Paul Phillips writes: > What you suggest here is that the profit rate fell despite a *falling organic composition of capital*. I don't disagree though I would again ask is that because of an improper measuring of productivity growth as I suggested in my earlier post? You suggest this seems to contradict classical Marx and I would agree. Doug in an earlier post also suggests that Marx was wrong on some details.<
I am disagreeing with "classical Marxism" rather than with Marx himself. Whereas Karl didn't have a complete theory of crises (cf., e.g., Simon Clarke's 1993 _Marx's Theory of Crisis_), so-called "classical Marxism" posits a specific theory based on one of Marx's incomplete theory-fragments as presented in a poorly-edited posthumously-published manuscript (volume III of CAPITAL). Actually, if we were to define "classical Marxism" in terms of what Marxists during Marx's time believed, instead of the allegedly "classical" rising OCC theory, we'd probably define "classical Marxism" in terms of underconsumption or disproportionality. (That doesn't make any of these theories right, though. People should stop using the word "classical" to imply correctness.) As for the issue of measuring productivity, I agree that it's always problematic, especially when services are involved. In practice, capitalism defines "productivity" in terms of producing exchange-value or surplus-value, but what most people are interested in use-value is productivity. > I was suggesting that Marx may also have been wrong on the effect of 'globalization' (internationalization of capitalism) on what I believe you have advocated in other papers, the 'overaccumulation of capital' which I suggested with respect, particularly to China but also to other areas of the 3rd world -- and which has led directly to excess capital, international competition, and a realization crisis for domestic (i.e. North American) capital, particularly in the light of rising USD which exacerbates the realization problem for domestic US production.< I don't understand how Marx was wrong in your view. But I'd actually prefer a discussion of how _I_ am wrong, since discussions of "what Marx (really) thought" typically bog down. >Rakesh suggests I go read Shaik to disabuse myself of such ideas. Well, I have read Shaik, even talked to him about it when he visited our department. We also have a Shaik ex-student on our faculty and we frequently have this discussion -- he gave a couple of lectures in my class last week where this very issue came up.< Shaikh's foreign trade analysis makes sense to me, but his crisis theory doesn't, except in a limited way. In very simple terms, he argues that capitals drive themselves into a situation of lower profit rates because they seek higher profit margins. That makes some sense (under a relatively strong labor regime) -- but it's only a short-term, cyclical, theory. There's no reason why there should ever be a long-term downward trend in the rate of profit, since crises purge imbalances such as excessively high organic compositions and because the capitalists get the workers to pay for crises. >And Jim, as you remember, gave an early version of your paper on the origins of the great depression at a seminar in our department -- was it 15 years ago Jim? [yup!] So I would appreciate a little less patronizing by Rakesh and perhaps a more discretionary interpretation of scripture.< I don't understand this. I don't want to interpret scripture. (You can take the boy out of the Unitarian "church," but you can't take the Unitarianism out of the boy. I'm a skeptic, not a quoter of scripture.) I hope that _I_ haven't been patronizing. > Still, Jim, I think that the question of what was the real increase in productivity (and thus the organic composition) and the impact on realization of the rising exchange rate and increased competition, has yet to be answered.< I don't think it's right to equate increases in labor productivity with increases in the organic composition. There's a lot of variance in that relationship. In my paper that I presented in Sacramento, I didn't even measure the "organic composition," since I was more interested in the _combination_ of the effects of rising "capital intensity" and rising labor productivity on the rate of profit. I interpret the fixed K/Y ratio as measuring this combination of tendency and counter-tendency. Also, I'm not exactly clear what questions you are asking. I hope that you'll indulge me by repeating your questions in a way that I can understand. I do think that the rise of the USD in the late 1990s is an important fact that needs to be brought into the analysis, though. The rising dollar went along with -- or was due to -- a massive capital flow into the US which helped finance the investment & consumption booms of the late 1990s until 2000: investment could continue to rise despite the cyclical downturn in the profit rate and real GDP could continue to rise despite a worsening US trade deficit (and budget surpluses). Jim Devine
