Capital, the Productive Process, and the Rate of Profit [pdf]
Program Guide: George Reisman’s Program of Self-Education in the Economic Theory and Political Philosophy of Capitalism, Second Edition, Enlarged (including Introduction, Syllabus, and Syllabus Supplements) [pdf]
In combination, the following three series accompany Chapters 11
and 13-17 of CAPITALISM.
“Macroeconomics” focuses on the study of economic phenomena that are system-wide in their nature—for example, general business depressions, general economic progress, the general level of real wages, and the average rate of profit and interest. The currently prevailing ideas on the subject are those of Keynes and Marx. In sharpest contrast, the following three lecture series present a procapitalist approach to the subject that is inspired by the ideas of the British classical and Austrian economists and incorporates many of Dr. Reisman’s own, original contributions. They show that laissez-faire capitalism is both free of general business depressions and is characterized by a steadily rising level of real wages as the result precisely of the activities of businessmen and capitalists.
Capital, the Productive Process, and the Rate of Profit
This six-lecture series, delivered at the Jefferson School’s 1989 summer conference at the University of California, San Diego, makes an excellent accompaniment to Chapters 15 -17 of CAPITALISM. It represents a step-by-step exposition and development of Dr. Reisman’s own, original theory of profit and capital accumulation, together with many of its leading applications. It is accompanied by a 6,000 word excerpt from the draft of his book Capitalism: A Treatise on Economics and by a 34-page lecture supplement that contains the numerous diagrams and tables carefully worked through in the lectures, as well as a detailed outline of the material presented. The series thus represents a combination of tapes and virtual mini-textbook. Each of the lectures is approximately 90 minutes long, including question and answer period.
1. Methodological/Epistemological Introduction. Elements of sound economic theorizing: the proper treatment of money; the Aristotelian view of entities held by the British classical economists versus the Platonic-Heraclitean view of entities held by contemporary economists. Implications for the conception of aggregate production, aggregate spending, and the role of saving and productive expenditure versus consumption expenditure. Overthrow of the foundations of Keynesian economics.
2. Capital Accumulation and Its Causes. Saving and the relative demand for and production of capital goods. Technological progress and general economic efficiency as causes of capital accumulation. The fundamental role of economic freedom. Demonstration that in the absence of increases in the quantity of money, national income and capital accumulation are inversely related. Overthrow of the Keynesian doctrines of the balanced budget multiplier and the “conservatives’ dilemma.”
3. The Average Rate of Profit and Interest Under a Fixed Quantity of Money. Saving and productive expenditure as the source of equivalent sales revenues and costs deducted from sales revenues. Net consumption—essentially the consumption expenditure of businessmen and capitalists (financed by dividends, draw payments, and interest)—as the source of sales revenues in excess of productive expenditure and costs. The rate of net consumption as a manifestation of time preference.
4. The Average Rate of Profit and Interest Under an Increasing Quantity of Money. The rate of increase in the quantity of money and volume of spending as the source of an equivalent addition to the nominal rate of profit. The rate of increase in the production and supply of goods as the source of an equivalent addition to the real rate of profit. Why capital accumulation does not require a failing rate of profit. Why falling prices caused by increased production do not reduce the rate of profit or constitute deflation. Genuine deflation as a reduction in the quantity of money/volume of spending.
5. Further Applications of Reisman’s Theory. Baselessness of the hostility to profits and interest. The fundamental neutrality of technological progress with respect to the average rate of profit. How taxes on profits and interest raise the pre-tax rate of profit and interest and simultaneously undermine capital accumulation and economic progress. How government budget deficits do the same. Mitigation of the harmful effects of government budget deficits by means of foreign investment and an excess of imports over exports. Why large fortunes under capitalism are a reflection of low consumption and high efficiency on the part of their owners.
6. Further Development of the Theory. Net investment and the rate of profit. The relationship between net investment and the increase in the quantity of money. The concept of the average period of production and why it need not go on lengthening as a condition of economic progress. Critique of underconsumptionism—how the demand for capital goods can permanently exceed the demand for consumers’ goods and yet business is not in the contradictory position of buying for more at the same time that it sells for less. Why savings cannot outrun the uses for savings. Saving and the process of capital intensification. Depressions not caused by saving but by the need of business firms to increase holdings of money, which they have been led to run down by a government created environment of inflation and credit expansion.
Recent Comments