Misplaced Pages

#500499

62-438: In market-based economies, state-owned assets are often managed and operated as joint-stock corporations with a government owning all or a controlling stake of the company's shares . This form is often referred to as a state-owned enterprise . A state-owned enterprise might variously operate as a not-for-profit corporation , as it may not be required to generate a profit; as a commercial enterprise in competitive sectors; or as

124-426: A corollary an increase in the level of permanent unemployment. As a rule, the larger the total sum of capital invested, the higher the return on investment will be. The more capital one owns, the more capital one can also borrow and reinvest at a higher rate of profit or interest . The inverse is also true, and this is one factor in the widening gap between the rich and the poor . Ernest Mandel emphasized that

186-419: A natural monopoly . Governments may also use the profitable entities they own to support the general budget. The creation of a state-owned enterprise from other forms of public property is called corporatization . In Soviet-type economies , state property was the dominant form of industry as property. The state held a monopoly on land and natural resources, and enterprises operated under the legal framework of

248-474: A strike by investors or workers, or consumer resistance ). "Accumulation of capital" sometimes also refers in Marxist writings to the reproduction of capitalist social relations (institutions) on a larger scale over time, i.e., the expansion of the size of the proletariat and of the wealth owned by the bourgeoisie. This interpretation emphasizes that capital ownership, predicated on command over labor,

310-586: A boom period of capitalism, the growth of investments is cumulative , i.e. one investment leads to another, leading to a constantly expanding market, an expanding labor force , and an increase in the standard of living for the majority of the people. In a stagnating , decadent capitalism, the accumulation process is increasingly oriented towards investment on military and security forces , real estate , financial speculation , and luxury consumption . In that case, income from value-adding production will decline in favour of interest, rent and tax income, with as

372-452: A family is allocated an apartment that is state owned, it will have been granted a tenancy of the apartment, which may be lifelong or inheritable, but the management and control rights are held by various government departments . There is a distinction to be made between state ownership and public property. The former may refer to assets operated by a specific state institution or branch of government, used exclusively by that branch, such as

434-520: A government entity in a capitalist market or mixed economy . Reasons for state ownership of commercial enterprises are that the enterprise in question is a natural monopoly or because the government is promoting economic development and industrialization . State-owned enterprises may or may not be expected to operate in a broadly commercial manner and may or may not have monopolies in their areas of activity. The transformation of public entities and government agencies into government-owned corporations

496-434: A huge mass in a single hand, because it has in another place been lost by many.... The battle of competition is fought by cheapening of commodities. The cheapness of commodities demands, ceteris paribus , on the productiveness of labour, and this again on the scale of production. Therefore, the larger capitals beat the smaller. It will further be remembered that, with the development of the capitalist mode of production , there

558-433: A man as a capitalist if there be wanting the correlative — the wage-worker, the other man who is compelled to sell himself of his own free-will. He discovered that capital is not a thing, but a social relation between persons, established by the instrumentality of things. Mr. Peel , he moans, took with him from England to Swan River , West Australia, means of subsistence and of production to the amount of £50,000. Mr. Peel had

620-489: A necessary change in total magnitude of value produced but can simply refer to a change in the composition of an industry (p. 514). Ernest Mandel introduced the additional concept of contracted economic reproduction , i.e. reduced accumulation where business operating at a loss outnumbers growing business, or economic reproduction on a decreasing scale, for example due to wars, natural disasters or de valorisation . Balanced economic growth requires that different factors in

682-424: A net addition and a redistribution of wealth , which may raise the question of who really benefits from it most. If more wealth is produced than there was before, a society becomes richer; the total stock of wealth increases. But if some accumulate capital only at the expense of others, wealth is merely shifted from A to B. It is also possible that some accumulate capital much faster than others. When one person

SECTION 10

#1732780259501

744-401: A nominally planned economy , and thus according to different criteria than enterprises in market and mixed economies. Nationalization is a process of transferring private or municipal assets to a central government or state entity. Municipalization is the process of transferring private or state assets to a municipal government. A state-owned enterprise is a commercial enterprise owned by

806-461: A problem of unstable static equilibrium, since if the growth rate is not equal to the Harrodian warranted rate, the production will tend to extreme points (infinite or zero production). The Neo-Kaleckians models do not suffer from the Harrodian instability but fails to deliver a convergence dynamic of the effective capacity utilization to the planned capacity utilization. For its turn, the model of

868-607: A research laboratory. The latter refers to assets and resources owned by the population of a state which are mostly available to the entire public for use, such as a public park (see public space ). In neoclassical economic theory , the desirability of state ownership has been studied using contract theory . According to the property rights approach based on incomplete contracting (developed by Oliver Hart and his co-authors), ownership matters because it determines what happens in contingencies that were not considered in prevailing contracts. The work by Hart, Shleifer and Vishny (1997)

930-595: A source of capital accumulation, nor does he analyze taxation in detail (he could not, as he died even before completing his major book, Das Kapital ). The continuation and progress of capital accumulation depends on the removal of obstacles to the expansion of trade, and this has historically often been a violent process. As markets expand, more and more new opportunities develop for accumulating capital, because more and more types of goods and services can be traded in. But capital accumulation may also confront resistance, when people refuse to sell, or refuse to buy (for example

992-551: A very long time. Some people argue that it also explains government regulation of market trade and protectionism . According to Marx, capital accumulation has a double origin, namely in trade and in expropriation , both of a legal or illegal kind. The reason is that a stock of capital can be increased through a process of exchange or "trading up" but also through directly taking an asset or resource from someone else, without compensation. David Harvey calls this accumulation by dispossession . Marx does not discuss gifts and grants as

1054-419: A wide variety of different political and economic systems for a variety of different reasons. State ownership by itself does not imply social ownership where income rights belong to society as a whole. As such, state ownership is only one possible expression of public ownership, which itself is one variation of the broader concept of social ownership. In the context of socialism, public ownership implies that

1116-445: Is 4:1 (i.e. $ 4 billion must be invested to increase the national income by 1 billion) the rate of growth of the national income might be 3% annually. However, as Keynesian economics points out, savings do not automatically mean investment (as liquid funds may be hoarded for example). Investment may also not be investment in fixed capital (see above). Assuming that the turnover of total production capital invested remains constant,

1178-460: Is a social relation: the growth of capital implies the growth of the working class (a " law of accumulation "). In the first volume of Das Kapital Marx had illustrated this idea with reference to Edward Gibbon Wakefield 's theory of colonisation: ...Wakefield discovered that in the Colonies, property in money, means of subsistence, machines, and other means of production, does not as yet stamp

1240-414: Is a tool to consolidate the means of production as a precursor to the establishment of economic planning for the allocation of resources between organizations, as required by government or by the state. State ownership is advocated as a form of social ownership for practical concerns, with the state being seen as the obvious candidate for owning and operating the means of production. Proponents assume that

1302-446: Is an increase in the minimum amount of individual capital necessary to carry on a business under its normal conditions. The smaller capitals, therefore, crowd into spheres of production which Modern Industry has only sporadically or incompletely got hold of. Here competition rages.... It always ends in the ruin of many small capitalists, whose capitals partly pass into the hands of their conquerors, partly vanish." In Marxian economics ,

SECTION 20

#1732780259501

1364-494: Is enriched at the expense of another in circumstances that the law sees as unjust it is called unjust enrichment . In principle, it is possible that a few people or organisations accumulate capital and grow richer, although the total stock of wealth of society decreases . In economics and accounting , capital accumulation is often equated with investment of profit income or savings, especially in real capital goods . The concentration and centralisation of capital are two of

1426-408: Is equal to the rate of growth of K {\displaystyle K} . This is determined by s {\displaystyle s} (the ratio of net fixed investment or saving to Y {\displaystyle Y} ) and k {\displaystyle k} . A country might, for example, save and invest 12% of its national income , and then if the capital coefficient

1488-692: Is reinvested, or as the change in the value of assets owned (the increase in the value of the capital stock). Using company balance sheets , tax data and direct surveys as a basis, government statisticians estimate total investments and assets for the purpose of national accounts , national balance of payments and flow of funds statistics. Usually, the reserve banks and the Treasury provide interpretations and analysis of this data . Standard indicators include capital formation , gross fixed capital formation , fixed capital , household asset wealth, and foreign direct investment . Organisations such as

1550-410: Is sometimes a precursor to privatization . State capitalist economies are capitalist market economies that have high degrees of government-owned businesses. Public ownership of the means of production is a subset of social ownership , which is the defining characteristic of a socialist economy. However, state ownership and nationalization by themselves are not socialist, as they can exist under

1612-652: Is the Review of Income and Wealth . In the case of the US, the "Analytical Perspectives" document (an annex to the yearly budget) provides useful wealth and capital estimates applying to the whole country. In macroeconomics , following the Harrod–Domar model , the savings ratio ( s {\displaystyle s} ) and the capital coefficient ( k {\displaystyle k} ) are regarded as critical factors for accumulation and growth, assuming that all saving

1674-420: Is the dynamic that motivates the pursuit of profit , involving the investment of money or any financial asset with the goal of increasing the initial monetary value of said asset as a financial return whether in the form of profit , rent , interest , royalties or capital gains . The aim of capital accumulation is to create new fixed and working capitals, broaden and modernize the existing ones, grow

1736-410: Is the leading application of the property rights approach to the question whether state ownership or private ownership is desirable. In their model, the government and a private firm can invest to improve the quality of a public good and to reduce its production costs. It turns out that private ownership results in strong incentives to reduce costs, but it may also lead to poor quality. Hence, depending on

1798-436: Is used to finance fixed investment . The rate of growth of the real stock of fixed capital ( K {\displaystyle K} ) is: where Y {\displaystyle Y} is the real national income. If the capital- output ratio or capital coefficient ( k = K Y {\displaystyle k={K \over Y}} ) is constant, the rate of growth of Y {\displaystyle Y}

1860-910: The International Monetary Fund , UNCTAD, the World Bank Group , the OECD , and the Bank for International Settlements used national investment data to estimate world trends. The Bureau of Economic Analysis , Eurostat and the Japan Statistical Office provide data on the US, Europe and Japan respectively. Other useful sources of investment information are business magazines such as Fortune , Forbes , The Economist , Business Week , etc., and various corporate " watchdog " organisations and non-governmental organization publications. A reputable scientific journal

1922-401: The dominant mode of production when the accumulation of capital can no longer sustain itself due to falling rates of profit in real production relative to increasing productivity. A socialist economy would not base production on the accumulation of capital, instead basing production on the criteria of satisfying human needs and directly producing use-values . This concept is encapsulated in

State ownership - Misplaced Pages Continue

1984-402: The rate of accumulation is defined as (1) the value of the real net increase in the stock of capital in an accounting period, (2) the proportion of realized surplus-value or profit-income which is reinvested, rather than consumed. This rate can be expressed by means of various ratios between the original capital outlay, the realized turnover, surplus-value or profit and reinvestment's (see, e.g.,

2046-404: The surplus product generated by publicly owned assets accrues to all of society in the form of a social dividend , as opposed to a distinct class of private capital owners. There is a wide variety of organizational forms for state-run industry, ranging from specialized technocratic management to direct workers' self-management . In traditional conceptions of non-market socialism, public ownership

2108-440: The wage bill, leading to stagnant wages and high rates of unemployment for the working class while excess profits search for new profitable investment opportunities. Marx believed that this cyclical process would be the fundamental cause for the dissolution of capitalism and its replacement by socialism , which would operate according to a different economic dynamic. In Marxist thought, socialism would succeed capitalism as

2170-498: The Hart-Shleifer-Vishny model assumes that the private party derives no utility from provision of the public good. Besley and Ghatak (2001) have shown that if the private party (a non-governmental organization) cares about the public good, then the party with the larger valuation of the public good should always be the owner, regardless of the parties' investment technologies. More recently, some authors have shown that

2232-639: The Sraffian Supermultiplier grants a static stable equilibrium and a convergence to the planned capacity utilization. The Sraffian Supermultiplier model diverges from the Harrodian model since it takes the investment as induced and not as autonomous. The autonomous components in this model are the Autonomous Non-Capacity Creating Expenditures, such as exports, credit led consumption and public spending. The growth rate of these expenditures determines

2294-405: The accumulation process expand in appropriate proportions. But markets themselves cannot spontaneously create that balance, in fact what drives business activity is precisely the imbalances between supply and demand : inequality is the motor of growth. This partly explains why the worldwide pattern of economic growth is very uneven and unequal, even although markets have existed almost everywhere for

2356-429: The additional product-value is available for investments which enlarge the scale and variety of production. The bourgeois claim there is no economic law according to which capital is necessarily re-invested in the expansion of production, that such depends on anticipated profitability, market expectations and perceptions of investment risk. Such statements only explain the subjective experiences of investors and ignore

2418-472: The available investment technologies, there are situations in which state ownership is better. The Hart-Shleifer-Vishny theory has been extended in many directions. For instance, some authors have also considered mixed forms of private ownership and state ownership. In the Hart-Shleifer-Vishny model it is assumed that all parties have the same information, while Schmitz (2023) has studied an extension of their analysis allowing for asymmetric information . Moreover,

2480-408: The conditions of production offers a more sophisticated model of the parameters of the accumulation process as a whole. At simple reproduction, a sufficient amount is produced to sustain society at the given living standard ; the stock of capital stays constant. At expanded reproduction, more product-value is produced than is necessary to sustain society at a given living standard (a surplus product);

2542-408: The creation of Clause IV of the "Labour Party Manifesto" in 1918. "Clause IV" was written by Fabian Society member Sidney Webb . When ownership of a resource is vested in the state, or any branch of the state such as a local authority , individual use "rights" are based on the state's management policies, though these rights are not property rights as they are not transmissible. For example, if

State ownership - Misplaced Pages Continue

2604-424: The development of capitalism identifies systemic issues with the process that arise with expansion of the productive forces . A crisis of overaccumulation of capital occurs when the rate of profit is greater than the rate of new profitable investment outlets in the economy, arising from increasing productivity from a rising organic composition of capital (higher capital input to labor input ratio). This depresses

2666-843: The foresight to bring with him, besides, 3,000 persons of the working-class, men, women, and children. Once arrived at his destination, “Mr. Peel was left without a servant to make his bed or fetch him water from the river.” Unhappy Mr. Peel, who provided for everything except the export of English modes of production to Swan River! In the third volume of Das Kapital , Marx refers to the "fetishism of capital" reaching its highest point with interest-bearing capital , because now capital seems to grow of its own accord without anybody doing anything. In this case, The relations of capital assume their most externalised and most fetish-like form in interest-bearing capital. We have here M − M ′ {\displaystyle M-M'} , money creating more money, self-expanding value, without

2728-707: The investment technology also matters in the Besley-Ghatak framework if an investing party is indispensable or if there are bargaining frictions between the government and the private party. Market-based Too Many Requests If you report this error to the Wikimedia System Administrators, please include the details below. Request from 172.68.168.226 via cp1108 cp1108, Varnish XID 213412006 Upstream caches: cp1108 int Error: 429, Too Many Requests at Thu, 28 Nov 2024 07:50:59 GMT Capital accumulation Capital accumulation

2790-467: The long run rate of capital accumulation and product growth. Marx borrowed the idea of capital accumulation or the concentration of capital from early socialist writers such as Charles Fourier , Louis Blanc , Victor Considerant , and Constantin Pecqueur . In Karl Marx 's critique of political economy , capital accumulation is the operation whereby profits are reinvested into the economy, increasing

2852-433: The material basis of social-cultural activities, as well as constituting the necessary resource for reserve and insurance. The process of capital accumulation forms the basis of capitalism , and is one of the defining characteristics of a capitalist economic system . The definition of capital accumulation is subject to controversy and ambiguities, because it could refer to: Most often, capital accumulation involves both

2914-601: The new wealth could not occur. This becomes especially clear when the attempt is made to create a market where none exists, or where people refuse to trade. In fact Marx argues that the original or primitive accumulation of capital often occurs through violence, plunder, slavery, robbery, extortion and theft. He argues that the capitalist mode of production requires that people be forced to work in value-adding production for someone else, and for this purpose, they must be cut off from sources of income other than selling their labor power. In volume 2 of Das Kapital , Marx continues

2976-489: The objective realities which would influence such opinions. As Marx states in Vol.2, simple reproduction only exists if the variable and surplus capital realized by Dept. 1—producers of means of production—exactly equals that of the constant capital of Dept. 2, producers of articles of consumption (p. 524). Such equilibrium rests on various assumptions, such as a constant labor supply (no population growth). Accumulation does not imply

3038-402: The principle of production for use . According to Marx, capital has the tendency for concentration and centralization in the hands of richest capitalists. Marx explains: "It is concentration of capitals already formed, destruction of their individual independence, expropriation of capitalist by capitalist, transformation of many small into few large capitals.... Capital grows in one place to

3100-549: The process of capital accumulation and structure of wage labor. Engels argued that state ownership of commercial industry would represent the final stage of capitalism, consisting of ownership and management of large-scale production and manufacture by the state. Within the United Kingdom, public ownership is mostly associated with the Labour Party (a centre-left democratic socialist party), specifically due to

3162-399: The process of capital accumulation in production has, as suggested in the first volume of Marx's Das Kapital , at least seven distinct but linked moments: All of these moments do not refer simply to an economic or commercial process . Rather, they assume the existence of legal, social , cultural and economic power conditions, without which creation , distribution and circulation of

SECTION 50

#1732780259501

3224-400: The process that effectuates these two extremes. In merchant's capital, M − C − M ′ {\displaystyle M-C-M'} , there is at least the general form of the capitalistic movement, although it confines itself solely to the sphere of circulation, so that profit appears merely as profit derived from alienation; but it is at least seen to be

3286-416: The product of a social relation, not the product of a mere thing. (...) This is obliterated in M − M ′ {\displaystyle M-M'} , the form of interest-bearing capital. (...) The thing (money, commodity, value) is now capital even as a mere thing, and capital appears as a mere thing. The result of the entire process of reproduction appears as a property inherent in

3348-440: The proportion of total investment which just maintains the stock of total capital, rather than enlarging it, will typically increase as the total stock increases. The growth rate of incomes and net new investments must then also increase, in order to accelerate the growth of the capital stock. Simply put, the bigger capital grows, the more capital it takes to keep it growing and the more markets must expand. The Harrodian model has

3410-601: The results of such accumulation (see below). Capital accumulation refers ordinarily to: and by extension to: Both non-financial and financial capital accumulation is usually needed for economic growth , since additional production usually requires additional funds to enlarge the scale of production. Smarter and more productive organization of production can also increase production without increased capital. Capital can be created without increased investment by inventions or improved organization that increase productivity, discoveries of new assets (oil, gold, minerals, etc.),

3472-702: The rhythm of capital accumulation and growth depended critically on (1) the division of a society's social product between necessary product and surplus product , and (2) the division of the surplus product between investment and consumption. In turn, this allocation pattern reflected the outcome of competition among capitalists, competition between capitalists and workers, and competition between workers. The pattern of capital accumulation can therefore never be simply explained by commercial factors, it also involved social factors and power relationships. Strictly speaking, capital has accumulated only when realized profit income has been reinvested in capital assets . But

3534-489: The sale of property, etc. In modern macroeconomics and econometrics the term capital formation is often used in preference to "accumulation", though the United Nations Conference on Trade and Development (UNCTAD) refers nowadays to "accumulation". The term is occasionally used in national accounts . Accumulation can be measured as the monetary value of investments, the amount of income that

3596-584: The state, as the representative of the public interest , would manage resources and production for the benefit of the public. As a form of social ownership, state ownership may be contrasted with cooperatives and common ownership. Socialist theories and political ideologies that favor state ownership of the means of production may be labelled state socialism . State ownership was recognized by Friedrich Engels in Socialism: Utopian and Scientific as, by itself, not doing away with capitalism, including

3658-408: The story and shows that, with the aid of bank credit , capital in search of growth can more or less smoothly mutate from one form to another, alternately taking the form of money capital (liquid deposits, securities, etc.), commodity capital (tradeable products, real estate etc.), or production capital (means of production and labor power). His discussion of the simple and expanded reproduction of

3720-414: The thing itself. It depends on the owner of the money, i.e., of the commodity in its continually exchangeable form, whether he wants to spend it as money or loan it out as capital. In interest-bearing capital, therefore, this automatic fetish, self-expanding value, money generating money, are brought out in their pure state and in this form it no longer bears the birth-marks of its origin. The social relation

3782-585: The total quantity of capital. Capital was understood by Marx to be expanding value, that is, in other terms, as a sum of capital, usually expressed in money , that is transformed through human labor into a larger value and extracted as profits. Here, capital is defined essentially as economic or commercial asset value that is used by capitalists to obtain additional value ( surplus-value ). This requires property relations which enable objects of value to be appropriated and owned , and trading rights to be established. The Marxist analysis of capital accumulation and

SECTION 60

#1732780259501

3844-494: The writings of the economist Michał Kalecki ). Other things being equal, the greater the amount of profit-income that is disbursed as personal earnings and used for consumption purposes, the lower the savings rate and the lower the rate of accumulation is likely to be. However, earnings spent on consumption can also stimulate market demand and higher investment. This is the cause of endless controversies in economic theory about "how much to spend, and how much to save". In

#500499