>>> Rakesh Bhandari <bhandari at berkeley.edu> 12/19/2007 2:31 PM >>>
>Rakesh Bhandari wrote:
>
> >3. You seem to be saying that productivity gains are not so
> >impressive and widespread as to encourage a general upsurge in
real
> >investment. But that's Jha's point, so don't understand where the
> >difference is.
> >
> >
>
>That's not what I was saying. Productivity improvements were
>concentrated in a few sectors, but that's exactly what you would
expect
>from a boom. Every boom is focused on particular sectors. The point
is
>that the upsurge in productivity was certainly not caused by
eliminating
>low-productivity activities but rather by large and genuine
productivity
>advances in major sectors of the economy.
>
>I'm not dogmatic on this point. It's quite possible the productivity
>surge is over, having ended in 2006. But it was certainly very real.
>Hardly propitious terrain for anyone arguing for the long-term
>stagnation of capitalism.
>
Seth
But Seth I am not arguing for long term stagnation but a unity of stagnation and aggression. And no catastrophist denies that there may be exceptional advance in a few sectors.
For there to be a real productivity surge there has to widespread benefit from the most dynamic sectors as Paul David argued in his dynamo/computer analogy.
Technical advance is embodied in capital goods but Doug has shown that net investment has been very anemic in this 'boom', powered by deficits and cheap capital. This is a puzzle for us because the profit and productivity numbers look strong. Doug points to rentier disgorgement of cash but Michael Perelman and I ask why they would do that if profits from new investment are really so strong as a result of rising productivity.
^^^^^^^^ CB: Are these profits strong empirically ? If the productivity rise is due to new technology, one theory predicts a drop in profits.
^^^^