schumpeter help

Doug Henwood dhenwood at panix.com
Fri Aug 26 07:24:39 MDT 1994


Several responses to the first graf of this posting.

1) If an emphasis on speculative investment leads to under-investment in
real capital goods, the source of surplus value will be starved, and the
physical, social, and economic reproduction of society will be threatened.

2) Speculative investment usually creates fragile, debt-heavy financial
structures that are extremely vulnerable to a financial shock.

3) The management of those shocks by the central bank and state (low
interest rates, easy money, the Resolution Trust Corp.) "validates
threatened financial practices" (in Hyman Minsky's phrase), thereby
encouraging future irresponsibility even as it saves the system in the
short term.

4) The first wave of program trading restrictions does kick in at 50 Dow
points, but it works both ways, not just on the downside.

5) Markets did collapse before program trading. There's no reason why
program trading restrictions should prevent an old-fashioned selling (or
buying) panic.

6) Despite all the institutional and technical changes of recent years,
stock market volatility is not all that different from 10, 20, or 60
years ago.

Doug

Doug Henwood [dhenwood at panix.com]
Left Business Observer
212-874-4020 (voice)
212-874-3137 (fax)


On Thu, 25 Aug 1994, wesley david cecil wrote:

> First, I do not see why speculative investment creates a crisis, it would
> seem to be a really good way of dealing with a falling rate of profit and
> also a nifty means to increase the concentration of wealth in the hands
> of the wealthy.  Also consider that the Dowj now cannot fall more than
> 50[I think it is 50 maybe someone else can confirm this number]
> points in one session(about 1.5%) before computer trading is shut off
> effectively insuring that the dow cannot lose more than 70 or so points
> in a single day, about 2%, while there is no limit on how much it can
> rise.  So while individual stocks can rise and fall quie dramatically,
> overall the game is seriously rigged towrds stability.  In fact, many
> brokers have complained of the "Chinese Water Torture" effect of recent
> market changes which tend to hover between 3 and 10 points a day with the
> occasional 40 point swing on major announcements(still only about 1%).
>
> Onthe question of how technology effects value, that is hard to say, I
> would think, particularly in the context of the many long discussions of
> calue that have already taken place.  Basically, however, it would seem
> to connstantly reduce the number of workers necessary to produce any
> single item while simultaneously creating new products and the desire for
> them, thus forcing the creation of new jobs(notice the Clinton Admin has
> penned all of their hopes for employment growth on this latter
> pehnomenon).  Certainly it is easy to imagine that the ability to produce
> will outstrip the ability to stimulate consumption, so I see no reason
> why technology does not function quite nicely even in very fundamentalist
> views of the coming crisis of Captialism.
> Wes
>
>  On Wed, 24 Aug 1994, donna jones
> wrote:
>
> > I would still be happy to receive some comments or citations on how to
> > study the impact of modern science and technology on the value-determined
> > capitalist production process.  Does capitalistically endogeneous technical
> > change modify or destroy the objectivist or fundamentalist theory of the
> > law of accumulation and breakdown of the capitalist system?
> >
> > Also what do people think of the critique of subjectivist or, more
> > precisely, psychological theories of crisis." As capitalist production is
> > the *production of capital* via the production of commodities, a lack of
> > new investments can only have one cause, namely, the fear that such
> > investments 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."(Mattick Sr, 1983, 133)
> >
>


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