But the obsolescence
>>> >of one firm's capital is produced by a technological advance that
>>> >provides a profitable [temporary] monopoly advantage to the firm
>>> >introducing the new technology. The laggard's capital is "destroyed,"
>>> >but that "destruction" is compensated by the market which capitalizes
>>> >the expected profit of the innovator at a much higher rate. This is how
>>> >capitalist fortunes are made when they are made
>>> >"honestly." From a
>>> >Marxist view, this is a transfer of capital from loser to winner. It is
>>> >also the very essence of capitalism as a continual revolution of the forces
>>> >of production (and the main thing that Schumpeter learned from Marx!)
Not only may US industry be far on its way in establishing global leadership (see Mowery and Rosenberg and Mowery and Nelson--all Schumpeterian economists), it may be doing so in exactly those sectors where today's monopoly profits, ploughed back into US industry, will ensure tomorrow's technological monopoly as well (James Galbraith). Nowhere is this clearer than in the chip business--the poster child of industrial policy advocates (Galbraith included) a decade ago.
As I noted 9/9/99:
Again the paradigmatic case was the loss of US technological leadership in DRAMs. But it turned out that US firms were strengthening themselves by buying from least cost foreign sources. Frederick Scherer makes 3 interesting points: US firms did not need the experience of meeting the demanding fabrication tolerances from basic memory chip production to master the techniques for making more complex application specific and microprocessor chips. The US dominates design and production of microprocessors whose tolerances are at least as stringent as those of DRAMS. Second, computer designers have not suffered from not having the earliest possible access to the latest chip memory layouts since their interface with computers is pretty standardized, and lower capacity chips serve as a functional, if not ideal, substitute. Finally, Japan was not successful in forcing the payment of higher prices by cartelizing production. ______________
And now for speculation:
These technological monopolies in microprocesors and other key industries may be in a position to set excessively high prices for their output (mostly r & d-intensive capital goods) which is demanded worldwide to restore profitability by putting industry on a higher technological foundation. As Adolph Lowe argued about the 1930s (according to Harald Hagemann), a sort of sectoral disproportionality could now be in the process of being frozen (the divergences within the US stock market are as sharp as those worldwide) while all pressure for the restoration of profitability is put on wage cuts which continues to threaten vicious deflationary spirals to which heavily indebted government are no longer in any position to put a stop.
Yours, Rakesh