RE: [Marxism] America No. 1?

[Julio Huato <juliohuato@xxxxxxxxx>]

rr wrote:

> While I appreciate Julio's attempt to bridge the gap and synthesize the
> disagreements between Joaquin and myself, I disagree that there is a
> relative decline of US economic power vis-a-vis the rest of capitalism.
> Let me produce an interesting excerpt from The Financial Times (Jan 13)
> that might help explain what has really taken place:

Forgive my cliche, but it wasn't my intention to make you guys hold
hands and sing Kumbaya in the face of a difference in principles --
assuming that's the nature of your disagreement.  What I tried to do
was point out a few issues I consider politically crucial.

Now, as to your reply alluding to a FT's report, let me say first off
that my main point is that the economic predominance of the U.S. *in
global terms* (not only, or not mainly, in comparison to Europe or
Japan) is clearly decaying.  You are not challenging this, or are you?

That said, let me add that different measures are used to compare the
performance of the economies in the *rich* capitalist world.  The
OECD, the IMF, and the World Bank databases are perhaps the most
widely used sources.  I prefer the Summers and Heston database (PWT),
which you're probably familiar with, in part because it includes
almost the whole world and covers almost the entire postwar period.

The PWT are, IMHO, the best source of comparable international
economic measures.  Now, did I revised the data before I described the
trajectory of U.S. productivity (not standard of living) in comparison
to the rest of the world in my previous posting?  No.  I just rely on
my memory, which is known to trick me every now and then.  But, as
impressionistic as my description is, I stand by it and -- given time
-- I'd be glad to document my assertions if required.

Now, the kind of productivity that needs to be compared is what
economists call "total factor productivity" or "residual
productivity."  That is not the same as output per unit of "labor."
Although I'm sure you're familiar with this concept, let me explain it
to people who are not familiar with it:

Production entails the combination of (1) means of production (natural
resources and other means of production, particularly in the form of a
fixed capital infrastructure) and (2) labor power (what economists
call "human capital" plus "labor").  Obviously, if you expand (1)
and/or (2) and all other things stay constant, the level of production
goes up.  Now, the level of production may go up further because the
labor power you add is more skilled, educated, etc. and/or because the
means of production you add are of better quality.  But also, the
level of output may go up further because, even if the quality of (1)
and (2) don't change, the way you mix (1) and (2) is more effective.
The latter is what economists call TFP, which they estimate routinely
in an exercise called "growth accounting."  (This requires the
analytical digestion of the raw data that you'd find on the OECD, WB,
or PWT web sites.)

TFP is the extra level of output that cannot be explained by more or
better labor power or means of production, but "only" (mainly?) by
so-called "technological change."  Innovation in the productive
processes and in the quality of the products (when such improvements
are duly reflected in the income/output measures) are what drive TFP.
Clearly, Marx regarded the kind of productivity growth captured in
this type of empirical measure as the main engine of capitalist
production.  (That is clear in, for example, Marx's discussion of
relative surplus value production, where he viewed the ability of
capitalist production to continuously revolutionize the productive
forces, at the point of turning science and its applications into a
"direct" productive force, as its "historical justification.")

Short of TFP, I believe that real output per hour is a next best
measure of productivity.  Now, in the short and medium run,
international financial phenomena tend to distort what goes on at the
TFP level.  That's why it is important to look at the trends in TFP
when we're analyzing the secular shifts in international power in the
capitalist world.  For example, the U.S. has been running huge and
growing deficits in their trade balance for a good while already.
That inflates temporarily the U.S.'s levels of consumption.  In
measurement, it inflates the dollar and thereby the U.S. standard of
living in comparison to the rest of the world.  But those levels of
consumption (and the dollar overvaluation) are not sustainable, as the
IMF has been saying for a few years and a growing number of voices
(including Greenspan) are now saying.

So, we need to look at things deeper than GDPs per capita.  At the end
of the day, as I said recently on PEN-L, the ultimate sources of
economic power are (1) the ability of the social institutions to
continuously induce TFP growth, (2) existing productivity levels, and
(3) available resources (people, fixed capital infrastructure, and
natural resources).

And the social institutions in the U.S. are not helping, but hurting
productivity.  (Militarism, the strategy chosen by the current U.S.
administration) is not about promoting productivity growth, but about
blackmailing the rest of the world, unilaterally appropriating someone
else's wealth.  To put it in classical terms, in this country, the
legal and political superstructure is blocking -- or perhaps even
pushing backwards -- the economic structure (the whole set of social
relations of production) and thereby slowing down the further
development of the productive forces vis-a-vis the rest of the world.

In such scenario, what should we expect?  And how should we best use
our well-founded expectation politically?

Julio

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