Re: RE: Re: the profit rate & recession

[Rakesh Bhandari <rakeshb@xxxxxxxxxxxx>]

Title: Re: [PEN-L:20986] RE: Re: the profit rate & recession

> concerning my notes that I posted
> on-line (at http://bellarmine.lmu.edu/faculty/jdevine/FROP/sacramento.htm),  Rakesh
> writes:  
>
> > 1. you have confused changes in vcc with changes in
> occ.<
>  
> I don't care, since what's important is
> the change in K/Y (the fixed capital-output ratio). It's via this
> ratio that changes in the vcc and/or the occ play a role in
> determining the rate of profit. If the vcc and/or occ rise and don't
> raise K/Y, they're irrelevant.

don't agree. it's good to distinguish analytically between crisis induced effects on vcc and effects of technical change (labor or capital saving) on occ.

Due to the latter alone the VCC may have risen.

> In my papers that I cite in the
> bibliography, I talk about the "more building of mills for the
> sake of building mills," which I call either the
> "Tugan-Baranowsky Path" or "bootstrap growth" or
> "profit-led growth." Indeed, as suggested by the last name
> listed, I argue that rising profit rates and shares _encourage_ such
> craziness. The problem, as I argue, is that as this kind of boom
> persists, the economy becomes increasingly unstable (prone to
> collapse). I won't bother you with the details of the
> arguments.

please excerpt your analysis of why this kind of boom becomes unstable. i ask this sincerely because as duncan foley notes in understanding capital one cannot but agree with luxemburg's sarcastic dismissal of the tugan vision, yet her dismissal seems predicated on the equally untenable assumption that the purpose of capitalist production is consumption.

 

>
> Yeah, I also didn't discuss Mattick or
> the price of tea in China.

oh so the funny stuff is on list. let me think more about how interest costs play into all this.

Rakesh