That improvements in the productivity of labor enable a given population to produce a greater amount of surplus value does not mean that the amount extortable from that population is limitless; the boundaries remain the number of *productive* workers exploited and the length of the working day. My point is that even if the necessary labor time of the proletariat exploited by American capital were pushed to zero, still not enough surplus value could be pumped out to justify the profit growth implicit in the 9500 Dow. You are vague as to whether there any limits to the surplus value that can be produced; I suggest your vagueness comes from your repudiation of the labor theory of value, Comrade Max Bernstein.
I was relying on Uchitelle's skepticism towards the recently posted .3% increase in the productivity growth rate which even if valid is still not high enough to justify the recent stock market madness (he mentioned the problem of an incorrect estimation of inflation). I believe Robert Gordon has given some other reasons for skepticism, and we have Doug's review of Sichel's critique of the computer revolution as itself the putative instrument of a boundless productivity revolution. You don't disagree that the amount of labor it has taken for the recent growth in output strongly suggests the lack of strong productivity growth.
And finally you respond to this:
>>> RB: the explanation for which must thus be found elsewhere. The paradox of
>course is that its rise can only be explained on the basis of the law of
>value though rising equity values are indeed incompatible with it. >>
>MSThis last sounds totally self-contradictory, if by law of value you mean the
>labor-based 'liquid' component of output measured in money, rather than the
>fizz reflected in fictitious value.
Indeed it is contradictory; and that's why it can't last. The point is simple. The fall in the rate of profit in production explainable in terms of the law of value gives rise to the search for profit making through tax evasions such as debt financed stock buy backs, the distress sale of excess capacity in backward firms for stock in thereby strengthened conglomerates and speculative gains in the stock market generally, pushing the value of marketable stock upward even as or because profit gains in production have dimmed in the economy as a whole.
This simply cannot last. The dividends will not be forthcoming to justify the valuations, and at some point investors will try to go liquid simultaneously in anticipation of massive devaluations in hope that they will be in position to buy more at the lower price.
The gains in the US stock market, where global speculation is presently concentrated, are enabling a consumption led boom from the so called wealth effect as equities reach for the moon. And since this is presently the basis of the US economy, the collpase in the stock market will take the whole economy with it. Everything thus rides on the maintainence of a rising Dow; it's a case of the barometer determining the weather, just one more aspect of the topsy turviness of bourgeois society.
The American oasis-boom is a mirage, based on a global slump leading to the so called flight for quality and the distress sale of commodities temporarily boosting US profitability as commodity exporters head towards social breakdown. There is nothing in the productivity stats that would justify thinking that US capital is going to extort the surplus value to actually justify the 9500 Dow. We are headed towards catastrophe and the general objective conditions out of which the subjective readiness for revolutionary action by the American proletariat could arise. Even the EPI will not understand what hit it. It will be busy writing up plans for the same old new deal of social security and collective bargaining while the anarchists and marxists will push for the completion of labor's revolution previously aborted by FDR.
yours, rakesh
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Since Brenner accepts Sweezy and Baran's theory of monopoly capitalism as adequate for immediate postwar American economy, one would imagine that with the rise of international competition among oligopolists, he would have considered society the gainer as monopolistic profit margins are presumably reduced and prices brought into closer proximity to costs and firms prevented from organizing the restriction of ouput for reasons of profit maximization. But Brenner actually rejects this judgement about international competition : due to uneven development on a world scale, first industrializers suffer chronic excess capacity as late industrializers come to operate in terms of greater efficiencies and superior substitutes. The consequence is simply the build up of capacity in excess of current and probable future demands; Brenner then enumerates various rigidities that retard the reallocation of capital and/or labor towards growing industries or "lines" as he refers to them.
Why the hegemon loses its dynamic competitiveness Brenner explains in terms not of the shortage of surplus value in the late stages of accumulation but in terms of a technical problem in which "the interrelatedness of units...tend(s) to further increase the inertial character of a developmental bloc and thereby increase its vulnerability to new, lower cost production based on new techniques."
Despite claims to originality, this version of the sick industry problem as "inertial development" is found in the major introductory textbook on industrial structure by Frederick Scherer. Indeed Scherer writes: "...competition is likely to drive prices down to levels that yield investors much less than a normal return on their capital. When firms' cost structures include a high proportion of fixed costs, this profitless existence can continue for years or even (as in railroading and mining) for decades, since producers find it preferable to continue operation and cover at least their (relatively modest) variable costs than to shut down and have their investments wiped out completely." Brenner couches the failure to adjust in terms of the firms' continued ability to enjoy a reasonable rate of return on their circulating capital, while Scherer underlines that the neglibility of variable costs in relation to the risks of complete exit may prolong operation in sick industries. Of course Scherer could draw from Brenner to emphasize that these risks include the forgoing of existing lines of credit and established customer relations and other intangible assets.
To an economist Brenner's argument must have a familiar ring. Brenner makes the eminently bourgeois economic argument--indeed he could have quoted Scherer thusly--that losses in sick industries, however immediately painful in the short run, "would have served the function of driving out surpluses and inefficient production capacity and compelling the reallocation of resources into more renumerative lines." Brenner's fundamental diagnosis hardly differs from Schumpeter's:
"Everywhere we find industries which would not exist at all but for protection, subsidies and other political stimuli, and others which are overgrown or otherwise in an unhealthy state because of them, such as the beet sugar industry in Europe and shipbuilding all over the world. Such industries are assets of doubtful value, in any case a source of weakness and often the immediate cause of breakdowns or depressive symptoms. This type of economic waste and maladjustment may well be more important than any other."
And this is exactly Brenner's point. Such maladjustment, mainly the product of international competition coupled with uneven development, is just that important: it can explain the plunge in the profit rate first in the US, suffering the penalty having taken the lead, and then elsewhere due to retaliation by that mighty hegemon without the invocation of an empirically dubious wage squeeze the possibility of which Brenner gives independent reasons to doubt. Indeed it just as tenable to argue that higher wages would have forced the exit of sick or marginally profitable industries and the restoration of the profit rate and therewith the rate of accumulation; the neo Schumpeterian Kleinknecht has made exactly that argument.
Capitalism's crisis tendency is here traced to the realm of competition in which the new does not vigorously out-compete the old and force entry into new niches to the detriment of the capitalist class as a whole. These horizontal capital-capital relations are the terrain of bourgeois economics and its particular subfield of industrial market structure.