The analysis of cognitive dissonance is profoundly illuminating.
I have only one complaint: if Prof Brenner gets to criticize his oppponents as "fundamentalists" and Prof O Connor gets to characterize these positions as "orthodox" ones intuited by "oracles", what do I get to tar my interlocutors with? Revisionism? Who drew first blood?
1. Tugan Baranowsky vs O'Connor
Here's how I read your sophisticated underconsumptionism: since in the course of accumulation dept I grows at the expense of dept II, overproduction in dept II becomes a looming threat because the total growth of effective consumption demand is limited by the relatively high TCC in the capital goods dept (evidence?) that is making up a greater share of production.
I just don't see how this doesn't put us back on Tugan Baronwsky's doorstep: if profits can't be realized in the expansion of dept II, capital shifts to dept I--that is, the further production of machines by machines. Plus, the export of machinery allows an escape from the limits of consumption demand at home, as TB triumphantly declared.
Indeed there is more reason to think this dept I led expansion will founder on a *technical* shortage of labor needed to fashion sophisticated machines with which to produce more machines in the cost cutting movement towards total automation than on an excess of *value* vis a vis realization possiblities.
Or so Joseph Halevi has interpreted T-B's argument in his contribution to Political Economics in Retrospect: Essays in Memory of Adolph Lowe. 1998, very kindly sent to me by Mat Forstater.
TB's blow against underconsumptionism seems decisive, no? What about Sweezy's reworking of the underconsumption of Otto Bauer, still reeling from Grossmann's critique?
And what about Bukharin's fucking spirals?
2. the passivity of consumption
yes the credit card--the computer powered form of installment buying--expands the market for the moment but the subsequent compound interest reduces effective demand in the not so long run and directly narrows the market. It provides an immediate increase only at the cost of exacerbating the crisis it brings in its train. As for the wealth effect: to the extent that it is the rosy product of speculative gains in the stock market, it should engender only crisis inducing inflation.
3. FROP and realization crisis
In *The Meaning of Crisis* you wrote that the FROP "line of analysis remains limited because it presupposes that there is no structural gap between value production and value realization...[I]n the course of accumulation the realized profit rate must decline. The reason is two fold: on the one hand, if the value content and/or size of the consumption basket declines, the actual rate of profit will fall because of overproduction of capital. This is called a crisis of realization.."
But as my oracles showed, the consumption basket falls because the rate of profit falls, not visa versa. And as Oracle Jr underlines
"It follows from this--and this a point of great significance--that economic crisis raises, not the issue of maldistribution of income (to be overcome by some redistributive mechanism), but that of the existence of capital as a class relation." In CJ Arthur and Geert Reuten, Circulation of Capital. 1998
You continue: "On the other hand, if capital is used unproductively to expand markets and shorten circulation time, more capital becomes in effect constant capital, i.e. capital which does not produce surplus value."
But in Fred Moseley's synthesis--I would never have thought of this myself-- just because unproductive expenditures do not produce surplus value does not make them constant capital. Constant capital transmits its value to the final product. These unproductive expenditures are deducted from surplus value as revenue. That is, they more dramatically compound the FROP. They not only do not add to value; they subtract from it as well.
Still this formulation is compelling: "In orthodoxy, it's certainly true
that the absence of accumulation
>produces an insufficient effective demand, not the insufficiency of demand
>that causes a decline in accumulation. This formulation is a great leap
>forward against bourgeois economics in which "production is for
>consumption" and all that. But it is one-sided."
4. Wage squeeze in real or value terms?
>I refer you to the
>whole cost push lit of the 1970s, the Fiscal Crisis of the State,
>Accumulation Crisis, etc., etc. Real wages did rise faster than
>productivity for a while in some places. Workers struggle did make LP less
>variable capital. Etc.
The real direct and social wage rises may only mean an attentuation in the rise in the rate of exploitation or merely an attentuation in the rise of the rise of the rate of exploitation. The real direct and indirect wage increases you refer do not speak to a value analysis and on that basis it is not possible to refer a wage squeeze. For example, that the productivity of workers in circulation activities did not keep up with real wages--even as they increased as a portion of the workforce for reasons you mention--does not mean that the wages of productive labor (that is v) kept up productivity gains, that is, that productive labor was not more exploited despite real direct and indirect wage gains.
The oracles to cite here would be Fred Moseley and Anwar Shaikh/Ahmet Tonak.
It is possible, I suppose, that by stabilizing the trade cycle through govt intervention until say 1970, the rate of exploitation did not rise as it usually does in downturns.
But in the US alone, there have been seven downturns since 1970, along with political reaction. The rate of exploitation has thus increased, yet rates of output and productivity growth remain anemic. How could a wage squeeze been the efficient cause of a downturn in light of how things turned out and continue to turn out? The wage squeeze has been since reversed. What do you think of Moseley's analysis?
yours, rakesh