schumpeter help

donna jones djones at
Fri Aug 26 01:58:59 MDT 1994

Doug Henwood posted the following:

> 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.

>From a marxian pt of view, I believe that Doug has mistaken symptoms for
causes (see my previous post on Keynes and psychology).  I believe the
marxian argument would follow thusly

1. The law of the tendency for profit rates to fall.

"As Mattick showe in numerous essays, most Marxist theories...share with
bourgeois economics a focus on the circulation of commodities and the
realization of surplus value.  Marx, in contrast, focuses on the production
of surplus value, to argue that the very process by exploitation is
enhanced leads  over time to a decline in the rate of profit over total
capital." (Quoted in Robt A Gorman, 1985, p.288)  In his last book,
Carchedi has rigorously pursued the argument; or at least as rigorously as
possible without much math.  The footnotes indicate supporting articles,
including Moseley.

2. The effect of tendential fall on production and speculation

"...if there is an underlying bias toward a reduction of the rate of
profit, what are its effects on a society which is conditioned socially for
its increase?  It certainly checks the formation of new capitals.  It
threatens the growth of capitalist production by its very excess of
productive equipment.  It brings about overproduction in the endeavor of
each capitalist to increase his means of profit by selling as much as he
can.  It promotes speculation, for as profits become more difficult to make
in industry, the defected moeny and passion for gain must take another
outlet.  Since the money cannot be made out of labor, the capitalists
strive to outguess each other on the stock exchange and in real estate and
in commodity futures.  They try to plunder each other, for that is all
there is left to do.  The frequency of crises is greater, their depth
greater, surplus capital abounds, surplus workers are enormous, until a
painful rectification occurs, but one more unstable at the base.
"Since the tendential fall in the rate of profit does not diminish the rate
of exploitation of workers, nor necessarily diminish the number of
exploited (it may, but it does not always succeed in doing so), capital
seeks to counter that tendency by employing cheaper labor in the
noncapitalist lands, or in the backward areas; it is thus able to increase
the rate and mass of profits for several years at at time." William J
Blake, Marxian Economic Theory, 1939, p.308

This argument had been advanced ten years earlier by Henryk Grossmann
(1929), based on his study of the section Surplus Capital and Surplus
People in Vol III.

3. What are the implications of understanding speculation both in
subjectivist terms and as the independent variable? Not good.

 It seems to me that it transmutes the basic conflict in production
relations between workers and industrial capital (which even the millionare
capitalist Ricardo recognized beginning with his revision of his chapter On
Machinery) into a false conflict between a putatively unified productive
unit of productive capitalists and productive workers (that would be a
surprise to the IWW) against only a growing fragment of "a formerly great
class"--the speculators or previously autonomous banking capital.  Both
Franz Neumann and Sydney Coontz have traced such a politics back to
Proudhon and fascism--false splits within the capitalist class.  Such a
critique also figures prominently in Rosa Luxemburg's critique of

 Moreover, we know whose capital it is that is flowing into speculation, at
least profitably--the surplus capital of industrial conglomerations. The
struggle remains the expropriation of the owners and controllers of the
means of production, not utopian policy attempts to make capital take on
real investments.  For with whatever regulation that will put on
speculative capital, such  attempts will always involve greater
domestication of the working class--the very precondition for continued
accumulation remains a higher rate of surplus value (even if this is
possible with a stable real wage).  In Gramscian words, industrial capital
will remain hegemonic within a so-called productive bloc to "make America
work again" or any other such petty bourgeois ideal.   marxism always comes
down to the revolutionary class consciousness of the industrial working
class.  The alternative to that has historically been genocidal


Henryk Grossmann, 1929.  The Law of Accumulation
Paul Mattick. all books
Guglielmo Carchedi. 1991. Frontiers of Political Economy
Sydney Coontz, 1966. Productive Labor and Effective Demand
William J Blake, 1939. marxian economic theory
Franz Neumann.1942. Behemoth
Fred Moseley. 1992. The falling rate of profit in the US
Rosa Luxemburg. Anti-critique
d jones


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