tag:blogger.com,1999:blog-3591186784456519139.post6652972020422962690..comments2024-01-02T17:38:32.872+00:00Comments on Economics of Imperialism: The Number of the BeastTony Norfieldhttp://www.blogger.com/profile/03896437404164741498noreply@blogger.comBlogger9125tag:blogger.com,1999:blog-3591186784456519139.post-28484857922770529902012-03-19T22:07:59.118+00:002012-03-19T22:07:59.118+00:00In the 5th para., I meant OF corporate output.In the 5th para., I meant OF corporate output.Andrew Klimanhttp://akliman.squarespace.comnoreply@blogger.comtag:blogger.com,1999:blog-3591186784456519139.post-7094346881709420212012-03-19T22:00:59.932+00:002012-03-19T22:00:59.932+00:00Since a comrade has just written to me about the f...Since a comrade has just written to me about the following paragraph of Tony's review, I think I should say something to clarify things:<br /><br />"In Chapter 7, Kliman demonstrates that a rising ‘organic composition of capital’ was the main driver of the downtrend in profitability. I would agree with this point, except that Kliman’s explanation looks odd. His argument is that the organic composition was very low in 1945, resulting in a high rate of profit. After 1945, the organic composition for new capital investments was much higher, and the rate of profit on new investments was much lower. But he claims that the organic composition did not rise on these new investments after 1945. Instead, in his view, the overall rate of profit fell because, over time, the total stock of capital was made up by a higher proportion of the newer, higher organic composition, lower profit rate investments (pages 134-137). This argument is made in a chapter that is full of technical detail, and is one of the few in his book that I find implausible. Although it is difficult to find a good proxy for the organic composition of capital with official statistics, my reading of reports on business investments would suggest that there has indeed been a rise in the organic composition on new investments in the post-war period." <br /><br />I do TWO DIFFERENT decompositions of the data. ONE shows that the fall in the nominal rate of profit is almost entirely attributable to a rise in the ratio of the historical cost of fixed assets to compensation of employees. Some people may wish to construe this ratio as a proxy for the *nominal value* composition of capital.<br /><br />The OTHER decomposition, which I think is much more informative, does not refer to any composition of capital. And I'd prefer not to interpret it terms of any composition of capital. <br /><br />This latter decomposition shows that almost all of the fall in the nominal rate of profit since 1947 persists even after we hold the profit share (or corporate output) constant and also hold constant my proxy for the monetary expression of labor time (MELT), which measures the relationship between money prices and labor-time values. In other words, those factors have very little to do with the fall over the long haul.<br /><br />Why did this hypothetical constant-profit-share and constant-MELT rate of profit fall? Because the rate of profit on new investments (also in constant-profit-share and constant-MELT terms) was consistently *less* than the existing overall rate. So the overall rate fell. This is so even though there wasn't much *fall* in the rate of profit on new investments.<br /><br />Tony seems to interpret the rate of profit on new investments (in constant-profit-share and constant-MELT terms) as the reciprocal of what he calls the "organic composition for new capital investments." Then he questions something about my results--exactly what, I'm not sure--on the grounds that external evidence seems to him to "suggest that there has indeed been a rise in the organic composition on new investments in the post-war period." For the sake of argument, I'll accept that such evidence exists and that this is what it suggests. <br /><br />But let me ask: is this actually evidence about the reciprocal of the rate of profit on new investments (in constant-profit-share and constant-MELT terms), in the U.S. corporate sector? If it isn't, but is instead evidence about something else that might be called "the organic composition on new investments" (in the U.S. corporate sector?), it doesn't call my findings or computations into question. <br /><br />In particular, I'm concerned about the possibility that evidence about the technical composition of capital (and thus the organic composition in the strict sense) is being construed as evidence about the value composition that more directly affects movements in the rate of profit.Andrew Klimanhttp://akliman.squarespace.comnoreply@blogger.comtag:blogger.com,1999:blog-3591186784456519139.post-56876420801495515992012-03-19T17:32:34.725+00:002012-03-19T17:32:34.725+00:00@ Anonymous Mar 17, 2012 07:27 PM
@ Tony Norfield ...@ Anonymous Mar 17, 2012 07:27 PM<br />@ Tony Norfield Mar 18, 2012 09:10 AM<br /><br />Tony is right. And I think it's bad procedure--cherry picking--to use 1982 as a basis for comparison. This was a very atypical year, a year of deep recession in the U.S. And that's *precisely* why the working people's share of national income was so high then. <br /><br />1980 was another recession year, the year when the Fed started to attack inflation strongly. <br /><br />Here are the percentages for those and surrounding years:<br /><br />1978 69.4%<br />1979 70.0%<br />1980 72.0%<br />1981 70.7%<br />1982 72.0%<br />1983 71.0%<br />1984 68.4%<br /><br />The percentage in 1970, which is year Foster and Magdoff chose as the starting point (the year in which the wage & salary share in the *narrow* sense peaked)was 69.1%. Between 1985 and 2007, the percentage was greater than or equal to 69.1% in 11 of the 23 years. <br /><br />If you want to use deep recession periods bases for comparison, you should compare them to other deep recession periods:<br /><br />1980 72.0%<br />1981 70.7%<br />1982 72.0%<br />1983 71.0%<br /><br />2008 70.8%<br />2009 73.6%<br />2010 71.9%Andrew Klimanhttp://akliman.squarespace.comnoreply@blogger.comtag:blogger.com,1999:blog-3591186784456519139.post-91317608304338081032012-03-19T07:04:44.062+00:002012-03-19T07:04:44.062+00:00Another post that may be of interest to you and ot...Another post that may be of interest to you and other readers<br />‘The Failure of Capitalist Production’ by Andrew Kliman — Part 1<br />http://critiqueofcrisistheory.wordpress.com/2012/02/19/the-failure-of-capitalist-production-by-andrew-kliman-part-1/Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-3591186784456519139.post-5670771574382153782012-03-18T16:10:17.508+00:002012-03-18T16:10:17.508+00:00Kliman (page 154) measures wages + salaries + non-...Kliman (page 154) measures wages + salaries + non-wage compensation + net govt social benefits and takes this as a share of national income, not GDP. Except for the NI denominator, that is your third series. National income is the more relevant denominator for this exercise. His chart 8.1 shows the worker total rising sharply from the 1960s into the early 1980s, then it bounces around in a modest downtrend before rising back to the peaks in 2007-09. His point is that this contrasts with the usual charts of a strong downtrend in the share of wages & salaries since the 1970s.Tony Norfieldhttps://www.blogger.com/profile/03896437404164741498noreply@blogger.comtag:blogger.com,1999:blog-3591186784456519139.post-46824681071754764102012-03-18T02:27:07.714+00:002012-03-18T02:27:07.714+00:00Haven't seen the book, but Kliman issued a pap...Haven't seen the book, but Kliman issued a paper, "A Crisis of Capitalism." The Oct. 27, 2010 revised version has a figure 6 that displays three series of compensation as a percentage of GDP:<br /> <br />1) Wages and salaries peaked in 1970 and mostly fell since then.<br />2) Wages, salaries and other compensation (presumably including employee health and retirement benefits) peaked in 1973 and mostly fell since then.<br />3) Wages, salaries, other compensation and net social benefits rose dramatically from 1965 to 1982, then bounced around below the 1982 peak until reaching it again in 2010.<br /> <br />All the series understate the worsening situation for workers, because salaries and benefits for the top one, five, and ten percent increased much more than for the great majority of wage and salary recipients.<br /><br />Kliman's point depends on the third series. Given the declining effective corporate tax rate and anecdotal perception of increasingly sophisticated tax evasion by top income recipients, examination is needed to verify that net social benefits really reflect a net accounting.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-3591186784456519139.post-55871425303309315472012-03-17T19:59:44.167+00:002012-03-17T19:59:44.167+00:00I too was surprised by Kliman’s argument on US inc...I too was surprised by Kliman’s argument on US incomes. In the introduction to the book, he notes that until he examined the data (in 2009-2010) he too believed the standard argument that neoliberalism led to a drop in real worker incomes! However, his investigation of the evidence led to a different conclusion. He reviews in detail a number of the sources and the commentaries on the data. In some cases, he notes that economists have used the wrong figures for incomes, or they compare wage data with the wrong deflator. Overall, his figures show that the share of income for workers has not fallen when one takes account of both wages and benefits. Your points on the continued attack on living standards are valid, but Kliman’s argument is based on the data up to 2010 and that was the situation up to that time.<br /><br />Tony NorfieldTony Norfieldhttps://www.blogger.com/profile/03896437404164741498noreply@blogger.comtag:blogger.com,1999:blog-3591186784456519139.post-40856574201658739662012-03-17T19:21:26.774+00:002012-03-17T19:21:26.774+00:00The claim about the rate of exploitation clashes w...The claim about the rate of exploitation clashes with U.S. trends from the 1970s to now: more working hours per year and stagnant or falling real wages per hour and even per year with those extra hours.<br /> <br />Workers suffered these trends but got it all back in retirement, health, and unemployment benefits? Private retirement pensions have largely switched from defined benefit to defined contribution; perhaps Kliman goes into the consequences. Meanwhile, government Social Security has been indexed to inflation but not made more generous, and the retirement age was raised. Health coverage has become more insecure, whatever the money figure attached to it in the statistics.<br /> <br />Kliman's claim is remarkable. A comparison between his assertions and those from the Economic Policy Institute, which publishes a statistical review of workers' economic situation every two years or so, would be instructive.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-3591186784456519139.post-22986279890956173452012-03-13T22:33:07.891+00:002012-03-13T22:33:07.891+00:00Thanks Tony, I hope you'll be writing more art...Thanks Tony, I hope you'll be writing more articles like this. This blog is one of my favourites and is a welcome addition to my increasingly radical list of blogs.<br />I agree that to include a discussion of "the dollar" and "US Finance" is essential in developing a better understanding of imperialism and also the effect it has on workers privilages (e.g. cheap commodities) and related struggles, or lack of.Anonymousnoreply@blogger.com