Lakshmi Rhone wrote: >Great message, Jim.< thanks!
>Clarifying and helpful to call attention to Fred's very interesting concept of >the profit rate measured at full employment. A few quibbles > 1. For Grossman, emphasis not rop but mass of surplus value. Accumulation > crisis can't in fact be explained by FROP. < If the total mass of new investment in fixed capital (dK) is positively related to the mass of surplus-value (R), then the percentage rate of growth of the stock of fixed capital (dK/K) is similarly related to the rate of profit (R/K). > 2. That said, ROP is quite low on US investments if one abstracts from > profits from foreign operations and the (carry trade) profits of the > financial sector. See Justin Fox < So what? While interesting, that doesn’t respond to my missive. > 3. Insufficient mass of sv school points out that consumption demand often at > height just as crisis breaks out. Problem for underconsumption school of > course. < I wasn’t advocating the underconsumptionist school. In addition to my two main articles on the origin of the Great Depression, see http://myweb.lmu.edu/jdevine/dissertation/ch02-02-Survey-Undercons.pdf. > 4. The question is not the other imbalances but whether the insufficiency in > the production of surplus value is to be included in crisis theory at all. > Both Robinson and Sweezy tried to excise that part of Marx's theory while > Grossman actually tried to develop disproportionality analysis along with his > shortage of sv theory. < I don’t get why this is relevant to what I wrote. > 5. If shortage of sv is cause, then stimulus may not only cause inflation but > depress private investment even further. Wage pressures and future tax > burdens may spook private investors even more (note Christina Romer seems to > be pushing quite hard for payroll tax relief and a weaker dollar, both of > which really seek to improve profitability); < Right. But while payroll tax relief benefits capitalists’ revenues (in the longer one for the employees' half of the tax), it also encourages an increase in labor-power employment. It’s basically bribing employers to increase hiring. Also, in the period between cutting the employees' half of the payroll tax and the resulting market adjustment of wages, it does promote higher wages and consumption. > moreover, private investors may need the crisis to coordinate the scrapping > of fixed capital or even effect the centralization of capital and thus the > accumulation of power needed to make the future profitability of investments > likely. As Mattick Jr says, the unpleasantness of this capitalist reality is > not a reason to deny it. < All this says is that persistent stagnation allows the recovery of accumulation, no? > 6. It seems that the only reason that you are giving for why > depression-induced low wages and low raw material costs which could boost > profits don't revive accumulation is that the increasing value of debt in a > downturn chokes new debt-financed investments. Right?< No. there are two main reasons why falling wages encourage deepening depression: 1. The underconsumption trap. If accumulation is blocked (by unused fixed capital, excessive debts, and pessimistic profit expectations in a mutually-reinforcing bundle), falling wages (relative to labor productivity) cuts consumer demand and thus total demand relative to production, causing even higher unemployment (all else constant). 2. Fisher’s debt depression. Falling wages – and thus prices – encourage inflationary expectations (and rising real interest rates) and delayed spending along with higher consumer debt relative to incomes, which hurts consumption spending and can cause waves of bankruptcy. -- Jim Devine / "Segui il tuo corso, e lascia dir le genti." (Go your own way and let people talk.) -- Karl, paraphrasing Dante. _______________________________________________ pen-l mailing list [email protected] https://lists.csuchico.edu/mailman/listinfo/pen-l
