[lbo-talk] Capital strike business

shag shag at cleandraws.com
Fri Oct 10 11:29:43 PDT 2008


At 04:22 PM 10/9/2008, C. G. Estabrook wrote:


>The capital strike is not for wages, but for working conditions.

OK. so i read around about capital strikes: Kalecki, Dan Clawson, even Erik Olin Wright. The latter two take me back as I've not read them in years.

Supposedly, a capital strike occurs when capital objects to certain government policies, and kinda does a "I'm going to hold my breath until you do what I want" routine. The example is usually Venezuela. Others nod at Kalecki's "The Political Economy of Full Employment." (I found the original text somewhere and now can no longer find it, but i found a secondary source *describing* what Kalecki said.)

Basically, what I'm taking from Kalecki's discussion of the 1937 recession was that there was a recessionary dip that was exacerbated by a capital strike. Capital did this to secure desired government policies.

If it's a capital strike now, though, then it's not only workers who suffer, but also other businesses, which was the point of my story in my initial response. So it's really not capital acting as a monolith, but a certain sector having the flouncing little tanty.

But what conditions do they want? That, I don't get. They don't want a higher interest rate, you say. Rather, they want better conditions. Presumably you mean political conditions.

Are you saying that they are rejecting Obama's predicted win?

Are you saying that they are simply sending the message to any candidate, that they want certain policies enacted to benefit them?

?

<quote> Kalecki's "Political Business Cycle" Model. The central concern in Kalecki's writings ­ including his early Polish-language essays anticipating Keynes' principle of aggregate demand ­ was the problem of investment and employment fluctuations in capitalist economies. In his formal models, Kalecki (1954) identified several sources of fluctuation, including variable price-markup ratios and accelerator effects. At least as well known, despite its brevity and non-technical charater, is a model Kalecki did not formalize, his essay "The Political Economy of Full Employment."

Here Kalecki argues that sustained full employment is impossible in advanced capitalist societies. His pessimism stems, in effect, from the dependence of capitalist accumulation on Marxian exploitation. He argues first that if unemployment falls too low, workers' effort in production will decline, reducing the profit rate. So as unemployment falls, worker effort may diminish, and capitalists may feel coerced into providing jobs under terms and conditions that compromise profitability. In effect, profit levels are subject to a labor-effort/output tradeoff. This danger can be averted only if the economy is operated at sub-full-employment levels; but a low-output state -- stagnation ­ also diminishes profits. Continued capitalist accumulation is especially threatened if workers unite in social democratic parties that demand full employment as a political outcome. For then the very legitimacy of the powers and rights of the owners of the means of production can be subjected to fundamental challenges. Capitalists' loss of control leads them to capital strike and/or reduced investment, initiating the downturn. As Figure 2B illustrates, there is an upper limit to capital accumulation.

There is also effectively a lower limit on growth. High unemployment levels are beneficial in some respects for capitalists: high labor effort is assured, wages are low, and their control over the production process is guaranteed. Low rates of capacity utilization may be problematic, especially for firms that have significant financial leverage. Another problem arises because of the influence of labor in the political sphere. If unemployment rises beyond some point, political agitation by the working class might trigger government counter-cyclical action. This is suggested as the lower boundary for employment in Figure 2B.

This leads to the idea of a political business cycle, wherein macroeconomic growth fluctuates between the two limit points shown in Figure 2B. As unemployment falls during the expansion, capitalists will use their power to withhold investment to regain control over government policies. In turn, downturn is checked when unemployment leads to government counter-cyclical action and low wages lead capitalists to reinitiate investment expenditures. </quote>

http://www.cfeps.org/pubs/sp/sp9.html

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