In an interesting presentation at this weekend's Socialist Scholars
Conference, Bill Tabb argued that while there is no qualitative difference
between today's economy and the smokestack industry of the past, there are
significant differences that must be acknowledged by radical economists.
Among them he included e-commerce which he sees in terms similar to those I
reported on the other day in relation to Chemdex corporation. The
availability of direct purchasing over the Internet will facilitate
downward pressure on pricing while making investment decisions more
rational. Last week's NY Times had a full page ad for a new e-commerce
company that will service the aerospace industry. Does this mean the end of
$1000 screwdrivers?
Bill did not address a question which occurred to me after his talk. In the
old days, boom and bust was very much related to the heavy capital
expenditures of industries that formed the core of American industry. For
example, the sharp countours of the business cycle of the late 19th century
was very much related to rapid expansion of the railroad industry, which
required heavy outlays for rolling stock, bridges, etc. In the 1930s the
collapse of the German economy was very much related to its concentration
in steel and machine tool production, both of which require heavy fixed
capital outlays.
In the new economy, very few such expenditures are required. It is mostly
about gathering together highly skilled people and supplying them with
computers. Microsoft and aol.com can expand rapidly by adding bodies. If
there is a downturn, there is no need to pay off the huge debts associated
with steam engines, foundries, etc. Just lay off excess bodies. Would this
be a possible explanation for the USA's ability to weather the financial
crisis of 2 years ago? Perhaps the vulnerability of South Korea, etc. can
be explained in terms of its continuing dependence on smokestack industries.
Louis Proyect
(The Marxism mailing list: http://www.marxmail.org)
