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 --- from list marxism-thaxis-AT-lists.village.virginia.edu ---
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