Dispersion of profit rates (overproduction)
djones at uclink.berkeley.edu
Wed Nov 2 22:19:04 MST 1994
Justin posted the following:
It's also true that capitalists
>with large investments in relatively unprofitable industries may find it
>difficult or even irrational to get out to where the grass is greener, a
>fact which contributes to overproduction tendencies, as Robert Brenner has
>argued. But that does not mean that they will not try! As US Steel told
>the United Steel Workers, we don't make steel, we make money. And shortly
>afterwards they changed their name to USX and got out of steel.
1) Capital switching
If the grass is green enough elsewhere,why wouldn't exiting from the old,
unprofitable investment for those greener branches elsewhere be rational?
Why is it irrational to switch capital, instead of continuing to purchase
the "circulating capital" necessary to write off the (heavy) investment in
fixed capital? Anyways, if unit values have crashed beyond the reach of a
firm, how could it possibly be rational for it to stay in business?
Is Brenner's argument here that firms don't cutback supply in the face of
inadquate demand because (a)they cannot switch their capital (for whatever
reason) or (b) because they must first amortize past investments (
rendered however difficult by the continual decline in unit values
characteristic of this mode of production) or... (c)because they innovate,
thereby bringing social values closer down to the innovator's individual
value, simultaneously capturing more of and expanding demand (with the help
adverstising) and thus actually increasing supply in the struggle to save
themselves at the expense of other firms. Note 2c does not assume a static
equilibrium: that in the face of declining demand, firms will respond by
switiching capital so as to balance supply and demand. This has nothing to
do with capitalist reality. Firms often respond to declining demand with
increased supplies through technically-achieved revolutions in value. Why
US Steel did not take this classic path needs to be explained.
3)From US Steel to USX (or as Robt Reich put it, from high volume to high value)
so why did US Steel get out of the mass production of steel (assuming that
it did)? Is the argument here because of glutted markets? Or was was there
an insufficiency of surplus value to modernize plants, which could have
sufficiently revolutionized value to create adequate demand? Or was US
Steel governed by the Law of Maximum Value and saw only an average rate of
profit in the mass production of steel?
If it is (2a), as Brenner argument seems to be, then this peculiar
disproportionality crisis could be solved by more efficient capital
I think USX's decisions are best understood in the terms of both an
insufficiency of surplus value and the search for an above the average rate
In explaining the devastation of US steel decision's Robert Reich called it
an example of the movement of the US economy from High Volume to High
Value. What does this mean?
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