Capitalist

PF Drucker. Post-Capitalist Society. New York HarperCollins Publishers, Inc., 1993, p. 8. 

Patents are of paramount importance to the pharmaceutical industry. At the discovery program level, chemotype patentability is one of the key requirements for continued work on a particular structural class. Decisions by venture capitalists to fund startup companies are based, in part, on the strength of their patent portfolios. The presence or absence of a single key patent can determine the future of even the largest pharmaceutical company. Patents thus are a critical, inseparable component of the drug discovery process. 

Madison Square Garden, had said that the "capitalist" and "socialist" systems could get along together. And Molotov announced that Russia would not veto any United Nations provisions for international inspection of arms. 

A. I would not describe myself as a big businessman and capitalist. My fortune is a modest one. I own a house, a small farm, and I have I.G. stock to the amount of—... 

Mr. Sprecher Mr. President, I don t recall the prosecution going into this question of the big capitalists. 

Mr. Diehn knew East Asia he took over that part of the world. Mr. Ruperti treated the overseas business he had South and Central America and the British Empire Dr. Gattineau took care of the Scandinavian countries and I concerned myself with the United States and France because I had traveled much in the United States until 1932.. . . Goebbels lost interest in us. He called us a clique of capitalists that only criticized. 

Genentech was founded in 1976 by scientist Herbert Boyer and the venture capitalist Robert Swanson. Headquartered in San Francisco, it employs almost 5000 staff worldwide and has 10 protein-based products on the market. These include hGHs (Nutropin, Chapter 11), the anti-body-based products Herceptin and Rituxan (Chapter 13) and the thrombolytic agents Ac-tivase and TNKase (Chapter 12). The company also has 20 or so products in clinical trials. In 2004, it generated some US 4.6 billion in revenues. 

Subsequent rocketing oil and natural gas prices along with the concomitant action of venture capitalists changed all that. The price of energy and of traditional raw materials suddenly multiplied by a factor three or more. The route to innovative companies in the chemical industry is now open again. 

Looking to invest in rapidly growing sectors, venture capitalists have wisely funded the first sol-gel start-ups that are now conquering the markets remarkably, some of these venture funds are publicly (government) owned as in the case of Canada s SiliCycle. No matter whether private or public, these investments caused the rapid launch on the market of sol-gel functional silicas. 

The purpose of this chapter is to examine two main aspects of Marx s reproduction model. The first concerns the way in which sales of commodities are realized in the reproduction and circulation of commodities. Whereas in volume 1 of Capital the focus is on the production of value, on the assumption that each individual good is automatically sold, in volume 2 the market place is introduced. For Mandel (1978 14), in his introduction to the Penguin edition of volume 2, we have to understand the inner connection between the production of value and its realization. Commodities have to be sold, whether wage goods purchased by workers or means of production purchased by other capitalists. Reproduction can only take place if in aggregate... 

Now economists are very fond of diagrams, and one of the few diagrams Marx ever used was to summarize Quesnay s Tableau Economique (Marx 1969a). Quesnay was the doyen of the physiocrats, who thought that land was the source of all value hence the tableau shows the circulation of commodities between farmers and landlords. As shown by Pressman (1994), Marx shaped this model into his reproduction schema a model of how commodities circulate between capitalists and workers. For Marx (1969a 344), the tableau was an extremely brilliant conception, incontestably the most brilliant for which political economy had up to then been responsible . 

In chapter 20 of Capital, volume 2, Marx sets out the task of establishing how the total social capital can reproduce itself. A renewal is required of all elements of means of production such as raw materials and machinery that are used up in the production process. In addition, both the working class and the capitalist class have to be maintained such that the required amount of consumption goods is produced each year. Marx writes ... 

The immediate form in which the problem presents itself is this. How is the capital consumed in production replaced in its value out of the annual product, and how is the movement of this replacement intertwined with the consumption of surplus-value by the capitalists and of... 

Marx therefore develops a macroeconomic approach to establishing the conditions under which the economic system can reproduce itself one in which individual commodities are both produced and sold in the market place. To achieve this task, Marx collects industrial activities into two great departments of production. Department 1 produces means of production, capital goods that replace the constant capital (C,) used up in production. Department 2 produces consumption goods that take the form of variable capital (V ,) consumed by workers, and are also consumed by capitalists out of the surplus value (St) extracted from the production process. As a starting point for this analysis, Marx assumes that capitalists consume all of their surplus value. Hence, the system does not grow, since none of the surplus is set aside for capital expansion. All available resources are devoted to either consumption or the renewal of constant capital. This is the case of simple reproduction. 

It may be objected that simple reproduction is an assumption foreign to the capitalist basis (ibid. 470), since real capitalist economies are generally characterized by capital expansion. However, Marx argues that even under capital accumulation simple reproduction still remains a part of this (ibid. 471). The process of renewal that takes place under simple reproduction is an integral part of the more complicated process of expanded reproduction, and allows us to see more clearly its component parts. 

Marx also assumes the rate of surplus value (the ratio of St to VJ is the same in both departments. In Department 1, for example, 1,000 units of variable capital are employed at a rate of surplus value of 100 per cent, which generates 1,000 units of surplus value. Each worker performs an hour of labour for himself and an additional hour for the capitalist. The total amount of living labour performed (2,000) is added to the amount of constant capital (4,000) used up, to give a total value produced in Department 1 (W ) of 6,000. Similarly, Department 2 uses 2,000 units of constant capital, 500 units of variable capital, and extracts 500 emits of surplus value to yield a total value (W2) of 3,000. The general formula for calculating total values, Wt = Ct + IT +. S., is captured in Table 2.1. 

There are two main ways in which reproduction is made possible. First, the two departments have complementary requirements. Department 2 exchanges 2,000 units of its output of consumption goods for 2,000 emits of means of production produced by Department 1. These 2,000 emits of con-seimption goods fulfil the variable capital (1,000) and capitalist consumption (1,000) requirements of Department 1. And the 2,000 units of means of production supplied by Department 1 allow capitalists in Department 2 to replace used-up constant capital. Reproduction is facilitated by mutual exchange between the two departments. 

Whereas Moseley (1998 160) has argued that the refutation of Adam Smith is the most important immediate purpose of Marx s reproduction tables , others, as we have seen, emphasized their importance in addressing the issue of how surplus value is realized. The key role of consumption is illustrated sharply by the scheme of simple reproduction, since all of the surplus value is consumed by capitalists. 

Simple reproduction is oriented by nature to consumption as its aim. Even though the squeezing out of surplus-value appears as the driving motive of the individual capitalist, this surplus-value - no matter what its proportionate size - can be used here, in the last analysis, only for his individual consumption. 

The most developed expanded reproduction schema is referred to by Marx as schema (B) of the First Example in section 3 of chapter 21, Capital, volume 2 (ibid. 586-9). This is shown in Table 2.2, the numbers representing a modification of the simple reproduction table. The same assumptions are maintained as under simple reproduction, apart from relaxation of the restriction that all surplus value be allocated to capitalist consumption. 

An analytical leap can now be made that provides the cornerstone of the rest of this book. Located in this reproduction schema is a Keynesian multiplier that enables a relationship to be specified between net investment and net income. The intuition runs as follows. Capitalists anticipate that they will expand their constant capital by 500 in the next period of production. There is therefore a net investment demand for 500 emits of output to be produced in the current period.6 Workers are hired to produce this... 

Capitalists in Department 2 use this multiplier to anticipate how much consumption goods they need to produce in order to respond to the investment decisions of Department 1. Hartwig (2004) provides a particular interpretation of the methodology employed by Keynes, in which entrepreneurs use the multiplier to plan their outputs at the start of each production period. A key advantage of this multiplier, in comparison to a one-good Keynesian model, is that it embodies the requirement of proportionality between departments of production. 

To begin the analysis, Marx s numerical example of expanded reproduction can be recast as an input-output framework. Table 2.4(a) re-expresses the numerical elements of Table 2.2 as an input-output table. The advantage of this table is that it shows explicitly how Marx assumes capitalists spend their 1,750 units of surplus value on 500 units of new constant capital (dC), 150 new variable capital (clV) and 1,100 capitalist consumption (u). 

In this input-output format, elements of Table 2.4 can be read either along the rows as outputs of a particular department, or column-wise as inputs to that department. For example, reading row-wise, Department 2 produces 1,000 units of consumption goods for Department l s workers, 750 for itself, 150 for additional variable capital and 1,100 for capitalist consumption. Reading column-wise, Department 2 uses inputs of 1,500 constant capital from Department 1 and 750 of consumption goods from itself. The surplus value element of 750 is viewed as an input of value added to Department 2. For both departments, inputs and outputs are in balance, as shown by the identical column and row sums (6,000 and 3,000). 

Elements representing expansions of capital are defined by conjoining money prices with physical volumes of new means of production (da) and physical quantities of new means of consumption (dh). Similarly the physical quantity of capitalist consumption goods is shown by the term Ck. 

A first step in the analysis is to show explicitly how the elements of surplus value are allocated. Marx s numerical example of expanded reproduction (Table 2.2) can be explored in more detail by distinguishing, for each sector i, between capitalist consumption (uj, incremental changes in constant capital (cfQ and changes in variable capital (eft)). Numerical values for these terms are displayed in Table 3.1. In Department 1, for example, one half of the extracted surplus value of 1,000 is invested in the expansion of capital, with 400 directed to new constant capital and 100 to new variable capital. The remaining 500 units of surplus value are consumed by Department 1 capitalists. 

This is an ex post identity between total profits (P ) and the economy s output of capital goods (W ) and capitalists consumption goods (W2). Kalecki poses the key question as to how we should interpret this identity. Are expenditures upon capital goods and capitalists consumption goods determined by profits, or are profits determined by these expenditures He argues that capitalists can decide how much they will invest and consume next year, but they cannot decide how much they shall sell and profit (ibid. 461). It is the money expenditures by capitalists upon consumption and investment that generate the resultant volume of profits. 

Cartelier (1996 217) has linked this so-called Kalecki principle, that capitalists earn what they spend, to the circulation of money. As a result of their ability to initiate circulation entrepreneurs, as a whole, more or less have the power to determine their income. Moreover, he argues, the Kalecki principle does not contradict the Classical view which makes profit equal to the value of surplus. ... 

Key passages in Marx s writings that demonstrate the role of the Kalecki principle in relation to the circulation of money are in chapter 17 of Capital, volume 2 (see Sardoni 1989 211). Starting with the case of simple reproduction, Marx considers the circulation of money using the example of an individual capitalist. During the first year he advances a money capital of 5,000, let us say, in payment for means of production ( 4,000) and for... 

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