Re: Arms production + Dept III

[Adam Rose <adam@xxxxxxxx>]

Jerry,

I won't answer your questions directly, but I hope from what I say now that
my answers to your questions would become apparent.

Trotsky compared capitalism to a man breathing. The man can be young,
fit and healthy. The cyclical booms are long and vigourous, the slumps
short and shallow. Or, the man can be ill, when the cyclical booms are
short and shallow, and the slumps long and deep.

I think we can reasonably identify periods in the history of capitalism
of long term boom ie when the man is healthy, and periods of crisis, ie
when the man is ill.

The first period, one of crisis, say from 1830 to 1848.
A long boom associated with the classical age of imperialism, say 1848 to
1914 ( but the probelems became clear from 1889 onwards ).
The period of the crisis of Imperialism, say 1914 to 1945.
The post WWII boom 1945 - 1968.
The crisis 1968 onwards.

If we accept that the rate of profit tends to fall, we have no problem
explaining the tendency to crisis. We do however have a problem explaining
the two long booms, the first in the age of classical Imperialism and
the second from 1945 onwards.

I would argue that Capitalism came across a way of preventing the fall in the
rate of profit temporarilly in both cases, and that these "countervailing
tendencies" explain the long booms. However, in both cases, contradictions
in these adaptations of capitalism meant that the system returned to crisis.

1. Imperialism.

I don't think it is possible to say that the higher rate of exploitation
in colonial countries was sufficient to offset prevent the fall in the
rate of profit. In effect, this is a rejection of the falling
rate of profit, since the whole point is that the organic composition
of capital dominates the rate of exploitation.

Instead we have to look at the principal economic feature
of the classical age of Imperialism ( one which isn't particularly important
today - in fact , Imperialism today does the opposite , it sucks
Capital out of the "third world" ) , the export of capital.

The massive export of Capital was the mechanism by which the continuous
pressure on the organic composition of capital was relieved. Essentially,
Capital which otherwise would have been reinvested at home, increasing the
organic composition of capital, instead was exported. So an individual
Capitalist could increase his profits without this pushing the system as
a whole into crisis.

Of course, this ran into problems eventually. The first major Imperialist
country, Britain, precisely because it had exported a greater part of its
Capital than Germany and the US, had less efficient industry. So it began
to lose out economically. As we all know, for the same reason Germany had
more efficient industry ie it's relative lack of Empire, it didn't have
much of an Empire. So we had economic crisis and war.

2. The Permanent Arms Economy 1945 onwards.

I would also argue that from 1945 onwards arms production played a similar
role to the role the colonies played in the age of classical Imperialism.
The constant pressure on the organic composition of Capital was to an
extent alleviated by not reinvesting all the surplus in Deptartments I and II.
A historically high "peacetime" proportion of the surplus went instead into
arms production. Of course, some countries, most obviously Japan,
took advantage of this boom to direct all the surplus into more efficient
industry. So after a while, these counties were more competetive than
the US, and the pressure on the organic composition of capital reasserted
itself.

This is all far better explained in "Explaining the crisis" by Chris Harman,
published by BookMarks. You'll get all the references there.

Adam.

PS. On the subject of "is capital used in arms production "constant capital" ?
Does it create surplus value ? etc my answer is umambiguous : always and at all
times yes. The relationship between coca cola and advertising is the same as
the relationship between the state and arms production : neither contribute
directly to the product but both allow that particular block of capital to
capture market share.

Adam Rose
SWP
Manchester
UK


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