Jim shows the an excellent understanding of what I have been imperfectly
attempting to express. I agree that I have no proof that the rise of
intellectual property has been sufficient to increase the average rate of
profit, even though I'm convinced that I'm correct in this respect. Jim's post
was interesting in referring to the example of steel. In my book I used the
same example in discussing Alan Greenspan's notion of the weightless economy.
I argued that to the extent that U.S. Steel was able to increase its markup,
that the steel industry became increasingly weightless. Here is what I wrote:
"During the great merger wave at the turn-of-the-century, when the
major manufacturing industries of the United States consolidated,
the value per pound of production certainly increased. I doubt
that anybody at the time looked at the steel industry and marveled
at how weightless it had become."
Jim Devine wrote:
> Doug wrote:
> >Any sense of how representative these sorts of goods are? I'd guess that
> >gains from IP are merely redistributions of SV - it can't explain an
> >increase in the profit rate in the macroecomy. Nike's gain is some other
> >capitalist's loss, no?
>
> As I understand Michael's point, he's highlighting a big transition that's
> happened in the long haul. It used to be that US Steel (now called USX) was
> able to make monopoly (above-average) profits because of it was difficult
> to get into the steel industry and because of tacit collusion limiting
> competition in that market (and in earlier eras, because of control over
> inputs like coal). Nowadays, the steel industry has fallen on hard times
> (especially given the reports of world-wide excess capacity). A company
> like Microsoft gets monopoly profits not because of physical barriers to
> entry (like the need to invest in a big stinking steel mill) or collusion
> or control over inputs, but because of network economies, tie-ins (linking
> Internet Explorer to Windows), and intellectual property rights.
>
> But given the over-all rate of profit (determined largely by the state of
> class relations, which determines the profit share of output, along with
> the overall output/capital ratio), the above-average profit rates of the
> old US Steel or the new MS (or Nike) correspond to the below-average profit
> rates of smaller and weaker businesses. That of course, is Doug's emphasis.
>
> The big question is whether or not the monopoly power of a few (or even of
> many) companies helps tilt the overall balance of class relations (or
> raises the overall output/capital ratio), raising the average rate of
> profit. Baran and Sweezy thought that it would in their MONOPOLY CAPITAL.
> But this is only relevant to empirical research if there's an upward trend
> in the overall importance of monopoly. It's not clear to me that there was
> an upward trend in the importance of monopoly in the transition from the
> old economy of US Steel to the new economy of MS. As I've said, my
> impression is that the importance of monopoly in the US economy fell from
> the 1960s to the 1990s (though it's on the rise again). Also, how it is
> that monopoly works to tilt the balance of class forces has to be worked
> out theoretically.
>
> (sh*t. I thought I was going to abstain from e-mailing today after the HUGE
> spate this morning.)
>
> Jim Devine [EMAIL PROTECTED] & http://clawww.lmu.edu/~JDevine
> "It takes a busload of faith to get by." -- Lou Reed.
--
Michael Perelman
Economics Department
California State University
Chico, CA 95929
Tel. 530-898-5321
E-Mail [EMAIL PROTECTED]
