Wednesday, March 24, 2010

Constant Capital and the Crisis in Contemporary Capitalism

Echoes from the Late Nineteenth Century

Introduction: Constant Capital and Crises

An understanding of constant capital is an overlooked, but necessary component of crisis theory. This paper uses the experience of the 19th century U.S. economy illustrate the relationship between constant capital and economic crises. The rapid technological advances of the time led to a lethal combination for capital. Investment in constant capital suffered rapid devalorization, while growing productivity saturated markets, creating what was then known as The Great Depression.

Constant Capital and Labor, Living and Dead

Read complete paper


TheTrucker said...

I think I actually understand some of this business you have presented. You are interested in being able to account for what is happening and to possibly predict what will happen as technological innovation reduces the need for labor and the lenders of money manage to take advantage of everyone. I am reminded of the farmer that has no choice but to buy a new tractor or lose the farm. He simply can't produce enough to survive UNLESS he fertilizes and uses the new capital.

And as all the proprietors rush to be more productive then the amount of produced goods forces prices down and the bank (which accounts for magically created money and produces nothing) is the only winner.

michael perelman said...

Yes, you got it. Thanks.

Shag from Brookline said...

Michael, after reading David Brooks' NYTimes column yesterday, I'm confused about what Phase you and other economists at this Blog may be in. Personally, I think this column was Brooks' not-so-subtle way of trying to knock his fellow columnist Paul Krugman, an economist, down a peg without mentioning Krugman by name and attacking economics as a whole. Brooks has been lost in political punditry after the 8 inglorious Bush/Cheney years and has been trying to find his way as a conservative. Of course his recent column is full of holes. Hopefully economists will respond.

Shag from Brookline said...

Greg Mankiw has a blog post on Brooks' column that is somewhat critical.