquated stuff that must be 30 years old at
> >least. Moreover, in the case of most of the machines, only a few of the
> >components wear out to the extent that they have to be replaced after 5 or
> 6
> >years. And even after 15 years, provided the basic principle of a machine
> has
> >not been supersceded by new inventions, there is relatively little
> difficulty
> >in replacing worn out parts, so that it is hard to set a definite term on
> the
> >effective life of such machinery. Again, over the last 20 years
> improvements
> >in spinning machinery have not been such as to preclude the incorporation
> of
> >almost all of them in the existing structure of the machines, since nearly
> all
> >are minor innovations. [Ibid., pp. 280-81]
> >Marx uncharacteristically disregarded many of Engels' subtleties. Instead,
> he
> >confused the time required fully to depreciate equipment on the books with
> its
> >economic lifetime. Thus, in his response to Engels, Marx noted that the
> >typical business cycle lasted approximately as long as the average piece of
> >equipment (Marx to Engels, 5 March 1858; in Marx and Engels 1983: 40, pp.
> >282-84). Following this line of thought thought, Marx speculated that
> the
> >business cycle might reflect the cycle of reproduction of fixed capital.
> >Moreover, he noted that this approach would locate the engine of the cycle
> >within large scale industry (Ibid.). Four years later, just after asking
> >Engels to visit in order to help him with details on the Contribution to
> the
> >Critique of Political Economy, Marx again brought up the question of the
> >durability of fixed capital (Marx to Engels, 20 August 1862; in Marx and
> Engels
> >1973: 30: 279-81; see also Marx to Engels, 7 May 1868; in Marx and Engels
> 1973:
> >32, p. 82; and Engels to Marx, 10 May 1868; in Ibid., pp. 83-85).
> Engels,
> >caught up in the pressures of the Cotton Famine, was a bit impatient with
> >Marx's notion of the wear and tear of plant and equipment. He suggested
> that
> >Marx had "gone off the rails. Depreciation time is not, of course, the
> same
> >for all machines" (Engels to Marx, September 9 1862; in Marx and Engels
> 1985,
> >p. 414).
> > Atypically, Marx never absorbed Engels' lessons on the turnover of
> plant
> >and equipment. Instead, he frequently referred to the decennial cycles
> brought
> >on by the pattern of renewing fixed capital (see, for example, Marx 1967:
> 2,
> >pp. 185-86; and 1963-1971; Pt. 1, p. 699).
> >--
> >
> >Michael Perelman
> >Economics Department
> >California State University
> >[EMAIL PROTECTED]
> >Chico, CA 95929
> >530-898-5321
> >fax 530-898-5901
> >
> >
>
--
Michael Perelman
Economics Department
California State University
Chico, CA 95929
Tel. 530-898-5321
E-Mail [EMAIL PROTECTED]
