Accumulate, accumulate! That is Moses and the prophets!

Posted: 29 November 2017 in Uncategorized
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And the Republican Congress. . .

The premise and promise of the House and Senate versions of the Tax Cuts and Jobs Act are that lower corporate taxes will lead to increased investment and thus more jobs and higher wages for American workers.

Marx, it seems, would have endorsed the idea:

Accumulate, accumulate! That is Moses and the prophets! “Industry furnishes the material which saving accumulates.” Therefore, save, save, i.e., reconvert the greatest possible portion of surplus-value, or surplus-product into capital! Accumulation for accumulation’s sake, production for production’s sake: by this formula classical economy expressed the historical mission of the bourgeoisie, and did not for a single instant deceive itself over the birth-throes of wealth. But what avails lamentation in the face of historical necessity? If to classical economy, the proletarian is but a machine for the production of surplus-value; on the other hand, the capitalist is in its eyes only a machine for the conversion of this surplus-value into additional capital. Political Economy takes the historical function of the capitalist in bitter earnest.

Except for one thing (as Bruce Norton has explained): Marx never presumed capitalists would follow any kind of fixed rule, including using their surplus-value to accumulate capital. That’s only what the mainstream economists of his day—classical political economists like Adam Smith and David Ricardo—attributed to, or at least hoped from, capitalists. They’re the ones who thought capitalists had a “historical mission” of accumulating capital.

As I explained to students in class yesterday, you only get the accumulation of more capital out of corporate tax cuts if you assume everything else constant.

Consider, for example, the general law of capitalist accumulation:

K* = r – λ

where K* is the rate of capital accumulation (∆K/K), r is the rate of profit (surplus-value divided by the sum of constant and variable capital, s/[c+v]), and λ is the rate of all other distributions of surplus-value (including taxes to the state, CEO salaries, stock buybacks, dividends to stockholders, payments to money-lenders, and so on).

So, yes, if you hold everything else constant, corporate tax cuts, and thus a lower λ, will lead to a higher K*.

But that only works if everything else is held constant. If capitalists choose to use the tax cuts to increase CEO salaries, stock buybacks, and/or dividends to stockholders, then all bets are off. The Tax Cuts part of the act will not lead to the Jobs part of the act.

And even if capitalists do use some portion of the tax cuts to accumulate capital, that will only result in new jobs if technology is held constant. However, if they use it to invest in newer constant capital (e.g., automation and other labor-displacing technologies), then again we’ll see few if any new jobs.

And even if and when new jobs are created, the effect on workers’ wages will depend on the Reserve Army of Unemployed, Underemployed, and Low-Wage workers.

Clearly, there are lots of hidden steps and assumptions between slashing corporate taxes and more jobs.

That’s why Donald Trump and House and Senate Republicans have decided not to even attempt to justify the tax cuts but only to ram it through Congress in the shortest possible time.

They pretend they’re taking “the historical function of the capitalist in bitter earnest” but, in the end, they’re just attempting to line their benefactors’ pockets.

Comments
  1. […] Accumulate, accumulate! That is Moses and the prophets! […]

  2. […] have been arguing, since 2016 (e.g., here, here, and here), that one of the likely outcomes of the kind of corporate tax cuts Donald Trump and his fellow […]

  3. […] have been arguing, since 2016 (e.g., here, here, and here), that one of the likely outcomes of the kind of corporate tax cuts Donald Trump and his fellow […]

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