Professional Documents
Culture Documents
Introduction
To M arxist
Econom ic
Theory
B y E r n e st M andel
PATHFINDER PRESS
N E W YORK
Copyright © 1969 by Merit Publishers
Copyright © 1970 by Pathfinder Press, Inc.
All rights reserved
L ib rary of C ongress C atalog C ard Num ber 73-82169
M anufactured in the United States of America
PA T H FIN D E R PRESS
410 West Street
New York, N. Y. 10014
"Economic Planning" 69
by George Novack
The change in the social and political atm osphere of America
in the last decade h as intensified interest in Marxist ideas both
am ong the general public and in university circles. For a long
time, and especially during the reactionary cold-war era, it was
an axiom of conventional wisdom that M arxism had become
outdated. Some conceded that its teachings might retain value
and validity for the colonial world but lacked any useful ap
plication to America today.
The m ain propositions of M arx, the argum ent went, essential
ly reflected the conditions of an im m ature stage of capitalist de
velopment belonging to the nineteenth century in the West. They
no longer fitted the realities of such advanced capitalism s as
the United States.
This opinion w as voiced not only by conservative scholars
and liberal com m entators but by m entors of the New Left like
C. Wright Mills who highly esteemed M arx's contributions to
social thought and recommended them to students. Nevertheless,
after reviewing the principal postulates of M arxism in his book
The M arxists, the Colum bia professor delivered the following
verdict: "The political, psychological and economic expectations
clearly derivable from his (M arx's) work seem increasingly un
real, his model as a whole increasingly inadequate. His theories
bear the stam p of Victorian capitalism . . . ."
The contention that M arx's theories are irrelevant to our press
ing national problem s h a s become less and less fashionable and
tenable as so m any y oung people h ave begun to question the
foundations and future of American capitalism. The teachings
of M arxism seem cogent to them, not only because they have
been adopted as a guide by the m ajority of progressive h u m an
ity and form an integral and indispensable element of contem
porary thought and culture, but because they serve to explain
the course taken by Am erica's ruling class ab ro ad and at home
more profoundly and convincingly th an any alternative system
of ideas.
The author of this pam phlet has done much to prom ote this
continuing shift of attitude tow ard M arxism. Ernest Mandel, ed
itor-in-chief of the Belgian weekly La Gauche, is probably the
most influential exponent of the political economy of scientific
socialism in the Western world today.
3
He h a s taken a lead in the m odernization of the M arxist her
itage through his masterful two-volume work entitled M arxist
E conom ic Theory. There he analyzes both neocapitalism and
the postcapitalist societies in transition to socialism in a Marxist
m anner through the use of contem porary d ata a n d a critical
exam ination of rival schools in this field.
This w ork h as gone through several editions in France since
it w as first published there in 1962. It h as been translated into
m any other languages, from English to Arabic.
M andel has in addition contributed m any articles on a b ro ad
ran g e of subjects to periodicals throughout the world and h as
spoken at leading universities in the United States and C anada,
although he h a s since been banned from the U. S., Germany,
France, Switzerland, a nd A ustralia for his socialist views. This
ha s b rought widespread protest from scholars all over the world.
These are the resources which Ernest Mandel h a s draw n on in
this pam phlet, which w as originally presented as a course d u r
ing an educational weekend organized by the Paris Federation
of the United Socialist Party in 1963. It h as since been tra n s
lated into several lan g u a g e s and extensively used in classes on
the subject.
This is one of the m ost concise expositions of the elementary
principles of M arxist political economy available. In the first
section M andel elucidates the basic categories of M arx's eco
nomic doctrines from the emergence of the social surplus-product
to the la b o r theory of value. In the second he explains the laws
of m otion of the capitalist system and its inherent contradic
tions. In the final part he applies these concepts to the princi
pal phenom ena of the development of neocapitalism over the
past forty years.
While Mandel, as a Trotskyist, adheres to classical M arxism,
he does not rely on quotations or p a ra p h ra ses from the stan
d a rd M arxist w orks. His fresh and readable ap p ro ach avoids
the dullness often found in other treatm ents of these difficult
topics.
The present edition includes new m aterial in the form of an
answer by M andel to a criticism of his treatm ent of "socially
necessary labor." Students who are looking for a clear and com
pact explanation of the dynam ics of the capitalist system in our
time will find it in these pages. F o r a m ore comprehensive and
detailed exposition they should go on to read the two volumes
of M arxist Econom ic Theory.
4
Author’s Note to the Second Edition:
On Socially Necessary Labor
Commodities, Use-Value
and Exchange-Value
We h a v e now developed several b a sic definitions which will
be used th ro u g h o u t this exp o sitio n . A n u m b er of o th ers m ust
be ad d ed at this point.
E very p ro d u c t of h u m a n la b o r n o rm a lly possesses utility;
it m ust be a b le to satisfy a h u m a n need. We m a y therefore
s a y th at every p ro d u ct of h u m a n la b o r h a s a use-value. The
term "use-value" will, how ever, be used in two different senses.
We will sp e a k o f the use-value of a c o m m o d ity ; we will also
talk a b o u t use-values, a s w hen we refer, for exam p le, to a
society in w hich o n ly u se-values a re p ro d u ce d , th at is to say ,
w here p ro d u c ts a re created for direct c o n su m p tio n either b y
the p ro d u c e rs them selves o r b y ru lin g classes which a p p ro p r i
ate them .
T o g e th er with this use-value, a p ro d u c t of h u m a n la b o r can
a ls o h a v e a n o th e r v a lu e , a n excha n g e-va lu e. It m a y be p ro
duced for e x c h an g e o n the m a rk e t place, fo r the p u rp o se of
be in g so ld , r a th e r th a n for direct co n su m p tio n b y the p ro
ducers o r b y w e a lth y classes. A m a s s o f p ro d u cts which h a s
been cre a ted fo r the p u rp o se of b e in g so ld c a n no lo n g er be
c o n sid e red a s the p ro d u c tio n of sim ple u se-values; it is now a
p ro d u c tio n of c o m m odities.
The co m m o d ity , therefore, is a p ro d u c t created to be ex
c h a n g e d o n the m a rk e t, a s o p p o se d to on e which h a s been
m a d e fo r direct co n su m p tio n . E v e r y c o m m o d ity m u s t h a v e
b o th a u se -v a lu e a n d a n exchange-va lu e.
It m u st h a v e a use-v alu e o r else n o b o d y w o u ld b u y it, since
a p u rc h a s e r w ou ld be c oncerned w ith its u ltim ate c o n su m p tio n ,
w ith s a tis fy in g so m e w a n t o f his b y this p u rch a se . A com
m o d ity w ith o u t a u se-value to a n y o n e w ould co n seq u en tly be
u n s a le a b le , w o u ld constitute useless p ro d u ctio n , w ould h av e
no e x c h an g e -v a lu e precisely b ecau se it h a d no use-value.
On the o th e r h a n d , ev e ry p ro d u c t which h a s use-v alu e does
n o t n e c essa rily h a v e ex c h an g e -v a lu e . It h a s a n exchange-
v a lu e o n ly to the extent th a t the society itself, in which the
c o m m o d ity is p ro d u ce d , is fo u n d ed o n ex ch an g e, is a society
w here e x c h a n g e is co m m o n practice.
A re there societies w here p ro d u c ts do n o t h a v e exchange-
v a lu e ? T he b a s is for e x c h an g e -v a lu e , a n d a fo rtio r i for tra d e
a n d the m a rk e t place, is c onstitu ted b y a g iv en degree of
de v e lo p m e n t of the d iv isio n o f la b o r. In o rd e r for p ro d u cts
n o t to be directly co n su m e d b y their p ro d u ce rs, it is essential
th a t e v e ry b o d y s h o u ld n o t be e n g a g e d in tu rn in g ou t the sam e
th in g . If a p a rtic u la r co m m u n ity h a s no d iv isio n of la b o r,
o r o n ly its m o st r u d im e n ta ry form , then it is c lear th at no
re a s o n fo r e x c h an g e exists. N o rm a lly , a w heat farm er h a s
n o th in g to e x c h an g e w ith a n o th e r w heat farm er. But a s so o n
10
as a division of la b o r exists, as so o n as there is contact be
tween social g ro u p s p ro d u cin g different use-values, then ex
change can com e ab o u t, a t first o n a n o c c asio n a l basis, sub
sequently on a m o re p e rm a n e n t one. In this w ay, little b y
little, pro d u cts w hich a re m ad e to be ex ch anged, c o m m o d i
ties, m ake their a p p e a ra n c e alo n g sid e those p ro d u cts which
are sim ply m ad e for the direct co n su m p tio n of their pro d u cers.
In capitalist society, co m m o d ity p ro d u ctio n , the p ro d u ctio n
of exchange-values, h a s reached its g rea te st developm ent. It
is the first society in h u m a n h isto ry where the m a jo r p a rt of
p roduction consists of com m odities. It is no t true, how ever,
that all p ro d u ctio n u n d e r c a p italism is c o m m o d ity p ro d u c
tion. Two classes of p ro d u cts still rem a in sim ple use-value.
The first g r o u p consists of all th in g s p ro d u ce d b y the p eas
a n try for its ow n con su m p tio n , eve ry th in g directly consum ed
on the farm s w here it is p roduced . Such p ro d u ctio n for self
consum ption b y the fa rm e r exists even in a d v a n ce d c a p italist
countries like the U nited States, a lth o u g h it constitutes o n ly
a sm all p a rt of to ta l a g ric u ltu ra l p ro d u ctio n . In g en eral, the
m ore b a c k w a rd the a g ric u ltu re of a c o u n try , the g rea te r is
the fraction o f a g ric u ltu ra l p ro d u ctio n g o in g for self-consum p
tion. This fac to r m ak es it extrem ely difficult to calculate the
exact n a tio n a l incom e of such countries.
The second g ro u p of p ro d u c ts in cap ita list society which
are not com m odities b ut re m a in sim ple u se-value consists of
all things p ro d u ce d in the hom e. Despite the fact th at co n sid
erable h u m a n la b o r goes into this type of h o u se h o ld p ro d u c
tion, it still rem a in s a p ro d u c tio n of use-values a n d n o t of
com m odities. E v e ry tim e a so u p is m ad e o r a b u tto n sewn
on a g a rm e n t, it constitutes p ro d u ctio n , b u t it is no t p ro d u c
tion for the m ark e t.
The a p p e a ra n c e of c o m m o d ity p ro d u ctio n a n d its su b seq u en t
re g u la riz a tio n a n d g e n e ra liz a tio n h a v e ra d ic a lly tra n sfo rm ed
the w a y m en la b o r a n d how they o rg an iz e society.
Determination of the
Ex change-Value of Commodities
Once we h a v e determ ined th a t the p ro d u ctio n a n d ex ch an g e
of com m odities becom es re g u la r a n d gen eralized in a society
based on a n e c o n o m y of labor-tim e, on a n acco u n tin g sy s
tem in w o rk -h o u rs, we can re a d ily u n d e rs ta n d w hy the ex
change of com m odities, in its o rig in s a n d inherent n atu re,
rests on this fu n d am e n ta l b a s is of a n acco u n tin g system in
w ork -h o u rs a n d c o nsequently follows this g e n eral rule: the
exch a n g e-va lu e o f a c o m m o d ity is determ in ed b y the q u a n tity
17
o f la b o r n ecessa ry to p ro d u c e it. The q u a n tity of la b o r is
m e a s u re d b y the length of tim e it tak es to p ro d u ce the com
m odity.
T his g e n e ra l definition of the la b o r th eo ry o f v a lu e is the
b a s is o f bo th c lassical b o u rg e o is po litical eco n o m y fro m the
seventeenth ce n tu ry to the b e g in n in g of the nineteenth cen
tu ry , from W illiam Petty to R icard o ; a n d M a rx ist econom ic
th eo ry , w hich to o k o v e r the th eo ry of la b o r v a lu e a n d p er
fected it. H ow ever, the g e n e ra l definition m u st be qu alified in
se v era l respects.
In the first place, n o t all m en a re endow ed with the sam e
c a p a c ity for w o rk , with the sa m e stren g th o r the sam e degree
of skill a t th eir tra d e . If the e x c h an g e -v a lu e of com m odities
d e p ended o n ly on the q u a n tity of la b o r ex p en d ed in d iv id u a lly,
th a t is, o n the q u a n tity of la b o r e x p en d ed b y each in d iv id u a l
in the p ro d u c tio n of a c o m m o d ity , we w o u ld a rriv e a t this
a b s u rd ity : the lazier o r m o re inco m p eten t the p ro d u ce r, a n d
the la r g e r the n u m b e r of h o u rs he w o u ld sp en d in m a k in g a
p a ir of sh o es, the g re a te r w ou ld be the v a lu e o f the shoes!
T his is o b v io u sly im p o ssib le since e x c h an g e -v a lu e is no t a
m o ra l re w a rd fo r m ere w illingness to w o rk b u t a n objective
b o n d set u p betw een in d ep e n d e n t p ro d u c ers in o rd e r to e q u a l
ize the v a rio u s crafts in a society b a s e d b o th o n a d iv isio n
of la b o r a n d a n e c o n o m y of lab o r-tim e. In such a society
w asted la b o r receives no c o m p e n sa tio n ; o n the c o n tra ry , it
is a u to m a tic a lly penalized. W hoever p u ts m o re tim e into p r o
d u c in g a p a ir of shoes th a n the a v e ra g e n e c essa ry h o u rs —
a n a v e ra g e d eterm ined b y the a v e ra g e p ro d u c tiv ity o f la b o r
a n d rec o rd e d in the G uild C h a rte rs, fo r exam ple! — such a
p e rs o n h a s w asted h u m a n la b o r, w o rk ed to no a v a il for a
c e rta in n u m b e r of h o u rs. He will receive n o th in g in ex ch an g e
fo r these w asted h o u rs.
E x p re sse d a n o th e r w ay, the e x c h an g e -v a lu e of a co m m o d
ity is not d eterm ined by the q u a n tity o f la b o r ex p ended b y
each in d iv id u a l p ro d u c e r e n g a g ed in the p ro d u c tio n of this
c o m m o d ity b u t b y the q u a n tity of la b o r so c ia lly n ecessa ry
to p ro d u c e it. T he e x p re ssio n "socially necessary" m eans: the
q u a n tity of la b o r n e c essa ry u n d e r the a v e ra g e c o n d itio n s of
la b o r p ro d u c tiv ity e x istin g in a given c o u n try at a given time.
The a b o v e q u a lific a tio n h a s v e ry im p o rta n t a p p lic a tio n s
18
when we exam ine the functioning of cap italist society m ore
closely.
A nother clarify in g statem ent m ust be ad d ed here. Ju st w hat
do we m ean b y a "q u antity of la b o r" ? W orkers differ in their
qualifications. Is there com plete e q u a lity between one p er
son's h o u r of w ork a n d e v e ry b o d y else's, reg a rd le ss of such
differences in skills? Once a g a in the q u estion is no t a m o ra l
one but h a s to do with the in te rn al logic of a society b a sed
on an eq u a lity between skills, a n eq u a lity in the m ark etp lace,
and where a n y d isru p tio n of this e q u a lity w ould im m ediately
destroy the social e q uilibrium .
What w ould h a p p e n , fo r exam ple, if a n h o u r 's w o rk b y a n
unskilled la b o re r w as w orth a s m uch a s a n h o u r 's w ork b y
a skilled c ra ftsm a n , w ho h a d spent fo u r to six y e a rs as a n
apprentice in a c q u irin g his skill? O b viously, n o one w ould
want to becom e skilled. The h o u rs of w o rk spent in lea rn in g
a craft w ould be w asted h o u rs since the c ra ftsm a n w ould not
be com pensated fo r them after becom in g qualified.
In an ec o n o m y founded o n a n acco u n tin g system of w ork-
hours, the y o u n g will desire to becom e skilled o n ly if the time
lost d u rin g their tra in in g p e rio d is su b seq u en tly p a id for. O ur
definition of the exc h an g e -v a lu e of a co m m o d ity m u st therefore
be com pleted a s follows: "An h o u r of la b o r b y a skilled w o rk
er m ust be co n sid ered a s com plex la b o r, a s c o m p o u n d lab o r,
as a m ultiple of a n h o u r of unslcflled la b o r; the coefficient of
m ultiplication o b v io u sly c a n n o t be a n a rb itr a r y o ne b u t m ust
be based on the cost of a c q u irin g a g iv en skill." It sh o u ld
be pointed out, in p a ssin g , th at there w as a lw a y s a certain
fuzziness in the p re v a ilin g e x p la n a tio n of co m p o u n d la b o r in
the Soviet U n io n u n d e r Stalin which h a s p ersisted to this
very d ay. It is claim ed th at c o m p e n sa tio n for w o rk sh o u ld
be b ased on the q u a n tity a n d q u a lity of the w ork, bu t the
concept of q u a lity is no lo n g er u n d e rsto o d in the M arxist
sense of the term , th a t is to sa y , a s a q u a lity m e a su ra b le
q u a ntitatively b y m ea n s of a specific coefficient of m u ltip lica
tion. On the c o n tra ry , the idea of q u a lity is used in the b o u r
geois ideological sense, a c c o rd in g to which the q u a lity of
lab o r is su p p o sed to be determ in ed b y its social usefulness,
and this is used to justify the incom es of m a rs h a ls , b a lle rin a s
and in d u stria l m a n a g e rs, which a re ten tim es h ig h er th an
the incom es of unskilled la b o re rs . Such a th eo ry belo n g s in
19
the d o m a in of a p o logetics despite its w id esp read use to ju s
tify the e n o rm o u s differences in incom e which existed u n d e r
Stalin a n d c ontinue to exist in the Soviet U n io n to d ay , a l
th o u g h to a lesser extent.
The ex c h an g e -v a lu e of a c om m o d ity , then, is determ ined
b y the q u a n tity of la b o r so cially n ecessary for its p ro d u ctio n ,
w ith skilled la b o r being tak en as a m ultiple o f sim ple la b o r
a n d the coefficient of m u ltiplication b ein g a re a s o n a b ly m ea
s u ra b le q u a n tity .
T his is the k ernel of the M arx ist th eo ry of v a lu e a n d the
b a s is fo r all M a rx ist econom ic th eo ry in g e n eral. S im ilarly ,
the th e o ry o f so cial s u rp lu s p ro d u c t a n d s u rp lu s la b o r, which
we d iscussed a t the b e g in n in g of this w o rk , constitutes the
b a s is fo r all M a rx ist so c io lo g y a n d is the b rid g e connecting
M a rx 's so c io lo g ic a l a n d h isto ric a l a n a ly s is, his th eo ry of
c lasses a n d the developm ent of society g en erally , to M arxist
econom ic theo ry , a n d m o re precisely, to the M arx ist a n a ly sis
of all c o m m o d ity -p ro d u c in g societies of a p re-cap italist, c a p i
talist a n d p o st-c a p ita list c h a ra c te r.
Competition Leads to
Concentration and Monopoly
The c o n c en tratio n of c a p ita l is a n o th e r p erm a n e n t law of
ca pitalist society a n d is acco m p a n ie d b y the p ro le ta ria n iz a
tion of a p a r t of the b o u rg eo is class, the e x p ro p ria tio n o f a
certain n u m b e r of b o u rg eo is b y a sm a lle r n u m b er of b o u r
geois. T h a t is w hy the C o m m u n ist M anifesto of M arx a n d
Engels e m phasizes the fact th a t cap italism , which claim s to
defend p riv a te p ro p erty , is in rea lity a d e stro y e r of this p ri
vate p ro p erty , a n d c a rrie s o u t a co n sta n t, p e rm a n e n t ex p ro
p ria tio n of a g re a t n u m b e r of p ro p rie to rs b y a relativ ely sm all
n u m b er of p ro p rie to rs . T here a re sev eral in d u stria l b ran c h e s
in which this c o n c en tratio n is p a rtic u la rly strik in g : coal m in in g
h a d h u n d re d s of co m p an ies d u rin g the nineteenth cen tu ry in
a c o u n try like F ra n c e (there were a lm o st two h u n d re d in
B elgium ); the a u to m o b ile in d u stry h a d a h u n d re d o r m ore
firm s a t the b e g in n in g of the c en tu ry in co u n tries like the
U nited States a n d E n g la n d , w hereas to d a y th eir n u m b er h a s
been reduced to four, five o r six such c o m p an ies a t m ost.
Of course, there a re ind u stries w here this co n cen tratio n h a s
not been c a rrie d so far, such a s the textile in d u stry , the food
in d u stry , etc. In gen e ra l, the g re a te r the o rg a n ic co m p o sitio n
of c a p ita l in a n in d u stria l b ra n c h , the g rea te r is the co n cen tra
tion o f c a p ita l, a n d c onversely, the sm a lle r the o rg a n ic c o m p o si
tion of c a p ita l, the s m a lle r is the co n cen tratio n of c ap ital.
W hy? B ecause the sm a lle r the o rg a n ic co m p o sitio n of cap ital,
the less c a p ita l is req u ired a t the b e g in n in g in o rd e r to enter
this b ra n c h a n d e sta b lish a new venture. It is far e asier to
p u t to gether the m illion o r two m illion d o lla rs n ecessary for
b u ild in g a new textile p la n t th a n to assem b le the h u n d red s
of m illions needed to set u p even relativ ely sm all steel w orks.
C ap ita lism w a s b o rn of free com p etitio n a n d is inconceivable
w ithout com petition. But free com petition p ro d u ces concen
tra tio n , a n d c o n c en tratio n p ro d u ce s the o p p o site of free com
petition, n a m e ly , m o n o p o ly . W here there a re few p ro d u ce rs,
they can re a d ily reach agreem ents, a t the expense of the con-
45
sum ers, in d iv id in g u p m a rk e ts a n d p rev e n tin g a n y low ering
of prices.
So in the s p a n of a century, the w hole ca p ita list d y n am ic
a p p e a r s to h a v e c h a n g e d its n a tu re . F irs t we h a v e a m ove
m ent p ro ce e d in g in the direction o f a c o n sta n t fall in prices
because of a c o n sta n t rise in p ro d u c tio n a n d a co n sta n t m ul
tip licatio n of the n u m b e r of enterp rises. At a c ertain point,
the s h a rp e n in g of c o m petition b rin g s with it a co n cen tratio n
of en te rp rise s a n d a red u c tio n in the n u m b e r o f enterprises.
T he re m a in in g c o m p a n ie s a re now a b le to rea c h ag reem en t
on p re v e n tin g fu rth e r price reductio n s a n d such ag reem en t
ca n o n ly be h o n o re d , of course, b y lim itin g p ro d u ctio n . The
e ra of m o n o p o ly c a p ita lism thu s d isp laces the e ra of free
com petitive c a p ita lism a t the b e g in n in g of the la s t q u a rte r
of the nineteenth century.
N a tu ra lly , w hen we sp e a k of m o n o p o ly cap ita lism , we m u st
n o t in the lea st p resu m e a c a p ita lism w hich h a s com pletely
e lim in ated com petition. T here is n o such th in g . We sim p ly
m ea n a c a p ita lism w hose b a sic b e h a v io r h a s ch an g ed , th at
is to s a y , it n o lo n g e r strives fo r a co n sta n t lo w erin g of prices
b y m e a n s o f a c o n s ta n t in cre a se in p ro d u c tio n ; it uses the
technique of d iv id in g u p the m ark e t, o f setting u p m ark e t
q u o ta s . B ut this p ro ce ss w inds u p in a p a ra d o x . W hy do
c a p ita lists w ho b e g a n a s c om petito rs now tu rn to concerted
ac tio n in o rd e r to lim it this com petitio n a n d to lim it p ro d u ctio n
a s well? T he a n sw e r is th a t it is a m eth o d of in cre a sin g their
profits. T h e y o n ly d o so if it b rin g s them m o re profits. Lim it
in g p r o d u c tio n p e rm its in c re a sin g prices, b rin g in g g rea te r
profits a n d c o n seq u e n tly in cre a se d c a p ita l a c cu m u latio n .
T his new c a p ita l c a n no lo n g e r be invested in the sam e
b ra n c h , since this w ould m e a n a n in crease in p ro d u ctiv e
c a p ac ity , resu ltin g in in cre a se d p ro d u ctio n , a n d le a d in g to
a lo w ering o f prices. C a p ita lism h a s been c a u g h t u p in this
c o n tra d ic tio n com m e n c in g with the la st q u a rte r o f the nine
teenth century. It then su d d e n ly a c q u ire d a q u a lity which o n ly
M a rx h a d foreseen a n d w hich w a s n o t g ra s p e d b y eco n o m ists
like R ic a rd o o r A d a m Sm ith; sud d en ly , the cap ita list m ode
of p ro d u c tio n to o k o n a m is s io n a ry role. It b e g a n to sp re a d
th ro u g h o u t the w o rld b y m ea n s of ca p ita l exp o rts, w hich en
a b le d c a p ita list en te rp rise s to be set u p in co u n tries o r sectors
46
where m on o p o lies h a d n o t yet entrenched them selves.
T he consequence of m o n o p o ly in certain b ran c h e s a n d of
the s p re a d of m o n o p o ly c a p italism in certain countries is th at
the ca p ita list m ode of p ro d u ctio n h a s been rep ro d u ced in
b ran c h e s still free from m o n o p o ly c o n tro l a n d in countries
which h a d n o t yet becom e capitalist. T his is how co lonialism
in all its v arieties m a n a g e d , to w a rd the b e g in n in g o f the
twentieth ce n tu ry to s p re a d like a po w d er tra in in the course
of a few decades, s ta rtin g from the sm all p a rt of the w o rld
to which the ca p ita list m ode of p ro d u ctio n w as lim ited, a n d
e v entually e m b ra c in g the w hole w orld. E v ery co u n try o n the
m ap w as thus tra n sfo rm e d into a sp h ere of influence a n d field
of investm ent fo r capital.
Tendency of the Average
Rate of Profit to Decline
We saw p re v io u s ly th at the s u rp lu s-v a lu e p ro d u ce d b y the
w orkers in each fac to ry rem a in e d "locked" in the p ro d u cts,
a n d th a t the q uestion w hether o r n o t this s u rp lu s-v a lu e w ould
be realized b y the c a p ita list fac to ry ow ner w as decided b y
m ark e t c o nditions, th at is to sa y , b y the p o ssib ility for the
factory to sell its p ro d u cts a t a price which w ould allow all
of this su rp lu s-v a lu e to be realized. By a p p ly in g the law of
v alue developed ea rlie r, we c a n set u p the follow ing rule: all
e nterprises w hich a re p ro d u c in g a t the a v e ra g e level of p r o
ductivity will, ro u g h ly sp e ak in g , realize the su rp lu s-v a lu e
p roduced b y their w orkers, th a t is to sa y , they will sell their
p ro d u cts a t a price e q u a l to the v a lu e o f these p ro d u cts.
But this will n o t be the case for two categ o ries of enterprises:
those o p e ra tin g below a n d those o p e ra tin g a b o v e the a v e r
age level of pro d u ctiv ity .
W hat is the c a te g o ry of enterp rises o p e ra tin g below the
a v e ra g e level of p ro d u ctiv ity ? T his is n o th in g bu t a g en e ra li
z ation of the laz y sh o e m a k e r we m entioned p rev io u sly . It is,
for exam ple, a steel m ill w hich p ro d u ce s 5 0 0 ,0 0 0 tons of
steel in 2.2 o r 2 .5 o r 3 m illion m an -h o u rs, when the n a tio n a l
a v e ra g e for this p ro d u c tio n is 2 m illion m an -h o u rs. It is
therefore w a stin g social labor-tim e. The su rp lu s-v a lu e p ro
duced b y the w o rk e rs in this fac to ry will no t be realized in
its entirety b y the ow ners of this plan t; it will w o rk a t a p rofit
below the a v e ra g e rate of profit for all en terp rises in the
country.
47
But the to ta l m a ss of s u rp lu s-v a lu e p ro d u ce d in society is a
fixed m ass, dependent in the last a n a ly s is o n the to tal n u m b er
of la b o r h o u rs su p p lie d b y all w o rk e rs e n g a g ed in p ro d u ctio n .
T his m ea n s th a t if there a re a ce rta in n u m b er of enterprises
w hich do n o t realize all the s u rp lu s-v a lu e p ro d u ce d b y their
w o rk e rs be c au se the e n terp rises a re o p e ra tin g below the a v e r
a g e level of p ro d u c tiv ity a n d h a v e therefore w asted social
la b o r-tim e , then there is a n un e x p e n d ed b a la n c e of su rp lu s-
v a lu e a v a ila b le w hich is c a p tu re d b y the p lan ts o p e ra tin g
a b o v e the a v e ra g e level of p ro d u ctiv ity . H a v in g econom ized
o n so cial lab o r-tim e , the latter a re rew a rd e d b y society.
T his th eoretical e x p la n a tio n is a g e n e ra l d e m o n stra tio n of
the m ec h a n ism d e te rm in in g the m o v em en t of prices in ca p i
talist society. H ow does this m ech an ism o p e ra te in practice?
Let us s a y the a v e ra g e selling price o f a loco m o tiv e is a
m illion d o lla rs. W hat then will be the difference between a
p la n t o p e ra tin g below the a v e ra g e p ro d u ctiv ity of la b o r a n d
o ne o p e ra tin g a b o v e it? T he first will sp en d , let us say ,
$ 9 0 0 ,0 0 0 to p ro d u c e a locom otiv e, a n d its p ro fit will be
$ 1 0 0 ,0 0 0 . On the o th er h a n d , the p la n t p ro d u c in g a b o v e the
a v e ra g e level o f la b o r p ro d u ctiv ity , will sp en d , let us sa y ,
$ 7 5 0 ,0 0 0 a n d will m a k e $ 2 5 0 ,0 0 0 pro fit, th a t is 33 p er cent
o n its c u rre n t p ro d u c tio n , w h e re a s the a v e ra g e rate of profit
is 18 p e r cent a n d en te rp rise s w o rk in g a t this a v e ra g e social
la b o r p ro d u c tiv ity p ro d u c e d locom o tiv es at a cost o f $ 8 5 0 ,0 0 0 ,
rea liz in g $ 1 5 0 ,0 0 0 in profit, th a t is to sa y , 18 p er c e n t.(l)
In o th er w o rd s, c a p ita list c om p etitio n fa v o rs th o se enter
p rises w hich a re te c h n o lo g ic a lly a h e a d ; these en terp rises realize
su p e rp ro fits a s c o m p a re d with the a v e ra g e profit. A v erag e
pro fit is b a s ic a lly a n a b s tra c t idea, e x actly like v alu e. It is
a n ’ a v e ra g e a r o u n d w hich the rea l p ro fit rate s of different
b ra n c h e s a n d en te rp rise s fluctuate. C a p ita l flows to w a rd the
b ra n c h e s w here there a re su p e rp ro fits a n d flows a w a y from
th o se b ra n c h e s in w hich p rofits a re below the a v e ra g e . By
v irtu e o f this e bb a n d flow of c a p ita l from one b ra n c h to
a n o th e r, the ra te s of profit tend to a p p ro x im a te this a v e ra g e ,
w ith o u t ever com pletely re a c h in g it in a n a b so lu te a n d m e
c h a n ic a l w ay.
( 1 ) In r e a lity , th e c a p ita lis ts d o n o t f ig u r e th e ir p r o lit r a te o n th e b a s is
o f c u r r e n t p r o d u c t i o n , b u t o n th e ir in v e s te d c a p ita l; in o r d e r to a v o i d c o m
p lic a t e d c a l c u la t io n s , w e c a n im a g in e th a t th e e n tir e c a p ita l is a b s o r b e d
in th e p r o d u c t i o n o f o n e lo c o m o tiv e .
48
This is the w ay then th at eq u alizatio n of the rates of profit
is effected. There is a v e ry sim ple w ay to determ ine this a b
stract a v e ra g e rate of profit: we take the total m ass of surplus-
value p ro d u ce d b y all w orkers in a given y e a r a n d in a given
country, a n d d raw its ratio to the to ta l m ass of cap ital in
vestm ent in th a t country.
W hat is the fo rm u la for the rate of pro fit? It is the ratio
between su rp lu s-v a lu e a n d to ta l c a p ital. It is therefore c t f -
Still a n o th e r fo rm u la m ust be co n sid ered a s well: £ ;
this is the rate o f su rp lu s- value, o r better still, the rate o f
exp lo ita tio n o f the w o rk in g class. It specifies the w ay in which
the new ly p ro d u ce d v a lu e is divid ed between w o rk ers a n d
capitalists. If, for instance, f eq u a ls 100 p er cent this m eans
that the new ly p ro d u ce d v a lu e is div id ed into two e q u al p a rts,
one p a rt g o in g to the w o rk e rs in the form of w ages, the other
g o in g to the b o u rg eo is class in the form of profits, interest,
dividends, etc.
When the e x p lo itatio n rate of the w o rk in g class is 100 p er
cent, the 8 -h o u r w o rk in g d a y then consists of two e q u a l p a rts:
4 h o u rs of la b o r in which the w o rk e rs p ro d u ce the counter-
v alue of their w ages, a n d 4 h o u rs in w hich they s u p p ly g r a
tuitous la b o r, la b o r which is n o t p a id fo r b y the c a p italists
a n d its p ro d u c t a p p ro p ria te d b y the latter.
At first sight, it seem s th a t if the o rg a n ic c o m p o sitio n of
c ap ita l •$- increases, the p rofit ra te will decline, since
C becom es in cre a sin g ly g re a te r relativ e to V, a n d 5 is a
p ro d u ct of V a n d n o t of C. B ut th ere is a facto r th at can
n eutralize the effect of a n in cre a se in the o rg a n ic c o m p o si
tion of ca p ita l: it is precisely a n in crease in the su rp lu s-v a lu e
rate.
If S o v e r V, the s u rp lu s-v a lu e rate in creases, this m ean s
th at in the fra c tio n bo th the n u m e ra to r a n d d e n o m in a to r
increase, a n d in this case the v a lu e of the fractio n can rem ain
the sam e, u n d e r c o n ditions w here the two in creases occur in
a certain p ro p o rtio n .
In o ther w ords, a n increase in the su rp lu s-v a lu e rate can
neutralize the effects of a n increase in the o rg a n ic com p o sitio n
of c ap ital. Let us a ssu m e th a t the v alu e of p ro d u ctio n C -V * S
goes from 100 O l O O l^ lO O S to 2 0 0 C M 0 0 V - 100S. The o r
g an ic co m p o sitio n of c a p ita l will therefore g o from 100 to 200
per cent, the profit rate will fall from 5 0 to 33 p er cent. But
if at the sam e tim e the s u rp lu s-v a lu e g oes from 100 to 150,
49
th a t is to sa y , the su rp lu s v a lu e ra te goes fro m 100 to 150
p e r cent, then the p rofit rate rem a in s a t 5 0 p e r cent: the
in cre a se in the s u rp lu s-v a lu e rate neu tralizes the effect o f the
in crease in the o rg a n ic c o m p o sitio n o f c ap ital.
C a n these two m ovem ents o ccu r in ex a ctly the n ecessary
p r o p o rtio n s fo r them to n eutralize each o th er? H ere we touch
the b a sic w eakness, the Achilles heel o f the c a p ita list system .
These two m ovem ents c a n n o t develop p r o p o rtio n a lly o v e r
the lo n g ru n . T here is no lim it w h atev er to the in crease in
the o r g a n ic co m p o sitio n of c a p ita l. F o r V there is a theoreti
c al lim it of zero, a s su m in g the a r r iv a l o f to ta l au to m a tio n .
But c a n a lso in crease in a n u n lim ited w ay , w ithout a n y
lim it w h a te v er? N o , fo r in o r d e r to p ro d u ce s u rp lu s-v a lu e it
is n e c essa ry to h a v e w o rk in g w o rk e rs, a n d this b ein g the
case, the fra c tio n of the w o rk d a y in w hich the w o rk e r re p ro
duces his ow n w age c a n n o t fall to zero. It c a n be reduced
from 8 h o u rs to 7, from 7 h o u rs to 6, from 6 h o u rs to 5,
from 5 h o u rs to 4, from 4 h o u r s to 3, from 3 h o u rs to 2,
from 2 h o u rs to 1, from 1 h o u r to 5 0 m inutes. It w ould a l
r e a d y be a fan ta stic p ro d u c tiv ity which w o u ld p erm it the
w o rk e r to p ro d u c e the c o u n te r-v a lu e of his entire w age in
5 0 m inutes. B ut he could never rep ro d u c e the c o u n ter-v alu e
of his w ag e in zero m inutes a n d zero seconds. T here is a
res id u a l w hich c a p ita list e x p lo itatio n c a n nev er su p p ress.
T his m ea n s th a t in the lo n g ru n the fall in the a v e ra g e
rate of pro fit is inevitable, a n d I p e rs o n a lly believe, con
t r a r y to the id ea o f quite a few M a rx ists, th a t this fall is also
d e m o n s tra b le in statistics, th a t is to sa y , th a t the a v e ra g e
rate s of p ro fit to d a y in the b ig c a p ita list c o u n tries a re m uch
low er th a n they w ere 50, 100 o r 150 y e a rs a g o .
Of co u rse, if we e x a m in e s h o rte r p e rio d s, th ere a re flu ctu a
tions up a n d dow n; there a re n u m e ro u s facto rs w hich com e
into p la y (we will discuss them late r, w hen d e a lin g with neo
c a p ita lis m ). But fo r the lo n g ru n , the m o v em en t is v e ry clear,
b o th for interest rate s a n d p rofit rates. We sh o u ld p o in t out,
m o re o v e r, th a t a m o n g all the d ev e lo p m e n ta l tendencies of
c a p ita lism , this w a s the one m ost c le a rly p erceived b y the
theo re tic ia n s of ca p ita lism them selves. R icard o sp e ak s of it;
J o h n S tu a rt Mill stresses it; K eynes is h ig h ly a w a re of it.
T here w as a m ax im in E n g la n d at the end o f the nine
teenth c e n tu ry which w as p ra c tic a lly a p o p u la r sa y in g : capi-
50
talism can w ith stan d a n y th in g except a fall in the av e ra g e
interest rate to 2 p er cent, because th at w ould kill investm ent
incentive.
This m ax im o b v io u sly co n ta in s a certain k in d of e rro r in
its rea so n in g . C a lculations of percentages, of profit rates, h av e
a real value, b ut it is still, after all, a relative one to a cap i
talist. W hat interests him is not exclusively the percentage he
m akes on his cap ita l, b ut a lso the total a m o u n t which he
m akes. A nd if the 2 per cent a p plies no t to $ 1 0 0 ,0 0 0 bu t to
$100 m illion, it still represents $2 m illion, a n d the c a p italist
w ould do a n aw ful lot of th in k in g before he w ould s a y th at
he preferred to let his c a p ita l lie idle ra th e r th a n to accept
the rev olting profit of a m ere $2 m illion a year.
In practice, we see therefore th a t there is no total h a lt in
investm ent a ctiv ity follow ing a fall in the p ro fit a n d interest
rates bu t r a th e r a slow ing dow n p ro p o rtio n a l to the fall in
profit rate in a n in d u stria l b ra n c h . On the o th er h a n d , when
there is m o re ra p id e x p a n sio n a n d a risin g tendency of the
profit rate in certain in d u stria l b ra n c h e s o r in c ertain periods,
then investm ent a c tivity resum es, speeds up, the m ovem ent
then seem s to feed on itself, a n d the e x p a n sio n a p p e a rs to
have no lim its up to the tim e when the tendency reverses once
m ore.
53
HI. Neo- Capitalism
The Origins of Neo-Capitalism
"Economic Planning"
The o th er side of the n eo -cap italist coin h a s to d o with the
b o d y of p h e n o m e n a w hich h a s been su m m ed u p in the term s
" m a n a g e d econom y," "econom ic p ro g ra m m in g ," o r still fu r
ther "indicative p lan n in g ." It is a n o th e r fo rm o f co n scio u s in
tervention in the e conom y, c o n tr a ry to the classical sp irit of
ca p ita lism , b u t it is a n in te rvention which is ch ara c te rize d b y
the fact th a t it is no lo n g er m a in ly a g o v e rn m e n ta l act bu t
is m o re a n act of c o lla b o ra tio n , of in te g ratio n , betw een g o v e rn
m ent o n one side a n d ca p ita list g ro u p s o n the other.
H ow c a n we e x p la in this g e n e ra l tendency to "indicative
p lan n in g ," to "econom ic p ro g ra m m in g ," o r to a "m a n a g e d
ec o n o m y "?
We m u st s ta r t from a rea l need of big ca p ita l, a need which
derives from precisely the p h e n o m e n o n which we described
in the first p a rt of o u r discu ssio n . We sp o k e there o f a n accel
e ra tio n in the rh y th m o f the renew al o f m ech an ical in sta lla
tions; o r a m o re o r less p e rm a n e n t tech n o lo g ical revolution.
But w hen we sp e a k of a n acceleratio n in the rh y th m of renew al
of fixed c a p ita l we can o n ly be refe rrin g to the necessity of
a m o rtiz in g c o n tin u o u sly e x p a n d in g investm ent expenses in
p e rio d s of tim e w hich c o n tin u o u sly becom e s h o rte r. C ertain ly
this a m o rtiz a tio n m u st be p la n n e d a n d calcu lated in the m o st
a c c u ra te w a y possible, so a s to p reserv e the e c o n o m y from
sh o rt-te rm flu ctu atio n s, w hich c o n ta in the d a n g e r o f c reatin g
incredible d is o rd e r in en te rp rise s o p e ra tin g with m illio n s of
d o lla rs. T his fu n d a m e n ta l fact is the c au se of cap ita list eco
n o m ic p ro g ra m m in g for its d riv e to w a rd a m a n a g e d econom y.
T o d a y 's c a p ita lism of the g re a t m o n o p o lies assem b les tens
of m illio n s of d o lla rs in investm en ts w hich h a v e to be a m o r
tized speedily. It c a n no lo n g e r affo rd to ru n the risk o f su b
sta n tia l perio d ic fluctuations. It c o n seq u en tly req u ires a g u a r
antee th a t its a m o rtiz a tio n costs will be co v ered a n d a ssu ra n c e
th a t its revenue will continue, a t least fo r a v e ra g e p erio d s of
tim e c o rre s p o n d in g m o re o r less to the a m o rtiz a tio n p erio d
of its fixed c a p ita l, p e rio d s w hich now extend between four
a n d five y e a rs.
M oreo v er, the p h e n o m e n o n h a s em erg ed directly from with
in the c a p ita lis t en te rp rise itself, in w hich the ever in creasin g
co m p lex ity of the p ro d u ctiv e p ro ce ss im plies in cre a sin g ly p re
cise p la n n in g efforts in o rd e r for it to function a s a whole.
C a p ita list p r o g ra m m in g is, in the last a n a ly sis, n o th in g but
the extension, o r m o re exactly, the c o o rd in a tio n on a n a tio n a l
level of w h a t h a s a lr e a d y been h a p p e n in g o n the level of
the la rg e c a p ita list en te rp rise o r cap ita list g ro u p in g s such
as the tru st o r cartel e m b ra c in g a g ro u p of com p an ies.
W hat is the fu n d a m e n ta l cha ra c te ristic of this indicative
p la n n in g ? It is e ssentially different in n a tu re from so cialist
p la n n in g . It is n o t m a in ly concerned with setting up a set
o f o bjectives in p r o d u c tio n fig u r e s a n d in su rin g the attain-
70
m ent o f these goals. Its m a jo r concern is with c o o rd in a tin g
the investm ent p la n s a lre a d y d raw n up b y p riv a te firm s a n d
with effecting this necessary c o o rd in a tio n b y p ro p o sin g , at
the v e ry m ost, certain objectives considered to h av e p rio rity
on the g o v e rn m e n ta l level. These are, of course, objectives
c o rre sp o n d in g to the g e neral interest of the b o u rg eo is class.
In a c o u n try like B elgium o r G reat B ritain, the o p e ra tio n
h a s been effected in a pretty crude w ay ; in F ran ce, where e v ery
th in g h a p p e n s on a m uch m ore refined intellectual level, a n d a
g re a t deal of c am o u flag e is used, the class n a tu re of the m ech
anism is less obv io u s. It is nonetheless identical with th at of
the econom ic p ro g ra m m in g of the o th er c ap italist countries.
In essence, the activity of " p la n n in g com m issions," of "p lan
n in g b u rea u s," of "p ro g ra m m in g b u reau s," consists of co n
su ltin g representatives of v a rio u s e m p lo y er g ro u p s, e x a m in
in g their investm ent projects a n d m ark e t forecasts, a n d
"harm onizing" the forecasts of the different sectors with each
other, a n d e n d e a v o rin g to a v o id bottlenecks a n d d u p licatio n s.
G ilbert M athieu pu b lish e d three g o o d articles o n this su b
ject in L e M o n d e (M arch 2, 3 a n d 6, 19 6 2 ), in which he
pointed o u t th at a s a g a in s t 2 8 0 tra d e u n io n ists w ho h a v e
p a rticip a te d in the w ork of the different p la n n in g com m is
sio n s a n d su b c o m m issio n s, there were 1,280 c o m p a n y h e a d s
o r representatives of em p lo y e r a sso c ia tio n s. "In practice, Mr.
F ra n c o is P e rro u x believes, the F ren ch p la n is often set up
a n d p ut into o p e ra tio n u n d e r the p r e p o n d e ra n t influence of
the b ig co m p an ies a n d fin a n c ia l institutions." A n d Le B run,
a lth o u g h one of the m o st m o d era te tra d e -u n io n lead ers, a s
serts th a t F re n ch p la n n in g "is e ssen tially a rr a n g e d between
the h ig h er a g e n ts of c a p ita l a n d the h ig h er civil s e rv a n ts,
the fo rm e r n o rm a lly h a v in g g re a te r w eight th a n the latter."
T his co n fro n tatio n a n d c o o rd in a tio n o f the decisions of
firm s is, m o re o v e r, v e ry useful fo r ca p ita list e n trep ren eu rs;
it constitutes a k in d of so u n d in g ou t of the m a rk e t o n a n a
tio n a l scale a n d o v e r a lo n g term , so m eth in g v e ry difficult to
achieve with p resent techniques. But the b a s is for all these
studies, all these ca lc u latio n s, still rem a in s the figures a d
v a n c ed a s forecasts b y the em ployers.
T here a re c o n sequently two c h a ra c te ristic fu n d am e n ta l a s
pects to this k in d of p ro g ra m m in g o r "indicative p lan n in g ."
On the one h a n d , it is n a rro w ly centered o n the interests
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of the e m p lo y e rs w hich a re the in itial elem ent in the calc u la
tion. A nd w hen we s a y em p lo y ers, we d o n o t m ea n all em
p lo y ers, b u t ra th e r the d o m in a n t la y e rs o f the b o u rg eo is class,
th a t is to sa y , the m o n o p o lie s a n d tru sts. T o the degree th at
a conflict o f interest betw een v e ry pow erful m o n o p o lies m a y
som etim es a rise (re m em b e r the 1962 conflict in A m erica be
tween the steel p ro d u c e r tru sts a n d the steel co n su m er tru sts
r e g a r d in g steel prices), the g o v e rn m e n t p la y s a c ertain role
a s a rb itra to r betw een c a p ita list g ro u p s. It is, in som e re
spects, a n a d m in istra tiv e council o f the b o u rg e o is class actin g
in b e h a lf o f all s to c k h o ld e rs, of all m em b ers of the b o u r
geois c lass, b u t in the interest of the d o m in a n t g ro u p ra th e r
th a n in the interests of d e m o c ra cy a n d the la r g e r n u m b er.
On the o th e r h a n d , there is a n u n c e rta in ty ly in g a t the base
of all of these c a lc u latio n s, a n u n c e rta in ty a ris in g from the
fact th a t the p r o g ra m m in g is b a s e d p u rely o n fo recasts a n d
fro m the a d d itio n a l fact th a t the g o v e rn m e n t h a s n o m ean s
fo r c a rr y in g o u t such p ro g ra m m in g . As a m atter o f fact,
neither do the p riv a te interests h a v e a n y w a y o f a s su rin g
the fulfillm ent of th eir forecasts.
In 1956-60, the "p ro g ra m m e rs" of the C o m m u n a u te EurO-
peenne du C h a r b o n et de l'A cier [E u ro p e a n C o al a n d Steel
C om m unity] a s well a s those of the B elgian M in istry of Eco
nom ic A ffairs, twice m issed the m a r k b a d ly in their fo recasts
of co al c o n su m p tio n for W estern E u ro p e a n d esp ecially for
Belgium . The first tim e, p r io r to a n d d u rin g the crisis in su p
plies c a u se d b y the Suez events, th ey fo recast a s u b sta n tia l
in crease in c o n su m p tio n for 1960 a n d a co n seq u en t in crease
in co al p ro d u c tio n , with B elgian p ro d u ctio n g o in g from 30
m illion to n s of co al a n n u a lly to 4 0 m illio n tons. In reality ,
it fell from 3 0 to 2 0 m illion tons d u rin g 1960; the " p ro g ra m
m ers" h a d c o n seq u e n tly com m itted a c o m p o u n d e rr o r of ra th e r
sig nificant p r o p o rtio n s . But no so o n e r w as this on e o n rec o rd
w hen they m a d e a n o th e r in the o p p o site direction. While this
d ro p in c o a l c o n su m p tio n w as o c c u rrin g , they predicted th at
the tre n d w o u ld continue a n d d eclared th at it w as a lso neces
s a r y to co n tin u e c losing coal m ines. H ow ever, the c o n tra ry
to o k place betw een 196 0 a n d 1963: B elgian c o n su m p tio n of
coal w ent from 2 0 to 25 m illion to n s a y e a r, with the result
th a t after h a v in g cut dow n B elgian p ro d u ctiv e c a p ac ity in
co a l b y one-th ird , there w as a n acute sc arc ity in co al, p a r-
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ticu larly d u rin g the w inter of 1962-1963, a n d it w as necessary
to im p o rt coal post-haste, even from Vietnam !
This ex am p le gives us a v ivid picture of the technique which
the "p ro g ra m m e rs" m ust reso rt to ninety p er cent of the time
w hen m a k in g their ca lc u latio n s for in d u stria l sectors. It is
sim p ly a pro je c tio n into the future of the p resen t trend, co r
rected a t best b y a factor e x p re ssin g the elasticity in d em an d ,
which in tu rn is b a s e d on forecasts o f g en eral rates of ex
p a n sio n .
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