On capital allocation: 1. one idea is that with perfect competition capital flows to best uses first, then to less lucrative projects, and so 'on the margin' productivity of capital and the rate of profit fall. In the extreme, the rentier is euthanized as capital becomes so plentiful that the rate of return is driven to zero; (obviously we're talkin theory here)
2. a second is that congenitally optimistic investment in capital is devalued by innovations, rendering older business concerns bankrupt, fostering bankruptcies, breakdown crisis, the day the shit came down, etc. 3. a third which seems new, to me at least unschooled in this stuff, is that politically-connected capital refuses to go down route #1 and instead seeks out or generates bullshit projects aimed at exploiting the greater fool. These eventually fail to bear fruit and bring about bankruptcies etc along the lines of #2. The third is embodied in this fragment I picked up today: "Hedge funds so flush with cash that they are lending money into a commercial real estate bubble, bidding up the price of gold and financing hostile takeovers." http://www.washingtonpost.com/wp-dyn/content/article/2006/01/03/AR2006010301 358_pf.html Is my taxonomy right? The third item seems underemphasized in Marx, or is it actually there? It seems very salient today. Mbs
