fouling

["Devine, James" <jdevine@xxxxxxx>]

[was: RE: [PEN-L] Estimating the surplus\Doug's question]

Doug wrote: 
> I'd make the same argument using the real wage and the wage and
> profit shares of national income plus an analysis of the balance of
> class power. I saw that the profit rate, by my vulgar measure, fell
> during the 1970s and rose during the 1980s and 1990s. What happened?
> Unions were broken, the welfare state pared back, and a deep
> recession from 1980-82 scared the hell out of the working class. The
> profit rate fell sharply from 1997-2001 because labor markets were
> tight; Alan Greenspan was channelling Kalecki, saying that the "pool
> of available workers" was running dry, invoking the threat of wage
> inflation. As you say, tranlating the bourgeois stats into Marxian
> categories takes lots of work; why spend all that time crunching
> numbers when you could better spend it by thinking politically?

I agree that there's no reason to adjust the profit rate that Doug creates for the effects of unproductive expenditure. It's important to look at the back-and-forth between the rate of profit and accumulation, with a major emphasis on the balance of class power. 

However, I'd add that old-fashioned Marxian crisis theory may have something to add. Capitalism isn't simply a matter of class conflict affecting the production and distribution of the product. There are also cases where capitalism develops in a way that undermines its own success: the capitalists foul their own nest, a nest that we have to live in. Because of the latter, the societal context in which class relations take place changes. 

The "classical" emphasis on the organic composition of capital promised to capture that "fouling": the OCC rises, hurting profits, no matter what the balance of class power. Now, the classical argument didn't work out very well, but that doesn't mean that "fouling" doesn't have a theoretical basis. 

In the late 1960s/early 1970s in the US, there was a fall in the rate of profit (r =R/K) in the advanced countries that involved over-investment relative to supply constraints. This wasn't simply a fall in the share of profits in national income (R/Y). In several research papers, I've see it also can be seen (to a lesser extent) in a fall in "capital productivity" (Y/K). (Note that r = (Y/K)*(R/Y) where Y = national income (total value production), K = the value of means of production, and R = total property income.)

In the last couple of decades, especially in the 1990s, there was over-accumulation relative to demand constraints. Even though the dramatic shift of the distribution of income toward the capitalists implied that there was an underlying "underconsumption undertow," the economy continued to boom, especially in the 1990s. (That this "boom" has been over-sold is a different issue.) This created imbalances with which the US economy is still struggling, implying an especially anemic "recovery," with little recovery at all in terms of employment.

Jim