Michael writes: >the idea that profits depend on investment is back to front. For Marxists, it is the other way round: investment depends on profit. And profit depends on the exploitation of labour power and its appropriation by capital. <
Causation goes _both_ ways. The Keynesian story assumes unused industrial capacity exists, so that rising aggregate spending (not just consumption, but also investment) allows higher capacity utilization rates and thus greater profit-rate realization. When supply constraints are hit, this story reverses, so that greater demand causes a profit squeeze: bottlenecks at or near full capacity cause input prices to rise, including wages and raw material prices (while productivity falls). The current Keynesian story ignores this second part; this oversight seems okay to me, since the last time the US saw this happen was the late 1960s. The Marxian story goes from actual profit rates to expected profit rates to accumulation to aggregate demand. This means that in the first part of the story sketched in the previous paragraph, we might see expected profit rates rising, boosting actual profit-rate realization, which helps raise expected profit rates. This is sort of like a Keynesian multiplier/accelerator process, but it cannot continue in the second part of the story. The Keynesian perspective works best in the short run, when general profit conditions are given, setting the scope for fluctuations of the realized profit rate and the expected profit rate. The Marxian theory, on the other hand, is about the determination of these general profitability conditions in the longer run. That is, it's about limits put on Keynesian theory and policy. The Chicago type John Cochrane is quoted as saying >> I note most of our government’s “investment” projects consist of high speed rail, alternative energy boondoggles, photovolatics that need protection from Chinese imports and so on. Say what you will about side benefits, but none of these projects has a remote chance of returning a positive return to the US Treasury… << These policies aren't supposed to give a positive return to the Treasury! I don't think anyone ever said so, since it's not the Treasury's goal to make a profit. If the US government makes a profit on any operation, in fact, Congress mobilizes to privatize the profit opportunities. The "profit" is supposed to be in terms of non-paid-for benefits to the "public." For example, in addition to directly helping Pres. Obama's financial supporters, alternative energy projects are (in theory) supposed to reduce carbon emissions, slow global warming, and ultimately help long-term real GDP growth. The main beneficiary of the last is the "private" sector. -- Jim Devine / "As far as the laws of mathematics refer to reality, they are not certain; and as far as they are certain, they do not refer to reality." -- Albert Einstein _______________________________________________ pen-l mailing list [email protected] https://lists.csuchico.edu/mailman/listinfo/pen-l
