Well, empirically speaking - which I know is embarrassingly vulgar - the best explanation for changes in investment is the change in profits. Marx's argument in this excerpt just doesn't sound right.
Doug Rakesh Bhandari wrote: >>Rakesh Bhandari wrote: >> >>>Why should capitalism be more vulnerable to recessions and >>>stagnation simply because the profit rate is falling or low? >> >>Low profits mean low investment, which means a slower rate of >>growth and reduced technical innovation. Profits are the main >>source of investment funds, and with profits expectations low, >>there's no reason to invest. And animal spirits wither. But surely >>everyone knows this? >> >>Doug > >Well Marx himself says the opposite. > >"'All other things being equal, the power of a nation to save from >its profits varies with the rate of profits, is great when they are >high, less, when low; but as the rate of profit declines, al other >do not remain equal...A low rate of profit is ordinarily accompanied >by a rapid rate of accumulation, relatively to the numbers of the >people, as in England [note this is what my post was suggesting]...a >high rate of profit by a lower rate of accumulation, relatively to >the numbers of people.' Examples: Poland, Russia, India, etc. >(Richard Jones, An Introductory Lecture on Political Economy) >"Jones is right to stres that , despite the falling rate of profit, >the 'inducements and faculties to accumulate' increase. Firstly, on >the account of the growing relative surplus population. Secondly, >because as the productivity of labour gros, dos do the mass of use >values represented by teh same exchange value, i.e., the material >elements of capital. Thirdly, because of the increasing diversity of >branches of production. Fourthly, through the development of the >credit system, etc. and the ease with which the possessor of money >can now transform it into capital without having to become an >industrial capitalsits. Fifthly, the growth in needs and desire for >enrichment. Sixthly, the growing mass of fixed capital, etc." > >(Capital vol 3, p. 374-5. Vintage.) > >rb
