[PEN-L:10998] Re: K/Y ratios

[John Lawrence Gulick <jlgulick@xxxxxxxxxxxxx>]

I don't religiously subscribe to Marxist value theory, and hence don't
recall much of what I used to know, but I thought that it was possible
for a particular fraction of capital to have at once a) a high OCC, and
b) high rates of profit, b/c of the way that the total mass of surplus
value is split up amongst money K, landed K, new industrial K, mature
industrial K, labor-intensive K, capital-intensive K (mediated through
and by the state as well as national and international markets). It's
possible that amongst all the capitalist firms in the world the U.S.
features a higher than average percentage of firms which have a high OCC
(hence the low capital/output ratio) but also the revived profit rates of
late, given the way that the distributional system gives technological
rents to innovative industries and other forms of rent (I forget what
they're called) to capital-intensive ones ...

John Gulick
UC-Santa Cruz


> I think the following speaks to these questions.
>
> Paul Mattick, 1983:
> "For the rate of profit not to decline, output must grow faster than the
> constant capital, which is only another way of saying that the rate of
> exploitation must exceed the rate of accumulation. As far as can be
> established on the basis of the unreliable statistics we have, this was the
> case during the last century, although accumulation was interrupted by a
> series of depressions. On the basis of then existing capital structure, the
> rate of exploitation apparently sufficed to ensure the expanssion process.
> This may explain the rather rapid accujmulation of capital during this
> period. Since the first decade of the present century, however, the
> capital-output ratio has stabilized, which is to say the rate of
> accumulation has slowed down, relative to existing capital. But as the
> accumulation of capital is also a concentration process and thus plays
> larger profits into fewer hands, the accumulating capitals were not for
> some time aware of the decline in profits. And because the centralization
> process can raise the rate of profit even in the absence of capital
> concentration, simply by the reorganization and different utilization of
> existing capital, a relative stagnation of capital does not at once express
> itself in lower profits. On the other hand, the hastened concentration and
> centralization of capital can also be seen as measures forced upon capital
> to maintain its profitability. Insofar as these measures compensate for
> lack of sufficient new investments, they hold down the rising organic
> composition of capital, thus bolstering the rate of profit at the expense
> of accumulation. But while the profit rate may be maintained, general
> economic activity stagnates, for it cannot advance without the production
> of additional capital. Sooner or later, the stagnation leads to a crisis,
> which can be overcome through the resumption of the accumulation process.
>
> "As long as the share of surplus value within the value of the total output
> allows for both capitalistc consumption and new investments adequate to the
> already existing capital, the rate of prift will not fall, even with a
> rising organic composition of capital, or in bourgeois terms, with the
> increase of the ratio of capital to net output. But this is just the point:
> while the rate of profit *must* fall with the rising organic compostion of
> capital a more rapid increase  of the rate of exploitation, visible in
> larger output, prevents this tendency from showing itself in the actual
> profit rates. To progress, capitalism must constantly raise the
> productivity of labor, that is, reinvest in more efficient means of
> production throught the accumulation of capital. A slowing-down of the rate
> of accumulation, or even capital stagnation, while on the one hand reducing
> or preventing the rise of the organic composition of capital and thereby
> stabilizing the rate of profit, on the other hand will lead to a sudden
> fall of profits through the reduction of total production, on account of
> the lack of new investments. A part of the surplus value remains in its
> monetary form, in which it does not yield surplus value, and to that extent
> reduces the total mass of profit over time.
>
> "As capitalist production is the production of capital via the production
> of commodities, a lack of new investments can only have one cause,
> namenlythe fear that such investment may prove to be unprofitable and
> therefore senseless. This fear is not a psychological phenomenon but
> derives directly from the fact that the rate of profit on the functioning
> capital already shows a strong tendency to decline. The reason for this
> decline is not discernible, for it has to do with capital as a whole, with
> the total social mass of surplus value in relation to the total social
> cpaital. But while not discernible, it nontheless affects all individual
> capitals, although to varying degrees, and determines their individual
> decisions with regard to investment policies. Thte fall of the rate of
> profit precedes the decline, or the arrest, of accumulation, which is thus
> merely the outward expression of the fall of the  rate of profit inherent
> in the expansion of capital. The falling rate of profit is thus the signal
> for the disruption of the spiraling disequilibrium of capital production,
> as the necessary condition for its continuing development.
>
> "Without resumption of the accumulation process, the raison d etre for
> capital production would be gone. It is thus in capitalist reactions to
> declining profitability that Marx's theory of accumulation finds its
> obvious verification. These reactions, whatever their consequences, have
> only one purpose, namely, the increase of surplus value through a further
> increase in the productivity of labor., for the restoration of
> profitability of the expanding capital. This is, and always was, the *only
> solution* suggested by the capitalists and by the "science of economics" to
> overcome a period of economic decline, even though this means accumulation
> for the sake of accumulation, regardless of social consequences."
>
> Paul Mattick, 1983. *Marxist: last refuge of the bourgeoisie?*. Ed. Paul
> Mattick, Jr. Armonk, NY: ME Sharpe, Publishers. 131-33.
>
> Rakesh Bhandari
>
>
>