You wrote: "Drewk will tell me if I am wrong or imprecise, but I think some marxists argue that advanced rationalized firms, though themselves immensely profitable, enforce a technological obsolescence or moral depreciation on backward firms; that is advanced firms outcompete their rivals and reduce their profit rates or, to put it another way, destroy the value which their unamortized capital once represented. This has has the effect of making less value available overall for future investment, compounding the problem of unemployment. Unplanned rationalization in a private anarchic market thus tends not only to reduce employment demand relative to new investment but to destroy value elsewhere in the economy which would have been available for future investment and employment growth."
Before I get to this, my two cents on efficiency in general. In a class-divided, race-divided, gender-divided society, there just ain't no "social welfare function," i.e., general will. So there's no efficiency from the societal standpoint. "Efficiency" is the neutral technocratic term dreamt up to make the technocrats' arguments more "objective" and more persuasive than "this is in my class interest" or "this is in the interest of the people who are paying me."
As for Rakesh's statement, I don't know about wrong or imprecise; there may be those who have this view. The temporal single-system interpretation of Marx's value theory, on the other hand, implies that the issue is not one of a "private anarchic market" or technological differentiation (advanced vs. backward), or technological differentiation causing a lack of investment capital. Remember that total value in Marx's theory is determined as a result of production, so that different distributions of it (due, e.g., to advanced firms outcompeting backward ones, or monopoly) do not alter the total.
Rather, the argument is this. If prices fall as a result of rising productivity (which they will if the relation between money and labor-time remains constant), then *aggregate* profitability tends to decline, since the machinery, etc. was acquired in the *past* when prices were higher, but the output is being sold *now* when prices are lower. *All* machines, etc. acquired in the past are subject to "moral depreciation," i.e., losses of value. Sooner or later, firms must charge these losses against operating income.
Also, the whole thing can play itself out as a debt crisis. Imagine that you buy a machine on credit today for $10,000, and use it to produce two clones of itself in one year. If the price of the new machines in 1 year is $5000 each, you can't pay the interest. No creditor will accept the argument that, since $10,000 is now equivalent to two machines, whereas the $10,000 borrowed was equivalent to only one machine, the repayment of principal alone yields them a 100% rate of return (and they won't accept the machines either). But that's what the standard interpretation of Marx curiously implies!
Also, if government debt is used to artificially raise demand and thus keep prices from falling, this tends to paper over the falling tendency of the profit rate but also to displace it, exascerbating the fragility of the system and the tendency to debt crisis, as well as fiscal crises, etc.
Now, all of this stems strictly from the laws of capitalist production, not competition. It stem from rising productivity, or "efficiency," if you will. However, it does *appear* in the form of a problem of technological differentiation, including the problem of differentiation between the First and Third Worlds. The advanced firms, having more productive equipment and techniques, produce at lower cost than the backward firms. But they all sell at the same price, more or less. So the advanced firms make superprofits by diverting surplus-value from the backward ones. For instance, imagine an advanced firm that produces 1 widget for $10 paid cost and extorts $10 of surplus-value, and a backward firm that produces 1 widget for $30 paid cost and extorts $10 of surplus-value. Then total value is $60, and the value per widget is $60/2 = $30. If the two firms sell at that price, the advanced firm gets $20 profit, while the backward firm gets $0.
So the advanced firms can actually raise their own profit rates by means of productivity increases. This, and the fact that backward firms go belly up, make it look, wrongly, as if productivity increases raise profitability. In fact, the productivity increases *lower* the aggregate profit rate.
This should be clear from the foregoing, but if not, you can see it by abstracting from technological differentiation. Then all firms get the same profit rate (ceteris paribus), and they all suffer equally from the drop in prices that results from rising productivity. So rising productivity tends to lower *all* of their profit rates.
Moreover, I don't think that planning can overcome such problems as long as the law of value holds sway. The Russians thought they were planning production, but the laws of capitalist production were controlling the Plan, if you know what I mean. Because they wanted to catch up with and outstrip "Western" capitalism, they had to do things like scrap the tractors they had just produced and buy tractors from Ford, in order to compete. And the Plans always called for balanced growth or even increases in consumer goods over investment goods, but the exigencies of global competition meant that they had to expand investment goods at the expense of consumer goods. And so they followed the classic pattern of capitalist accumulation first seen in England.
Ciao
Drewk
Andrew ("Drewk") Kliman Home: Dept. of Social Sciences 60 W. 76th St., #4E Pace University New York, NY 10023 Pleasantville, NY 10570 (914) 773-3951 Andrew_Kliman at msn.com
"... the *practice* of philosophy is itself *theoretical.* It is the *critique* that measures the individual existence by the essence, the particular reality by the Idea." -- K.M.