Date: Mon, 23 Jun 1997 17:54:28 -0800
From: djones-AT-uclink.berkeley.edu (rakesh bhandari)
Subject: Re: M-I: OCC


>I brought this up on PEN-L, and Rakesh responded with an interesting quote
>from Mattick, and a few other folks chimed in, but I want to ask all you
>Marxian heavyweights not on PEN-L the same question: what, if anything,
>does it mean that the U.S. has the lowest capital/output ratio (which may
>or may not coincide with the organic composition of capital) in the OECD,
>and has seen a decline in its K/Y ratio since the early 1980s. US
>profitability has been partly restored, it seems, by working labor harder
>and restricting investment to quick payback high-return projects, to the
>great delight of the stock market. Any thoughts?

Doug,
Let's see what the optimistic bourgeois economist could say about this. He
may agree that this ratio has not increased due to stagnation in
investment, which is itself the result of the savings-draining budget
deficit and rigidities in the labor market and the like.  But the real
optimist may note that the  US remains the most advanced in the innovation
of *capital-saving innovations*, and  maintains the scientific-personnel
necessary for further such innovation.  Thus even if the US lags behind
Japan and Germany in the percentage of its GDP devoted to fixed capital
investment, a smaller sum of surplus value is actually required in the US
to purchase not only cheaper but also more powerful means of production
(these innovations have served their function as a counter-tendency to the
falling profit rate). Accumulation may have temporarily slowed down in the
US, but due to capital-saving innovations, even rapid accumulation will not
imply upward pressure on the OCC. Also as a result of the superior
efficiency of these means, output of use-values will increase more than
sufficiently to compensate for the declining unit values from which
consumers will also benefit (this will of course allow capital to increase
relative surplus value production). Either way, a lower or stable
capital/output ratio may be a sign of the health of the US economy.

Also, one could argue that through investments in ever cheaper information
technology--again uniquely accessible to US firms--these American firms
have been able to rationalize their distribution and thus realize the value
of more of their output, giving them a much higher ratio of output realized
to capital invested.  Also through the outsourcing of what used to be
expensive in-house operations--financial, accounting, legal, technical and
other now information-equipped productive services--US firms have been able
to cut their capital costs. All this contributes to a lower capital/output
ratio, and remains a sign of the power and efficiency and dynamism of the
US economy.

The last twenty years may have seen the relative increase in the annual
productivity growth rates of Germany and Japan, which may have also been
saving and investing more of their national income. But the US retains the
highest total GNP and the highest per capita GNP, as well as the biggest
market,  providing it ultimately with sum of investment funds and the
opportunity it will need to create the infrastructure and engage in the
training to move to a higher technological level (of course we are not
interested in this context in a critical evaluation of a successful
investment and technology boom, such as Jacques Ellul's important The
Technological Bluff, Wm Eerdmans Publishing Company, 1990).

What do you think?

Rakesh




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