For those interested, I recently gave a talk at the Marxist School in
Sacramento, California, suggesting that the recent recession is connected
with the trend rise of the rate of profit. My notes are available at:
http://bellarmine.lmu.edu/faculty/jdevine/FROP/sacramento.htm
Jim Devine [EMAIL PROTECTED] & http://bellarmine.lmu.edu/~jdevine
jim,
i think this is a very valuable piece. it seems to me
1. you have confused changes in vcc with changes in occ.
"This decrease in K/Y
seems linked to the 1980s and 1990s shake-out of U.S. manufacturing
(dis-investment from old equipment and plant), investment in more
modern fixed capital in new sectors or even modified versions of old
sectors (as with the rise of steel mini-mills), and the falling
prices of some capital goods (e.g., computers) and important raw
materials such as oil. "
For example, your first reason for
decrease in K/Y is crisis induced devaluation. So this is a change in
the VCC, not the OCC. K/Y is a proxy for the former, not the
latter.
2. You don't say anything about the effect
of interest rates. Doug H and Fred M have both argued that spike of
profit rate (as conventionally measured) especially in the 90s was a
result influx of foreign capital, which reduced borrowing costs. But
in the last few years borrowing costs have risen considerably for
weaker and highly leveraged firms. Does this increased interest
burden play any role in your explanation of crisis?
3. Aren't you arguing that there is a
tendency for ex ante saving to exceed ex ante investment? But why in
the face of underconsumption isn't there just more building of mills
for the sake of building mills?
Rakesh
