[lbo-talk] Constant Capital and the Crisis in Contemporary Capitalism

michael perelman michael at ecst.csuchico.edu
Thu Mar 25 09:24:17 PDT 2010


James Hartfield's comment on my paper is useful. I am fully convinced that, other things being equal, lower labor costs discourages as much emphasis on labor saving technology. In addition, Marx's increasing organic composition of capital depends on the relative pace of technical change in the production of consumer goods compared to the rate in capital goods production.

Information technology would seem to fly in the face of increasing organic composition of capital; however, if we look at the total production cycle of information technology, the picture becomes somewhat cloudy.

Let's stick with the example of computers. The production of chips is extraordinarily capital-intensive. The computers themselves replace considerable labor. Even so, the direct labor used to produce computers becomes relatively insignificant.

I tried to avoid this problem by thinking about marginal costs relative to fixed costs. Here, I think the picture is one of a trend of reduced marginal costs, which seems to be a proxy for the direction of the organic composition of capital.

James Heartfield wrote:
> Michael, I am looking at your paper now, but one objection that strikes me straight away is that when you write about Marx's assumption of a rising organic composition of capital, I have to ask whether you think that assumption applies to the recent growth of capitalism.
>
> I mean that since the end of the cold war, there has been a marked expansion of capital that has been labour, rather than capital intensive. for the last twenty years. With labour costs held down and new layers of people drawn into wage labour, both in the developed world, and in the former Stalinist bloc, there has been little need for investors to seek labour saving technologies, and pursue intensive growth, when they have been able to accrue what Marx called 'absolute surplus value' by extensive growth, creating new points of production, rather than revolutionising the existing productive base. I write about that here: http://www.metamute.org/en/a_crisis_of_under_accumulation
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Michael Perelman Economics Department California State University michael at ecst.csuchico.edu Chico, CA 95929 530-898-5321 fax 530-898-5901 www.michaelperelman.wordpress.com



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