Rakesh Bhandari wrote:
> Roger,
>
> thank you for another illuminating post.
>
> There does seem to be a great of mass of SV that it is not profitable to
> capitalise--Doug has a great and very important discussion of this on
> pp269ff of his book. Whether the reason for this non capitalisation of SV
> is the profitability concerns of monpolies, the power of rentiers to
> require only pornographic rates of return on new real investment,
> underconsumptionist problems or falling profitability in new production due
> to the relative expulsion of variable capital (and it could be any
> combination), that mass of uncapitalised SV has led to an explosion of high
> rentier consumption and speculative financial activity.
>
> On another topic, any analysis that illuminates the dynamics of
> centralisation will win attention--you will notice Foster's very important
> critique of Brenner for neglect here.
>
> According to disciple Richard Langlois, Chandler saw the wave of
> conglomerate diversification in the 60s as in effect an internal capital
> market that invests in a diversified portfolio of unrelated interests.
> Though the stock market is better at diversifying away risk, Chandler
> argued that inflation had led to such price distortion that managers having
> found it impossible to disentangle changes in relative prices from changes
> in the price level found the internal information and control within a
> conglomerate to then have overall advantages.
>
> Chandler then feared as inflation subsided in the 80s that the break up of
> conglomerates would create a market for corporate control and the havoc of
> deal making would lead to an emphasis away from long term profit making.
>
> Yet inflation remains in check and we have seen perhaps an unprecedented
> wave of mergers and acquisitions. It seems to me that the main form has
> not been conglomerate diversification but within industry centralisation.
> In the case of transnational mergers perhaps the motive is to circumvent
> protectionist legislation. In the case of within country mergers, perhaps
> the motive is to avoid competitive investments and greater excess capacity.
> I am not quite sure, but we do need an analysis of the dynamics of the
> centralisation of capital over time, no?
>
> Yours, Rakesh
--
Michael Perelman Economics Department California State University michael at ecst.csuchico.edu Chico, CA 95929 530-898-5321 fax 530-898-5901