>Sure. I was talking with some students of Wolff and Resnick about cries theory
>and mentioned in the conversation that it seemed to me that amomng other
>problems with the Falling Rate of Profit theory, it didn't square with some
>data I'd seen. "But that's empiricism," they gasped in horror.
Justin, what data were you pointing to? What are your other problems with the falling profit theory? Van Parijs provides an elegant refutation, I think, but the cogency of Shaikh's, Carchedi's and Kliman's arguments have been underestimated, including by Brenner who deals with only Shaikh and only in a footnote.
At any rate, does the falling profit theory apply to the development of capital within each nation state at their varying respective states? Or to the capitalist system as a whole? What kind of abstraction is total capital then?
Pasinetti argues that "mechanization" can proceed (the capital-labor ratio in technical terms), without upward pressure on the "capital intensity" of production (the capital output ratio, presumably in value terms; it is also presumably a proxy for the organic composition of capital). This whole thing confuses me.
And how about this:
"To give a simple example, suppose that India imports from the United States of America a certain set of machinery for an integrated chemical process which is set up in India with exactly the same technical characteristics as it has in the US. The physical capital per man will obviously be exactly the same in both countries, and so will be its current value, evaluated in international prices, e.g., in dolllars. But suppose that the Indian industrial wage rate (at comparable efficiency and in dollars) is 1/4 of hte wage rate in the US: then the capital/output ratio entailed by this production process will be much greater (up to 4 times greater) in India than in the United States, despite the fact lower India wage will influence the price of final output, but not the price of the machinery (which is bought on the international market). In other words, the lower Indian wage rate will influence that part which is the charge for capital. The very same technical equipment, i.e., the very same degree of mechanization (the same capital per man, whether in physical terms or at current prices) will ential a much greater degree of capital intensity for India than for the United States." Pasinetti, Structural Change and Economic Growth, p. 185
So what determines the capital intensity of production is not the level of mechanization but the wage rate? That seems to be an important blow to Marx's theory (I have suggested other blows in a post on globalization to which no one responded.)
Also this seems to me a fascinating example since it may imply that a great deal of value that is to be extracted from, say, the Indian proletariat is being transferred up front through the purchase of specialized capital goods above value. My guess is that a rather significant transfer of value is in such transactions and that it is through the export of advanced capital goods, commanding what James Galbraith has called a scarcity rent, that several imperialist R&D intensive capital goods firms can continue to enjoy a high rate of profit--though of course at the expense of rising capital output ratios (given how much the capital costs the third world businessman) and therewith falling profit rates elsewhere, i.e., most of the world.
But it would take a great deal of evidence and theoretical rigor to make the argument. I have been collecting the evidence. Alan Freeman began this most important task a few years ago, but I haven't heard from him since. Of course Ranjit Sau has been talking it about for years, but no Western Marxist has paid any attention to it to the best of my knowledge (nor have any of those many Indian professors who have become specialists of international trade in American universities), though Carchedi does cite him while developing his own rigorous theory of unequal exchange.
For the most part, the Western Marxists at the NLR and elsewhere are such resentful white males that they can't even get themselves to admit the superiority of those lowly Italian scientific communists (Della Volpe, Colletti, Napoleoni) compared to windbag French. OK, OK, it's true: Sraffa and Gramsci have not been ignored. At any rate, have you seen the latest issue of International Journal of Political Economy on Italian Marxist Theory, ed. by the very insightful Riccardo Bellofiore.
Yours, Rakesh