On May 3, 2012, at 3:50 PM, Jim Devine wrote:
... In a "laborabundant" or "weak labor" economy, a rising profit
rate is encouraged.
It's true that the stagnant incomes of the vast majority (the 99%)
hold back consumer demand (absent a consumer credit boom), but to some
extent rising profit rates can be realized by increased accumulation
rates -- just as rising profit rates finance and motivate increased
accumulation rates. (Is a path that Tugan-Baranowsky posited, and
might be called "profit-led" or "bootstrap" growth.)...Obviously,
this story leaves a lot of stuff out so cannot be used to
describe recent real-world events exactly.
"not exactly" is quite an understatement. The "profit rate" is an
ambiguous term here. Marx's model of accumulation and falling rate of
profit tendency is based on some very severe abstractions: prices are
competitive (prices of production), profit of enterprise accounts for
all the surplus value produced in the economy (rent and interest are
set at zero), and unproductive labor plays no independent role. How
far this model is from "real-world events" is indicated by the current
division of "profit" in the US: only thirteen percent of "profit" is
accounted for by manufacturing even though the great bulk of
productive labor is employed in manufacturing! Thus more than four-
fifths of US surplus value takes the form of interest and rent,
fictitious profits from fictitious capital, and is predominantly
directed to luxury consumption and business construction destined for
the employment of unproductive labor (office buildings, shopping
malls, etc.) Thus the productive sector is in fact starved of the
investible capital whose productive investment, as Tugan (following
Marx) points out, is the motor force for an accumulation path free
from severe crises. An economy where the rich gain their "income"
from financialized economic rents (notably from resource monopolies
and "intellectual property") is condemned to stagnation and decline
and can escape underconsumption only during periodic bubbles each of
which leads to a worse hangover than the last.
Shane Mage
"All things are an equal exchange for fire and fire for all things,
as goods are for gold and gold for goods."
Herakleitos of Ephesos, fr, 90
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