Thanks. Michael, what's the title of the book by Staehle?
is there any more theoretical work about shake-out? it would clearly involve some sort of vintage model of capital goods (where capital goods existing at any one time have different ages and thus promote labor productivity differently) perhaps incorporating other dimensions of heterogeneity. Brenner suggests that by short-circuiting the "normal" business cycle keeps "obsolete" capacity in place and thus implies accumulating imbalances that weigh on the economy when a recession actually occurs. Where's his best explanation and empirical explication of that phenomenon? or has someone else talked about this? it seems to be part of the oral tradition of non-TRPF Marxists. On Fri, Oct 8, 2010 at 8:14 PM, michael perelman <[email protected]> wrote: > > Here are a couple of paragraphs from my Keynes book > > > Because the installation of long-lived capital goods is likely to disrupt > production, one might expect that long-lived investments would be installed > or significantly upgraded during contractions when plant and equipment is > used less intensively (S. Moss, 1984, p. 297). Because of the British > capital > > shortage in the years immediately following the Second World War, the ratio > of capital disposals to capital acquisition stood more than 50 per cent > lower than it was in the 1950s (Butler, 1960, p. 261). More dramatically, > 'in the panic of 1920-1921, Ford closed down for six weeks, cleared his > plants of obsolete equipment, and then proceeded to improve working methods > and layout and to install modern equipment. Also in 1920, the Lelands spent > $4,249,000 for special machine tools to produce postwar Lincolns' (Wagoner, > 1968, p. 126; see also p. 136). Most firms did not respond to the depressed > economic conditions in this fashion. Commentators took notice of Ford's > policy only because it seemed so exceptional. > > Firms do most of their replacement when competitive pressures compel > them to do so (Boddy and Gort, 1971, p. 182; S. Moss, 1984, p. 297). As a > result, productivity increases tend to be associated with business failures > (Montgomery and Wascher, 1986). For example, during the Depression, the > quantity of machine tools shipped in the US dropped sharply from a peak of > 50,000 units in 1928 to a low in 1932 of 5500 but the equipment that was > shipped during the Depression was predominantly for replacement rather than > expansion (Wagoner, 1968, p. 137). Prior to the 1930s, machine tool > manufacturers used to purchase the best available equipment. In the wake of > the Depression, 'machines were replaced only when they clearly could not do > the work required' (Wagoner, 1968, p. 136), perhaps because the > intensification of competition on the demand side was compensated by > reduction in wages and a higher value placed on liquidity. > > During the Depression, firms weeded out inefficient plant and equipment, > creating a much newer capital stock (Staehle, 1955, p. 124). By 1939, > one-half of all manufacturing equipment in the US that had existed in 1933 > had been replaced (Staehle, 1955, p. 127). Thereafter, business produced as > much output as a decade before with 15 per cent less capital and 19 per cent > less labour (Staehle, 1955, p. 133). French productivity also improved > noticably during the Depression (Aldrich, 1987, p. 98, citing Carr'e, Dubois > and Malinvaud, 1972). Similarly, in the recessionary period of 1982-4, only > 20 per cent of West German manufacturers replying to IFO's investment survey > gave capacity expansion as their motive for investment; 55 per cent cited > rationalization (Anon., 1985a, p. 69). > > Once the economy begins to prosper, scrapping returns to its normally > low level. During expansions, firms tend to increase the proportion of > investment devoted to long-lived capital of the sort that expands capacity > (Boddy and Gort, 1971; see also Mairesse and Dormont, 1985). During these > periods firms feel little pressure to replace obsolete plant and equipment > (Bleany, 1985, p. 77). Costs are less concern than the opportunity to > expand capacity. For example Schmenner reports that space constraints and > poor plant layout are much more important than labour costs in explaining > why plants move to new locations (Schmenner, 1980; see also Boddy and Gort, > 1971). > > Here is a reference to Field from the Confiscation of Economic Prosperity. > > This modernization gave U.S. industry a level of efficiency far in advance > of anything the world had ever seen before. University of Santa Clara > economist, Alexander Field, makes a convincing case that the rate of > productivity increase during the Depression years, 1929–41, was higher than > any other period of the twentieth century -- including the Golden Age (Field > 2003). > > > -- > Michael Perelman > Economics Department > California State University > Chico, CA > 95929 > > 530 898 5321 > fax 530 898 5901 > http://michaelperelman.wordpress.com > > > _______________________________________________ > pen-l mailing list > [email protected] > https://lists.csuchico.edu/mailman/listinfo/pen-l > > -- Jim Devine / "Segui il tuo corso, e lascia dir le genti." (Go your own way and let people talk.) -- Karl, paraphrasing Dante. _______________________________________________ pen-l mailing list [email protected] https://lists.csuchico.edu/mailman/listinfo/pen-l
