Jim,
What you suggest here is that the profit rate fell despite a *falling
organic composition of capital*. I don't disagree though I would
again ask is that because of an improper measuring of productivity
growth as I suggested in my earlier post? You suggest this seems
to contradict classical Marx and I would agree. Doug in an earlier
post also suggests that Marx was wrong on some details.
I was suggesting that Marx may also have been wrong on the effect
of 'globalization' (internationalization of capitalism) on what I believe
you have advocated in other papers, the 'overaccumulation of
capital' which I suggested with respect, particularly to China but
also to other areas of the 3rd world -- and which has led directly to
excess capital, international competition, and a realization crisis
for domestic (i.e. North American) capital, particularly in the light of
rising USD which exacerbates the realization problem for domestic
US production.
Rakesh suggests I go read Shaik to disabuse myself of such
ideas. Well, I have read Shaik, even talked to him about it when he
visited our department. We also have a Shaik ex-student on our
faculty and we frequently have this discussion -- he gave a couple
of lectures in my class last week where this very issue came up.
And Jim, as you remember, gave an early version of your paper on
the origins of the great depression at a seminar in our department --
was it 15 years ago Jim? So I would appreciate a little less
patronizing by Rakesh and perhaps a more discretionary
interpretation of scripture.
Still, Jim, I think that the question of what was the real increase in
productivity (and thus the organic composition) and the impact on
realization of the rising exchange rate and increased competition,
has yet to be answered.
Paul
Paul Phillips,
Economics,
University of Manitoba
From: "Devine, James" <[EMAIL PROTECTED]>
To: "'[EMAIL PROTECTED]'" <[EMAIL PROTECTED]>
Subject: [PEN-L:22028] RE: Re: The rate of profit and recession
Date sent: Mon, 28 Jan 2002 14:29:49 -0800
Send reply to: [EMAIL PROTECTED]
> Paul Phillips writes:>In the late 90's we kept hearing from CEOs, primarily
> in the US, that the reason inflation was contained was as a result of
> increasing competition from offshore companies, in part because of
> 'globalization' of production and increased overinvestment (increasing
> excess productive capacity) in countries like China, in part because of the
> rising value of the USD. Thus the rising wages could only be justified by
> increased productivity... Thus, the inability to realize the increased costs
> (realization as per Charles) would lead to falling profits would it not.
> What then is the root cause of the falling profits?<
>
> I can only talk about the US and the nonfinancial corporate business sector
> at that. Here I am attending to only the proximate explanation. (My
> discussion with Fred concerns more fundamental causes.)
>
> The recent falls (i.e., of the last 1 1/2 years or so) are due to falling
> demand and rates of capacity utilization. That is, there were realization
> problems.
>
> Before that, looking at the non-trended BEA data, the decline of the ROP
> was due to the declining SOP (share of profits). At the end of the business
> cycle upturn, wages started rising relative to productivity, as did raw
> material prices (of raw materials produced outside the US NFCB sector).
> There may have also been some bottlenecks and horizontal
> disproportionalities (such as those due to over-investment in fiber optic
> cable) that limited productivity growth in the cyclical peak, too. The cost
> pressures pushed toward inflation, but the high US dollar and international
> competition kept businesses from raising prices much (at least in the sector
> under consideration).
>
> The fixed capital/output ratio continued to fall all the way until 2000
> (following its trend from the early 1980s), indicating that labor
> productivity growth exceeded the rate of growth of fixed capital per worker.
> The "classical Marxist" theory doesn't seem to work, at least not for this
> specific example, because the counter-acting tendency was winning.
>
> Jim Devine [EMAIL PROTECTED] & http://bellarmine.lmu.edu/~jdevine
>
