File spoon-archives/marxism-thaxis.archive/marxism-thaxis_1998/marxism-thaxis.9801, message 190


Date: 	Sun, 11 Jan 1998 01:29:27 -0800
From: bhandari-AT-phoenix.Princeton.EDU (Rakesh Bhandari)
Subject: M-TH: MANDEL, DOUG AND BODDHI



Now to DOUG HENWOOD'S  important criticisms of  a crisis theory based on
the shorage of surplus value (I can't find the original post, hope I got
the gist): 1. US profit rates are up (and so are share values of course);
2. US production is *not* relatively capital intensive, suggesting little
upward pressure on the organic composition of capital.

Some comments:  the real invalidation of the Siegel/Mattick theory
submitted here would be a substantial increase in fixed capital
formation--a significant growth rate in fixed capital formation,
significant growth in the percentage of GNP claimed by fixed
non-residential capital formation, and substantial productivity increases
as a result of such accumulation.

I don't think Doug has presented any evidence of such trends. But such
evidence would be the real proof that even after amortization of past
investment in which value has been tied up, capital is not haunted by a
shortage of surplus value for new capital outlays.  Mattick argued that
profitability could indeed be boosted *for some time* through
reorganization of existing capital assets, ie. downsizing: last year
witnessed a record one trillion dollars in US mergers and
acquisitions--which seems to be the major cause of Wall Street's riches.
This may have indeed boosted industrial profitability as well but it only
does so by playing a *diminished mass of surplus value* into fewer hands.

Moreover, as Mary Malloy has argued, there has been more retrofitting of
existing plant than substantial acquistion of new advanced, industry
specific capital goods.

The character of US accmulation is indeed suggestive. For example, the
modernization of the US industrial structure has focused on relatively
cheap information technologies, instead of on more capital-intensive
technologies. That is, the obsession with each new generation of word
processor and other IT--the least of the roundabout methods in Austrian
lingo--could suggest a shortage of surplus value to carry out the real
modernization of the major expensive capital goods used in machine tools,
steel, automobiles, etc. There really should be no productivity paradox;
one trillion dollars of really good typewriters, replaced every few years,
shouldn't have been expected to do wonders for productivity in even the
bourgeois terms of use values.

I have also previously suggested that the growth of the service industry
reflects an objective shortage of surplus value as it provides an outlet
for otherwise overaccumulated capital since services, by definition,
require so little industry-specific capital.

At any rate, the growing world economic crisis will bury Doug's
triumphalism, seemingly based on a chauvinism for the US working class.
But I wouldn't worry, Doug: people are still paying Paul Krugman $15,000 a
lecture, though  just five months ago, he was touting Indonesia as the
model for the whole third world.

BODDHISATVA raises very important questions about whether new production
ventures actually do require higher capital outlays. If not, then perhaps
there will be no shorage of surplus value. B himself underlines that
capital-saving innovations may themselves be products of capital-intensive
production. However, I do not believe he factors in the burden of
amortization of past investment, which diminishes the flow of surplus value
available for new investment, no matter how profitable returns therefrom
may be.

Rakesh




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