jones/bhandari djones at
Fri Sep 8 00:41:50 MDT 1995

Reproduced below is  an absoutely  brilliant analysis of "the ratio of
dynamic to stagnant sectors" in an individual nation.  The analysis comes
from Tilla Siegel who I believe is now a Prof (or perhaps Chair) of
Sociology at the Goethe University at Frankfurt.

I did send this passage out before, but as I read some of the new strategic
trade theory and'restructuring' literature, I find this analysis to be
tremendously helpful.  For those of you who missed it the first time, I
hope that you find it illuminating in understanding the world political

"The existence of dynamic and stagnant sectors in capitalism does not
contradict the tendency toward an equalization of profit rates.  This is
not just because the term 'tendency'already implies continually changing
inequalities between profit rates.  Dynamic sectors do not grow faster just
because their profit rates, and so rates of accumulation, are above
average, but also because these profit rates attract capitals from other
sectors.  So long as the additional influx of capital does change the
relations between supply and demand in such a way that the profit rates do
not fall below average, they will remain dyanmic sectors.  And stagnant
sectors do not grow more slowly or shrink just because their rates of
profit are below average, but also because capitals leave these sectors for
others with higher profit rates. In general, the existence of dynamic and
stagnant sectors in capitalism is an expression of the capital movements
that create the tendency toward an average rate of profit.

"With respect to the position of the individual nation in the world market
the ratio of dynamic to stagnant sectors in its economy is very important.
Even if we assume that all nations have the same wage level and that all
nations produce at the highest levels of productivity, a nation that has
specialized in dynamic sectors will have a higher growth rate than one that
has specialized in stagnant sectors. Through the imperialistic expansion of
capital the international distribution of these sectors has created a
partition of the capitalist world market into nations with primarily
dynamic sectors (in the center) and nations with primarily stagnant sectors
(in the periphery).

"But how did this specialization come about?  It would be wrong to take the
effect for the cause and to argue that it came about because it was
favorable for the dominant capitalist nations.  One cannot say that the
process toward this form of specializtion was consciously created in the
sense that the nations of the center transferred staganant sectors into the
periphery by way of state action or by concerned capitalist action.  This
process was set in motion mainly by the fact that *acquired* advantages in
productivity, i.e., advantages resulting from technological progress, have
played an increasingly important role in international trade.  meanwhile,
the nations of the center have been and are monopolizing the development of
technology while their capital have destroyed and are destryoing the
possibility of this development in the periphery.

"On the one hand, the increase of productivity in a sphere of production
creates the possibility of extra profits.  On the other hand, this increase
makes possible the capture of markets in other nations where the level of
productivity is lower, and so makes possible an increase in demand and thus
the reaping of extra profits over a longer span of time.  This sphere of
production becomes a dynamic one (because of a higher rate of accumulation
and the influx of new capitals) and acquires more weight in the nation
concerned wthan other spheres where the relation between falling cost
prices and expanding demand is not as favorable.

"What was left for the nations of ther periphery were those sectors where
natural advantages (climate, minerals, etc) and lower wages could not be
compensated for by acquired advantages. These conditions severely limit the
possibility of making extra profits by lowering cost prices in these
sectors.  This possibility depends primarily on the devleopment of demand
for these commodities.  And his demand comes mainly from the center.  Thus
the growth potential of the nations of the peripery are strictly limited by
the development of capitalism in the center.  (It should be said that this
applies not only to the production of primary good but also to the
industrial production than has been transferred to the periphery because of
low wages there.)

This is, in its breivty, only a very rough sketch of the mechanisms that
have led to an unequal distribution of the dynamic and stagnant sectors
between the center and periphery of the world market.  Now I have to
qualify my statement above, that this distribution has not been consciously
created.  It is true that the state in private capitalism cannot tell
capitals where to invest.  This is why is so important to look at the
mechanisms that capital creates itself.  But throughout the history of
capitalism, nation states have repeatedly intervened in the economic
process, knwoing well how important is the specialization of their
economies in certain speheres of production.  By doing this they created
conditions in which these mechanisms operate in favor of the capitals of
their nations." (124-125)

Tilla Siegel, "Politics and Economics in the Capitalist World Market:
Methodological Problems of Marxist Analysis", International Journal of
Sociology, Spring 1984/Vol. XIV, no. 1

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