Productive Stagnation and Unproductive Accumulation in the United States, 1947-2011.

171 Pages·2015·3.12 MB·English

by  Tomas N. Rotta

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Doctoral Dissertations Dissertations and Theses
Summer November 2014
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Tomas N. Rotta
University of Massachusetts Amherst
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Rotta, Tomas N., "Productive Stagnation and Unproductive Accumulation in the United States, 1947-2011."
(2014). Doctoral Dissertations. 239.
https://doi.org/10.7275/6031577.0 https://scholarworks.umass.edu/dissertations_2/239
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PRODUCTIVE STAGNATION AND UNPRODUCTIVE
ACCUMULATION IN THE UNITED STATES, 1947-2011

A Dissertation Presented

by

TOMÁS N. ROTTA

Submitted to the Graduate School of the
University of Massachusetts Amherst in partial fulfillment
of the requirements for the degree of

DOCTOR OF PHILOSOPHY

September 2014

Economics
© Copyright by Tomás N. Rotta 2014

All Rights Reserved
P S U
RODUCTIVE TAGNATION AND NPRODUCTIVE
ACCUMULATION IN THE UNITED STATES, 1947-2011

A Dissertation Presented
by
TOMÁS N. ROTTA

Approved as to style and content by:

_____________________________
David Kotz, Chair

_____________________________
Gerald Epstein, Member

_____________________________
Deepankar Basu, Member

_____________________________
Thomas Roeper, Outside Member

_____________________________
Michael Ash, Department Chair
Economics
TO MY PROFESSORS,
ACKNOWLEDGEMENTS

I would like to express the deepest appreciation to my committee chair David Kotz for
his guidance and timely support for this research. David’s knowledge and enthusiasm for Marxist
theory and Political Economy had a lasting effect on me. I would like to thank my committee
members Gerald Epstein, Deepankar Basu, and Thomas Roeper for their comments, suggestions,
and patience. I have learned and benefited substantially from my dissertation committee and am
grateful for their dedication. I would like to thank Stephen Resnick in memoriam, my advisor
until his unfortunate death in January 2013. This dissertation is also a product of his comments,
suggestions, and inevitable disagreements. I would like to thank Zoe Sherman for proofreading
and editing the body chapters.
I thank the Economics department at the University of Massachusetts for its overall
support. In the Economics department I have met truly great professors, staff, and colleagues who
inspired me to pursue original and relevant research. UMass Amherst is a unique place and I will
be eternally grateful for being a graduate student here. I am indebted to all the knowledge
received and maturity gained during the past years. Especially, I would like to thank professors
Richard Wolff, Mohan Rao, Samuel Bowles, James Crotty and Peter Skott for their superb
teachings. With my undergraduate students I share my gratefulness, for they have taught me a lot.
I have loved to educate and to be educated by them. I would also like to thank the Political
Economy Research Institute for their financial support granted through a doctoral fellowship.
I thank the University of São Paulo and in particular the professors and staff at the School
of Management, Economics, and Accounting for all the knowledge and inspiration received. This
doctoral dissertation is an extension of what I have learned from great scholars as Leda Paulani,
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Eleutério Prado, Raul Cristóvão, Jorge Soromenho, Gilberto Tadeu, Rodrigo Teixeira, and many
others. The University of Massachusetts and the University of São Paulo changed my life forever
and to the better.
To my family and to Evanice I express the deepest gratitude for their unconditional love
and support. I have been blessed with wonderful parents (João de Aquino and Cristina), siblings
(Pedro and Luisa), and relatives (the Rotta and Nielsen families). I am grateful for their
unconditional caring and for having taught me respect, diligence, and persistence. I would like to
thank my godfather Heleno Rotta for his insistence that I should pay more attention to heterodox
and radical approaches. Heleno has had a great influence on me, and for this reason I will be
forever indebted to him.
I would like to convey sincere gratitude to my friends and colleagues. I have been very
lucky to have people around me such as Leonardo Nunes, Thais Lavagnolli, Ian Seda, João Paulo
Souza, Gonzalo Hernández, Iren Levina, Martin Rapetti, Adriana Neves, Cinthia Martins, Fausto
Spósito, André Vitta, Diego Viana, Thiago ‘Jesus’ Fonseca, Marcelo Cop, Guilherme Penin,
Gabriel Dib, Felipe Borim, Ian Guerriero, José Guedes, Cem Oyvat, Leila Davis, Harry
Konstantinidis, Avanti Mukherjee, Jessica Carrick-Hagenbarth, André Carvalho, Leopoldo
Gómez-Ramírez, Matthew Spurlock, Laura Carvalho, Fernando Rugitsky, Leonardo Müller,
Daniel MacDonald, Josh Mason, Mihnea Tudoreanu, Serkan Demirkilic, Raul Zelada-Aprilli,
Emir Benli, Flávia Santos Araújo, Julieta Chaparro, Andrés Fabián Castro, Anders Fremstad,
Pitchaya Boonsrirat, Zhongjin Li, Carlos Marentes, Özgür Orhangazi, Geert Dhondt, Xu Zhun,
Joseph Rebello, Yasser Munif, Jean Blaise, Amit Basole, Danilo Ramalho da Silva, Alison
Glasgow (also for proofreading the introduction), Samantha Hill, André Ventura, Alper Yagci,
Marcelo Milan, Christy Ganzert Pato, Joo Yeoun Suh, Cruz Bueno, Hasan Cömert, Maracajaro
Mansor, and Zoe Sherman. In special, I thank Anilyn Díaz for all her affection and dedication to a
better world.
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ABSTRACT

PRODUCTIVE STAGNATION AND UNPRODUCTIVE ACCUMULATION
IN THE UNITED STATES, 1947-2011

SEPTEMBER 2014

TOMÁS N. ROTTA

B.A., UNIVERSITY OF SÃO PAULO

M.A., UNIVERSITY OF SÃO PAULO

PH.D., UNIVERSITY OF MASSACHUSETTS AMHERST

Directed by: Professor David Kotz

My doctoral research addresses the question of how productive and unproductive forms
of capital accumulation interact in the United States. My contribution is to first develop a new
understanding of the labor theory of value in order to better explain how financial and rentier
forms of revenues relate to the wealth created in productive activities. Second, I offer an
innovative analysis of historical trends regarding unproductive accumulation in the postwar
United States economy. For that purpose, I propose a new methodology to estimate Marxist
categories from conventional input-output matrices, national income accounts, and employment
data. A core feature of my methodology is the idea that the production of knowledge and
information is an unproductive activity. Third, I employ time series econometric techniques to
formally evaluate the coevolution between productive and unproductive forms of capital
accumulation. My methods therefore consist of a combination of theoretical arguments,
descriptive empirical analysis, and econometrics.
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The way in which productive and unproductive capitals interact has changed substantially
throughout the postwar period in the United States. The accumulation pattern observed during the
1947-1979 phase, which prioritized productive accumulation, gave way after the 1980s to a
contrasting pattern prioritizing unproductive accumulation. Unproductive activity has been
growing significantly in terms of incomes, fixed assets, and employment. Among all forms of
unproductive activity, finance and the creation of knowledge and information have constituted a
rising share of total unproductive income and capital stock. Furthermore, productive stagnation
and unproductive accumulation have been closely related to greater exploitation of productive
workers and to overall income inequality.
The objective of my econometric study is to answer two questions: Does unproductive
accumulation hinder or induce productive accumulation, in terms of both short- and long-run
effects? Conversely, does productive stagnation lead to faster unproductive accumulation? I
provide an econometric assessment of a question that other scholars have so far considered
mostly through verbal or descriptive approaches. The main results are as follows. First,
productive and unproductive forms of accumulation share no common trend or no stable long-run
equilibrium relationship. There is, hence, no self-correcting mechanism that brings these two
forms of capital accumulation back into a stable long-run equilibrium. Second, productive and
unproductive forms of accumulation tend to be mutually reinforcing in the short term. Despite
consuming the surplus from productive endeavors, unproductive accumulation still has a net
positive effect on productive accumulation. Third, I find evidence of an absolute crowding-in
effect (or positive level effect) coupled with a relative crowding-out effect (or negative share
effect) between productive and unproductive forms of capital accumulation. The total value
produced in productive activities grows faster when the unproductive capital grows, but slows
down when the unproductive capital stock grows faster than the productive capital stock. Fourth,
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I find evidence of reverse causality indicating that the share of unproductive capital stock grows
faster when there is a slowdown in the total value produced in productive activities.
The combination of theoretical analysis and empirical findings in this study provides a
new assessment of how unproductive accumulation and productive stagnation have been core
features of the postwar United States economy. Predicated on the concepts of knowledge-rent and
of autonomization, I offer a theoretical explanation of unproductive growth that builds on and
expands Marxist political economy and the Marxist labor theory of value. The concept of
knowledge-rent reveals that the commodification of knowledge expands rentier capitalism. The
principle of autonomization uncovers how unproductive activities have a tendency to generate
abstract forms of wealth that are increasingly separated from the production of surplus value in
productive activities. Even though unproductive accumulation occurs together with rising levels
of exploitation of productive workers, capitalism in the United States is an economic system that
generates unproductive incomes that gradually obscure the source of new wealth in the
exploitation of labor.

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