- Capitalism and Alternatives -


Posted by: Barry Stoller on September 29, 1999 at 14:09:29:

Did anyone read last week's Business Week magazine, the article about 'The Prosperity Gap'?

As the story goes, there are the 'old' manufacturing---and service---industries (such as construction, transportation, utilities, 'all other manufacturers,' hospitals, schools, etc., etc.) and then there are the 'new' industries, the information industries (software, financial services, media, and what they vaguely term 'consulting'). In the article, it is openly admitted that wages in the 'old' industries are stagnant (up only 3%, equal to the rate of inflation) while the wages in the 'new' fields have risen 11%.(1) (This is not to infer that these two incomes groups were ever equal!)

Furthermore, the people employed in the 'old' industries amount to about to 91 million (about a third of the entire population) while those enjoying the benefits of the 'new' industries amount to only 19 million (under ten percent of the population).(2)

And furthermore:

...[F]or the foreseeable future, most Americans will be locked into Old Economy jobs without much hope of big income gains. Indeed, based on current trends, the wage gap between New Economy and Old Economy workers seems likely to widen for years to come.(3)

What's important here, I think, is that more and more of the surplus gained from 'manufacturing' is being brought into what Marx called the circulation sphere.

The circulation sphere has been growing larger and larger since the universalization of computers. Our so-called information technology (as it pertains primarily to Dept. 1) is nothing more than an added layer of circulation costs required to realize the final sale of commodities. (These costs come out of production costs---and are presented as a 'discount' to retailers; they do not add to the final value of the product, however, thus they cannot be 'passed on' to the final consumer.) Once upon a time a businessperson made a sale without the highly developed network of computers and computer-based services ubiquitous today. Now these things must be added to the list of constant capital---which, of course, reduces the previous 'dependence' upon variable capital (and seemingly all the 'labor hassles' that come with it).

With me so far?

Marx stated in no uncertain terms:

The process of circulation is a phase of the total process of reproduction. But no value is produced in the process of circulation, and, therefore, no surplus-value. In fact, nothing occurs there outside the metamorphosis of commodities, and this has nothing to do as such either with the creation or changes of values.(4)

Thus, the growing circulation sphere brings us again to the problem of the organic composition of capital, the increasing reliance upon dead labor and the increasing reduction of living labor---which is the only thing that can create value---in the production of commodities. Put simply, it's costing more and more (in investment dollars) to realize the same buck as before (although, admittedly, the scope of accumulation continues to grow---for the moment). This redistribution of investment dollars, which threatens the rate of profit gained, is accompanied, not surprisingly, by lowering the standards of living for those amongst the proletariat who remain employed (as well as proletarianizing more and more of the 'middle class' supplanted more and more by the very machines they initially thought were so wonderful). What the Business Week article so tactfully omits to mention, of course, is that many of the 'old economy' workers employed by the U.S. are not among the 91 million Americans mentioned; these overseas occupants of sweatshop hellholes receive far, far less than any of the figures cited in their story.

I'm sure Business Week would not agree, but their article pretty well substantiates Marx's view that the profit rate falls as more and more constant capital is required to remain competitive and that this fall is buffered primarily by expanding sales and by squeezing labor. After all, if profits were so hunky-dory, why invent all this expensive computer stuff to hasten turnover time (and replace yet more living labor) in the first place?


1. Mandel (with bureau reports), 'The Prosperity Gap,' Business Week, 27 September 1999, p. 90.
2. Ibid., p. 90.
3. Ibid., p. 96.
4. Marx, Capital, vol. 3, International, 1967, p. 279.

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