Concerning my notes that I posted on-line (at http://bellarmine.lmu.edu/faculty/jdevine/FROP/sacramento.htm), Rakesh writes:
>>> 1. you have confused changes in vcc with changes in occ.<<< I wrote: >>I don't care, since what's important is the change in K/Y (the fixed capital-output ratio). It's via this ratio that changes in the vcc and/or the occ play a role in determining the rate of profit. If the vcc and/or occ rise and don't raise K/Y, they're irrelevant.<< Rakesh ripostes:>don't agree. it's good to distinguish analytically between crisis induced effects on vcc and effects of technical change (labor or capital saving) on occ. Due to the latter alone the VCC may have risen. < it may make sense to make a distinction "analytically," but if the changes in value ratios and physical ratios are generally moving together to change K/Y, it's the latter that's relevant. Even if the value ratios and physical ratios are working against each other -- as in a classic story of the interaction of tendencies and counter-tendencies, for the purposes of a short paper all that matters is the change in K/Y. >>In my papers that I cite in the bibliography, I talk about the "more building of mills for the sake of building mills," which I call either the "Tugan-Baranowsky Path" or "bootstrap growth" or "profit-led growth." Indeed, as suggested by the last name listed, I argue that rising profit rates and shares _encourage_ such craziness. The problem, as I argue, is that as this kind of boom persists, the economy becomes increasingly unstable (prone to collapse). I won't bother you with the details of the arguments.<< >please excerpt your analysis of why this kind of boom becomes unstable. i ask this sincerely because as duncan foley notes in understanding capital one cannot but agree with luxemburg's sarcastic dismissal of the tugan vision, yet her dismissal seems predicated on the equally untenable assumption that the purpose of capitalist production is consumption.< I agree that Luxemburg is wrong to dismiss Tugan. Unfortunately, due to technical problems, I do not have my analysis in easily computer-readable form. Both are at the library, whereas the 1994 article is on my web-site (http://bellarmine.lmu.edu/~Jdevine). Jim D.
