Heinrich Contra Law of Falling Rate of Profit


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Apr 10 2013 04:24

[Angelus Novus]

I'm a bit late posting this, some of you will have already seen this.

In Marx’s work, no final presentation of his theory of crisis can be found. Instead, there are various approaches to explain crises. In the twentieth century, the starting point for Marxist debates on crisis theory was the third volume of Capital, the manuscript of which was written in 1864–1865. Later, attention was directed towards the theoretical considerations on crisis in the Theories of Surplus-Value, written in the period between 1861 and 1863. Finally, the Grundrisse of 1857–1858 also came into view, which today plays a central role in the understanding of Marx’s crisis theory for numerous authors. Thus, starting with Capital, the debate gradually shifted its attention to earlier texts. With the Marx Engels Gesamtausgabe (MEGA), all of the economic texts written by Marx between the late 1860s and the late 1870s are now available. Along with his letters, these texts allow for an insight into the development of Marx’s theoretical considerations on crisis after 1865.


[B_Reasonable]

Referring to the article, the ratio s/v can only increase if the labour becomes more "complicated" (Capitial Vol1 Ch1), i.e. each hour expended represents a higher multiple of "simple labour" . Marx doesn't suggest an independent measure of this complexity beyond observed differences in exchange values and seems to discount it as a general factor in increasing productivity when, for instance, he also says in Ch1: "In general, the greater the productivity of labour, the less the labour-time required to produce an article, the less the mass of labour crystallized in that article, and the less its value."

Working within the labour theory of value (LTV), for there not to be a tendency for the rate of profit to fall, Heinrich has to establish that any general increase in the "intensity" of labour is outstripping the increase in value composition (c/v) -- contrary to what Marx says indirectly -- which he doesn't attempt to do. Overall, when viewed in the light of this 'complex labour' fudge-factor, Heinrich's argument simply highlights the general un-disprovability of the LTV and the pointlessness of these kinds of argument.


[Khawaga]
In this context "complex" shouldn't be read as referring to a job being complex. From what I can gather complex is a "code word" for concrete or particular. Simple refers to abstract (perhaps even universal). This is typically how Marx uses these words in Vol 1. though I must admit that the specific case you are referring to did muddle it for me. Perhaps an issue of translation?
[jura]
B_Reasonable, I don't understand what you say at all. The ratio s/v, i.e., the rate of surplus-value, can increase for all sorts of reasons, including the simple lengthening of the working day, or changes in productivity outside of the enterprise in question.
[RedHughs]

Wow,

I've been having a long Facebook discussion on this. I think this is a very illuminating article.

Heinrich is saying, among other things, that the contradictions of the value versus prices-of-production are real. He "solves" this problem for himself by jettisoning the parts of Marx's approach which depend on "the processes of production as a whole" - including the long term falling rate of profit. This is fair enough in my mind but I think followers of Andrew Kliman would be correct to say that Heinrich, through agreeing that there is contradiction in Capital III, is indeed coming down on the side of Böhm-Bawerk and Bortkiewicz in the late 19th century debates on "the transformation problem".

I don't think that Marx's failed efforts to prove his law really mean you couldn't find something, just that Marx didn't really have strong enough mathematical tools for analyzing production as a unified whole. Basically, Heinrich might reject the later neo-Ricardian/Sraffian investigations that academics like Sweezy later engaged in. But he does show why this approach is pretty much the only way forward if one wants to engage in this quantitative analysis of capitalist production as a whole. Certainly, Heinrich curtly dismisses Kliman in a footnote so he doesn't seem to be a "TSSI" fan.

Also I think Heinrich is correct in highlighting the expression (s/v)/(c/v + 1). This shows the importance of the rise of the society-wide rate of surplus value. That question is more complicated than the note that the "production of relative surplus value" results in an increase in this rate - the society-wide rate of surplus value does not arise as the sum of the individual surplus values rates of the various industries; if relative surplus value is produce in only some industries, the productivity of only some industries goes up, then the relative demand for the products of those industries where whose productivity hasn't increased will itself increase. That is, low productivity industries which produce necessities will impose a lower-limit on the society-wide rate of surplus value but there isn't any inherent limit on the increases in the organic composition of capital.


[Malva]
If what Heinrich says is true, does this challenge the whole "critique of value" argument about an internal limit to capital due to technological development? I'm really struggling to get my head around this.
[RedHughs]

I believe Heinrich separates Marx' value theory into two parts, a monetary and a quantity theory.

I would still suspect that Marx himself imagined the two aspects forming a "dialectical unity" but I definitely done trying to myself push "dialectics" as a framework for unifying this stuff (OK, Angelus?).

Anyway, I think Heinrich demonstrates that whatever quantity theory people might take purely and entirely from Marx's works really doesn't fit together by itself as a mathematically consistent theory. And indeed, Heinrich is pretty much echoing earlier arguments to this effect. (Edit: I should note that what Heinrich adds here is an argument that Marx himself was abandoning the quantity theory over time).

How shocking people find this depends, to my mind, on how much people relate to Marx's writings as a fixed text offering enlightenment from on-high. Oddly, it seems like the whole "turn to Marx" perspective, post-Stalinism, post 1970 or whatever, has taken this "Marx and Marx alone" position even more than the various sclerotic Leninist sects and it seems like this is because it has been cut-off from the historical socialist movement that Marx was a part of (ya'll are like protestants returning to a biblical literalism). Correcting Marx here seems to be as shocking as correcting Stalin without authorization would be for the CP USA.

But anyway, if you want to try and recapture your orthodox, you can argue that Marx never published Capital III. One could argue that Engels shoe-horned Marx's approach into his cruder technological determinist theory through publishing Capital III as a finished work.

I myself feel like one can pick the most useful parts of post-Marx quantitative theories and integrate them as a better quantity theory having useful relation to the more qualitative "value-form" or "monetary" or whatever theories. But I understand now how unorthodox, unacceptable, and even offensive people here will find this.


[and g]
Quote:
Certainly, Heinrich curtly dismisses Kliman in a footnote so he doesn't seem to be a "TSSI" fan

The footnote in question relates to Kliman's defence of LTRPF which is logically distinct from TSSI as such

Quote:
The many “proofs” of the law that can be found in the literature, either rest upon logical errors, similar to those just demonstrated in the case of Marx, or upon absurd assumptions, such as the precondition that v = 0, as in the work of Andrew Kliman, Reclaiming Marx’s ‘Capital’: A Refutation of the Myth of Inconsistency.

I regret to say that I am some way from getting my head round Heinrich - this may have to wait until [someone] finishes translating "The Science of Value", hint, hint - but it seems clear there is clear water between Heinrich's version of a "monetary theory of value" and Kliman

admin: deleted reference that could identify the real name of a libcom user.


[andy g]

I think Heinrich argues that Marx formulated a monetary theory of value and this was his distinctive contribution. He argues Marx retreated from this finding and that monetary and embodied labour theories of value co-exist in Capital volume 3. They are mutually contradictory and this helps explain the knots Marxists have tied themselves into when discussing the "contradiction" between LTV and the existence of a uniform rate of profit.

Heinrich seems a long way from lining up with Bohm Bawerk or Bortkiewicz though. He argues value can only be quantified through money hence to try and measure the distance between the two (edit: that is between value and price) is to commit a category error as they exist at different levels of abstraction and are hence incommensurable.

This from John Milios is good in clarifying the argument - chapter 5 in particular

http://users.ntua.gr/jmilios/Milios-Marx-and-the-classics.pdf

fuck knows where I stand on this TBH - my head starts to ache whenever I devote serious thought to value-form analysis eek


[B_Reasonable]

@Khawaga, In Capital 1 Ch1, I think Marx is quite clear that hours worked at different tasks result in different quantities of value so he applies a "multiplier" so that all values can be measured off the same base of "simple average labour". So going forward, one has to assume that whenever he mentions a quantity of simple labour time, it should multiplied that by that task's multiplier to get back to the actual hours works. The alternative is to simply ignore what he said and assume that simple labour time refers directly to the hours worked in any given job (at the average level etc.). So, I agree, 'complexity' doesn't refer to actual complexity (but he is alluding the relative levels of skill) but neither is it a 'code word'. It's a number that allows one to directly compare the values produced per hours in different tasks.

@Jura, I take your point but I don't think Heinrich is looking at individual enterprises or overall lengthening of the working day but whether one can assume that any economy-side increases in s/v should be more than increases in (c/v)+1, i.e. as automation increases. Marx clearly didn't think so but not to Heinrich's satisfaction. My point being, all this just serves to highlight that the labour theory of value doesn't serve any practical purpose.


[S. Artesian]

All Heinrich says would be great if he could offer an explanation for what has taken place since 1970-1973 period to today, and why it has taken place, and what the purpose of those actions were; what triggered the structural changes, the emergence of the asset-stripping, deconstructionist bourgeoisie, the attacks on living standards. This is the area of greatest strength for those who do hold to the FROP.

Doesn't mean they get the details right; doesn't mean they don't miss points, but what they do get is that a) the "laws of value" are nothing but the relations between classes b) class struggle has a specific, measurable source in profitability c) there is indeed a conflict, here latent, over there manifest, now more or less everywhere in the open, between the labor process and the value process, and that Marx's immanent critique of capital, is just that, based on the very determination of capital, of itself, by itself, for itself..

The point being: the task is not what Marx wrote when, nor his doubts, revisions, alterations to what he wrote, but the actual analysis of capitalism. Does capitalism itself demonstrate the propulsive conflicts that define and encumber it?


[RedHughs]
Quote:
He argues Marx retreated from this finding and that monetary and embodied labour theories of value co-exist in Capital volume 3. They are mutually contradictory and this helps explain the knots Marxists have tied themselves into when discussing the "contradiction" between LTV and the existence of a uniform rate of profit.

Heinrich seems a long way from lining up with Bohm Bawerk or Bortkiewicz though.

As far as I know, Bohm Bawerk's primary relation to Marxian theory was to argue for Volume III's quantity theory being in contradiction with volume I's positions. Heinrich seems to be agreeing with this point and so I can't see the two as terribly far apart here. Obviously, Heinrich has a different solution to problem but he agrees there is a problem. Bortkiewicz also articulated a corrected quantity theory and Heinrich indeed has no interest in this.

Also, I believe the Heinrich article describes an opposite chronology. When Marx wrote Capital III, he was working with both theories but he later (in the 1870's) saw the problems with that and didn't publish Capital III - it was put together by Engels after Marx's death. Oddly enough, Heinrich's narrative goes pretty well with the video you kindly posted a link to, Andy, about why Marx didn't finish Capital.


[Khawaga]
B_Reasonable wrote:
@Khawaga, In Capital 1 Ch1, I think Marx is quite clear that hours worked at different tasks result in different quantities of value so he applies a "multiplier" so that all values can be measured off the same base of "simple average labour". So going forward, one has to assume that whenever he mentions a quantity of simple labour time, it should multiplied that by that task's multiplier to get back to the actual hours works. The alternative is to simply ignore what he said and assume that simple labour time refers directly to the hours worked in any given job (at the average level etc.). So, I agree, 'complexity' doesn't refer to actual complexity (but he is alluding the relative levels of skill) but neither is it a 'code word'. It's a number that allows one to directly compare the values produced per hours in different tasks.

I agree with your analysis there, but the problem is that Marx at different places does use simple and complex as code words for abstract and concrete (unless I've been getting that completely wrong, which is very likely). Hence, why I suspect it could be an issue of translation (Angelus or Jura, care to enlighten us?).


[RedHughs]
Quote:
All Heinrich says would be great if he could offer an explanation for what has taken place since 1970-1973 period to today, and why it has taken place, and what the purpose of those actions were; what triggered the structural changes, the emergence of the asset-stripping, deconstructionist bourgeoisie, the attacks on living standards. This is the area of greatest strength for those who do hold to the FROP.

Heinrich makes a good (and fairly standard) argument that Marx's formulation of the theory of the FROP contains contradictions.

There's nothing there that proves that the rate of profit doesn't fall.

The theory might just be true but still something can only be correctly formulated once you correct the contradictions that existed because of the limitations of Marx's mathematical ability.

See my earlier posts.


[RedHughs]
Quote:
The point being: the task is not what Marx wrote when, nor his doubts, revisions, alterations to what he wrote, but the actual analysis of capitalism. Does capitalism itself demonstrate the propulsive conflicts that define and encumber it?

Absolutely.

But the analysis of capitalism does require consistent analytic tools. The tendency of people here to go apoplectic whenever the phrase "transformation problem" appears speaks to me of an unwillingness to do this focusing on "actual analysis of capitalism".

I think Heinrich does very well to focus on the equation p= (s/v)/((c/v)+1). On analytical level, one just can't wiggle out of the point that if s/v is unconstrained, the profit rate is unconstrained but I think a bit of thought or analysis should show society wide s/v is not something can easily be constrained. It is pretty much inherent to technological progress that it occurs more quickly in some industries than others and the rate of exploitation is going to be constrained by the necessity good industries where progress happens most slowly - ie, the cost of survival will be constrained by those necessity good industries with low or no productivity growth (whether that's agriculture, health care or what-not).

Moreover, of course capital constantly works to reduce this value and these efforts are naturally "analytically instructive".


[S. Artesian]

I think you're being too modest in what Heinrich is claiming-- and what he is claiming is that the FROP not only cannot be proven, but was in the process of being abandoned by Marx, if not totally abandoned by Marx in the period after the publication of volume 1. Stop me if I'm wrong, but unless I read a different article than you did, I think we should explicitly identify the content of Heinrich's argument.

Now I think Heinrich is right about the different drafts for different projects, but I do not think there is a separation, a "rupture," in Marx's analysis between the Grundrisse and Capital or Capital and post-capital.

Nor do I think there is a rupture between Marx's analysis of the FROP and......overproduction, world trade crises; no more than I think there is a conflict between financial and industrial capital. Which is to say, the apparent conflict between FROP and overproduction, between circulation and production, or between financial and industrial capital are just that apparent, and can be shown as derived from a single source-- the organization of labor as wage-labor, and its expulsion, relatively, from the process of production to enhance the appropriation of surplus value.

I'm not big on "crisis theory"-- especially the "permanent crisis" theory that gets flogged around, but there are certainly long-term structural changes to capital and those changes are driven by the search for profit; the changing relation between the means of production as capital and labor as wage labor; or to put the same thing even more fundamentally, the changing relation between necessary and surplus labor-times, on which everything, as Marx said, depends.

Now if the relative expulsion of wage-labor from the value process does not encumber profitability, that's fine, but as Marxists, then we better go back and explain why what has happened has happened since 1973. We need to explain recoveries in the rate of profit after 1992; we need to explain what happened in 2001-2003 and what the bourgeoisie did to recover from that recession and why that recovery came up short in 2007. And we have to be able to do that based on the change in relations between living and dead labor.

Analyzing Marx is the abstract; analyzing capitalism is the concrete.

Short version: and still it falls.


[RedHughs]
Quote:
I think you're being too modest in what Heinrich is claiming-- and what he is claiming is that the FROP not only cannot be proven, but was in the process of being abandoned by Marx, if not totally abandoned by Marx in the period after the publication of volume 1. Stop me if I'm wrong, but unless I read a different article than you did, I think we should explicitly identify the content of Heinrich's argument.

As far as I can tell, you're characterizing Heinrich's argument correctly.

The thing is, I'm not a Heinrich-ist. I have no idea whether his chronology is correct or not. I'm not saying that I agree with everything he says.

I'm simply happy that he brings up these issue because I think the issues are important. My point is as I wrote - any quantity theory needs correcting to be consistent. I think such a corrected quantity can be formulated reasonably easily - I'm basically sympathetic to what became the standard model with Paul Sweezy and was developed by a whole slew of academic marxists, sometimes in useful, sometimes in less than useful directions but at least in a self-consistent fashion.

And I think looking at society s/v is useful analytic place to start.


[Angelus Novus]
S. Artesian wrote:
All Heinrich says would be great if he could offer an explanation for what has taken place since 1970-1973 period to today

I think you're making a fundamental error in confusing an argument against a law of the rate of profit to fall at the categorical level articulated by Marx, and the assertion that the rate of profit never-ever-ever falls in reality. Heinrich does not assert the latter. In fact, quite the opposite: he acknowledges that the rate of profit can fall. Then again, it can also rise. If you're talking about "long-term" trends, the question becomes: how long-term? What kind of time-scales are we talking about? And if the trend reverses, how meaningful is it to refer to any trend as confirmation of a "law"?

Also, since "rate of profit" in the Marxian sense really isn't a category of economic statistics, the various attempts by Marxist economists to calculate the "rate of profit" is going to depend exactly upon what factors they are actually using as the basis for their calculations. For example, Doug Henwood in this article divides profits of nonfinancial corporations according to the National Income and Product Accounts from the Department of Commerce by the value of capital stock from the Fed's flow of funds accounts. Surprise: he comes to different conclusions then those who assert FROP.

Malva wrote:
If what Heinrich says is true, does this challenge the whole "critique of value" argument about an internal limit to capital due to technological development? I'm really struggling to get my head around this.

The Nuremberger certainly think so. They don't like what he has to say about this one bit. Unlike S. Artesian and other defenders of the "law" of FROP, the Nuremberger literally defend the notion of a final collapse on the basis of their belief that any possibility renewed expansion of capital is definitely foreclosed. Any empirical evidence to the contrary they explain away in terms of it not being "real" capital accumulation, often arguing that, for example, China's growth isn't real because it's debt-financed (as if the American railroads weren't!).

Malva, since you're closer to the French discussions, does Anselm Jappe still defend this perspective? My impression from the final days of Principia Dialectica was that the other Nuremberger have excommunicated him because they regard his conception of abstract labor to be too close to Heinrich, Rubin, et al.


[Angelus Novus]
andy g wrote:
I think Heinrich argues that Marx formulated a monetary theory of value and this was his distinctive contribution. He argues Marx retreated from this finding and that monetary and embodied labour theories of value co-exist in Capital volume 3. [...] He argues value can only be quantified through money hence to try and measure the distance between the two is to commit a category error as they exist at different levels of abstraction and are hence incommensurable.

I think this is pretty much a perfect summary of Heinrich's argument.

Quote:
my head starts to ache whenever I devote serious thought to value-form analysis eek

Haha, well, you seem to have a solid grasp in any case.

Edit: no wait, you did get something wrong: Heinrich definitely does *not* argue that Marx "retreated" from the monetary theory of value. Quite the opposite: the newer the manuscript, the more the monetary theory of value achieves prominence (for example, the official French edition of Capital with the passages that explicitly state it). Remember: the manuscript that became Vol. III is the "oldest" of all the manuscripts that became "Capital" (Vol. II was the most recent, Vol. I was constantly revised by Marx, including the French edition, the last one overseen personally by Marx.)


[S. Artresian]

If the rate of profit does fall, and is then restored, we certainly need to examine what precedes and causes the fall, and what counteracts the fall.

Does the rate of profit fall by the necessity of capital's own requirements for accumulation? Is the fall of the rate of profit inherent, immanent I guess is the word, to the expropriation of surplus value? That is Marx's contention. Now I think if we sort through the formation of the average rate of profit, the distributive impact of the prices of production, and the impacts of that distribution on smaller capitals with higher rates of profit, we can certainly see the basis for the trend of the rate of profit to decline. Takes some work, which I haven't sorted out yet.. but along with this is.. as fixed assets accumulate the turnover time for the total capital lengthens and that too reduces the rate of profit. More work required, I know, but as I said, I don't have it sorted yet.

I've read Henwood's piece and it hardly refutes the notion of the long-term trend of the ROP to fall. Henwood, like almost everyone else, shows a post-WW2 peak around 1968-1970, a decline, then various recoveries with no recovery however exceeding the original peak. Seems to me to be an object lesson in the law and the attempts of offset the law.


[B. Reasonable]

Marx believed in the tendency for the rate of profit to fall, so assuming he's right, that means Heinrich is in effect arguing that the Labour Theory of Value (LTV) does not provide a sufficiently good explanation of Capitalism to predict this tendency. And Heinrich's proof of this is showing that Marx can't derive it from LTV. In order to disprove the tendency with LTV one has to first demonstrate that LTV has sufficient explanatory powers of Capitalist relations to do this. If anything, Heinrich's argument serves to further undermine any possible utility for LTV.

On the other hand, if Marx was wrong, and there isn't a tendency for the rate of profit to fall, then (i) this doesn't strengthen the argument for LTV, (ii) it doesn't mean that there isn't currently a long term trend of a falling rate of profit that may lead to a crisis. Basing these arguments on the disputed supposition of the LTV is a waste of time. If one is happy to discard Marx's tendency for the rate of profit to fall -- something he could have observed over time -- why not discard LTV if it doesn't provide an adequate model of Capitalist relations?


[andy g]

non-sequitur alert! non-sequitur alert!

Heinrich is arguing on the basis of his interpretation of LTV that Marx didn't provide a water-tight logical proof of LTRPF. The fact that he doesn't deny that over any given period profit rates may fall does not mean this empirical tendency can't be explained in ways consistent with LTV.

people have been arguing the LTV is unnecessary to the understanding of capitalism since forever. Doesn't seem right to hang that argument on Heinrich given he so manifestly opposes it


[jura]

Exactly, andy.

Heinrich points out that the law of the tendency of the rate of profit to fall isn't a necessary consequence of a certain system of propositions known as Marx's theory of value, even though Marx apparently went to great pains to derive it as a such a consequence.

However, that doesn't at all mean that the law of the tendency of the rate of profit to fall cannot be true.

Nor does this mean that this law cannot be explained, when conjoined with other statements describing what has been going on in a certain period of time ("since 1973"), by Marx's theory of value.

I don't see how any of this affects the explanatory power/empirical validity of the rest of Marx's theory.


[S. Artresian]

The issue is a bit more than that. At issue is whether or not the rate of profit must exhibit a tendency to decline as the means of production organized as capital accumulate?

That, I think, is what Marx intended by "immanent critique." At least, Marx is not just providing a critique of capital, but also the augmentation of the labor process by capital that pushes forward the prospects for capital's abolition.

If the answer to that question in the first paragraph is "yes, the accumulation of the means of production as capital exerts a downward pressure on the rate of profit," then we need to establish if it has such an effect precisely because it changes the relationship between wage-labor and capital, because it changes the relationship between necessary and surplus labor-time.

If the answer to either "no"-- the accumulation of the means of production as capital exerts no such downward influence-- or-- there is a downward influence that is NOT a result of the changing relationship between wage-labor and capital, the change in the ratio of necessary to surplus labor time; if the very organization of capital as capital, that is to say labor as wage-labor that provides value and value's expression as profit, does not transform capital's expansion into its contraction, then IMO we have lost the immanent critique and we better review what in fact is that determines capital; what makes capital historically specific and not a natural condition.


[RedHughs]

This thread raises fascinating questions. On Facebook, someone pointed to this:
[Edit: Where Andrew Kliman attempts to deal with same equation Heinrich makes the center of his investigation. That's the relevance of this link]

Andrew Kliman on OPE-L wrote:
As is well known, the profit rate can be written as

r = s/(c+v) = (s/v)/(c/v + 1).

Because of this, Sweezy, Robinson, Okishio, and many others have claimed that a sufficient rise in the rate of exploitation (s/v) can counteract any rise in the organic composition of capital (c/v), so that there's no "necessity" for the rate of profit to fall. According to this formula, if the percentage increase in the rate of exploitation exceeds that of the organic composition, then r rises. Yet what Marx points out is that the mass of surplus-value is limited by the number of workers employed, even if the rate of surplus-value goes sky-high. We can rewrite the profit rate as

s/v
r = ------------------
(c/L)*(L/v) + 1

where L is living labor. But since L = v+s,

s/v
r = ------------------
(c/L)(1+[s/v]) + 1

as s/v approaches infinity (or v approaches 0), r approaches L/c.

What this shows is a clear maximum limit to the profit rate, even with an
infinite rate of exploitation.

[Note the formatting of the large fraction expressions are screwed by text format, sorry]

Here, Kliman is apparently following what Heinrich describes as Marx's multiple attempts to prove the TLTFRP. However, a bit of math should show this attempt is flawed. One can easily show that despite Kliman's transformations and limit-takings, there are conditions in the abstract, where the rate profit can go to infinity as the organic composition of capital also goes to infinity. This is true even under the assumption that L is constant.

A proof; let t=time. Now suppose v = 1/(t^2), s = 1-1/(t^2) and c = 1/t. Then L=1 and L/c = 1/(1/t) = t, (c/v) = (1/t)/(1/(t^2))= t. So as t goes to infinity, L/c and c/v naturally also do so, since they are exactly equal. Of course, this involves v and c both decreases but that's exactly what would happen if you had constant output and increasing productivity. Anyway, this is just one of many counter-examples one can easily construction to the assertion that there is a limit to p based on the structure of the equations themselves. And remember, a single counter example is sufficient to disprove any general statement when one is talking maths.

Of course, you could make assumptions about the productive processes and get a situation where the rate of profit does decrease. Indeed, I think this is the way one should go but this involves not following Marx with complete exactitude.

And in reply to Artesian's continuing objections; As AN said, this doesn't prove the rate profit can't go down. It doesn't even prove the rate of profit won't tend to always go down. It doesn't even show there is no strong argument that the rate of profit tends to decline. It just shows this equation with no assumptions beyond the assumption that c increases over time, is insufficient to prove the assertion. (and repeating, assuming s/v increases at a lower rate than c/v is clearly sufficient. But that not something that falls out of Marx even though I'd claim you can argue it's a property capitalist production. However, that claim is "original research").


[S. Artresian]

However, as is clear from Heinrich's text, and various other comments, this is not about proving an equation. From Marx's work it should be clear that this is about the inherent tendency of capital to reduce "v," replacing it with fixed assets, transforming the increased "fc" (fixed capital) into increased circulating capital in order to (1) reduce its cost of production and (2) appropriate a larger share of the total socially available surplus value to achieve an average rate of profit.

Now I think that is what will, must, drive the average rate of profit down; I think this can establish a link between overproduction and the growth of the means of production as capital (linking overproduction to declining profitability in exchange as opposed to insufficient consumption or lack of "effective demand"), and declining profitability to slowing turnover time of the capital invested in production.

My objection is not that the Heinrich is denying the possibility that the rate of profit will fall, is likely to fall, is even very likely to fall; but rather that he asserts the decline is NOT inherent in the growth of the means of production as capital. That's what "immanence" is all about. And immanence does not mean "permanent." There is no "permanent" decline in the rate of profit as capital is quite capable of incinerating productive capacity and living labor in the millions (of whatever units you want-- people, dollars, labor hours); and there is no permanent crisis. But there is the inherent tendency of the means of production to outgrow their organization of capital, the relation of production which is wage-labor, and that "overgrowth" is pretty well identified by a declining profitability.

Momentary digression:

Back in the day, and I'm sure many have heard this story or versions of it before, (but maybe not my explanation for it)... anyway Henry Ford had a section of the Rouge Plant (IIRC) given over to R&D, with the purpose of creating a completely automated assembly line. He took Walther Reuther on a tour of the facility and supposedly said: "When this becomes reality, Walter, who are you going to organize?"

Supposedly, Reuther, always the empiricist and the wannabe social democrat said, "When this becomes reality, Henry, who's going to buy your cars?"

Well the answer is-- "everybody else" and the lower price of the Ford cars will in theory serve to transfer the profits from the other auto manufacturers, so that Ford will achieve the average rate of profit, which it has thus driven down.

Now imagine that all production in capitalism is automated-- in all sectors. Where then is the surplus value? Nowhere. There is no necessary labor-time that can only be satisfied through the alienation of surplus labor time. . Surplus value cannot be transferred, or allocated when its basis for existence-- necessary labor-time-- has disappeared. While Heinrich may laugh or refer to the absurdity of those who, as a matter of fact, do tease out the conflict between necessary and surplus labor-time by reducing wage-labor zero, such a conflict, revolving around a zero-point, or approaching it even asymptotically, is made explicit by Marx in some of his manuscripts, and is implicit throughout some others, including IMO, The Poverty of Philosophy. "Time is everything; man is nothing. At most, he is time's carcass."

I just want to add, I think Heinrich is historically wrong when he refers to the "crisis theory" of the 20th century as being concentrated this issue of the rate of profit. Much has centered on overproduction vs. underconsumption. Pavel Maksakovsky in his The Capitalist Cycle contends that Marx did indeed provide us with a crisis theory, and Maksakovsky says it's in volume 2. Today we know it as disproportion. I truly recommend Maksakovsky's book-- it is brilliantly written and brilliant, so brilliant it almost makes me want to agree with him. But I don't because, I think at core, disproportion theories become underconsumption theories.

Somewhere along the line we have to come to grips with the necessity for the emergence in the reproduction of capital declining profitability, overproduction, and disruptions in circulation. I don't think the answers for each, or any, can be achieved without integrating them as a whole.


[RedHughs]
Quote:
My objection is not that the Heinrich is denying the possibility that the rate of profit will fall, is likely to fall, is even very likely to fall; but rather that he asserts the decline is NOT inherent in the growth of the means of production as capital. That's what "immanence" is all about.

Hey, I am not defending Heinrich's final conclusion. I am simply describing the problem that Heinrich sets out for a crisis theorist. You don't like the hole Heinrich pokes in Marx's logic? Good. Figure out a way of actually solving them.


[kingzog]

S. Artesian, good post.

I just want to express my agreement with the last part of your post, especially.

The LTFRP was hardly ever an orthodox position in the Marxist movement, overall. Underconsumptionism and disproportionality were always the far closer contenders for the 'orthodox position.'

It always strikes me as odd- and perhaps ironic- whenever people who disagree with the LTFRP theory cry "ORTHODOXY, MARXIST FUNDAMENTALISM!" against those who are proponents of the LTFRP.


[S. Artresian]
RedHughs wrote:
Hey, I am not defending Heinrich's final conclusion. I am simply describing the problem that Heinrich sets out for a crisis theorist. You don't like the hole Heinrich pokes in Marx's logic? Good. Figure out a way of actually solving them.

I'm trying, believe me comrade, I'm trying. And for the record, I don't think Heinrich pokes a hole in Marx's logic. He points out that Marx's mathematical proof is not quite. That's different from Marx's logic, or rather, the logic of capital.

But.... good thread, no? Thanks to Heinrich, and AN, for pushing the issue.


[S. Artresian]
kingzog wrote:
S. Artesian, good post.

I just want to express my agreement with the last part of your post, especially.

The LTFRP was hardly ever an orthodox position in the Marxist movement, overall. Underconsumptionism and disproportionality were always the far closer contenders for the 'orthodox position.'

It always strikes me as odd- and perhaps ironic- whenever people who disagree with the LTFRP theory cry "ORTHODOXY, MARXIST FUNDAMENTALISM!" against those who are proponents of the LTFRP.

Thank you. I agree. ROP was not the "orthodox position" or the "popular position" and in fact, IMO, ROP is "restored" to a least a question of importance by value theory, with value being the material relation between classes..

If FROP didn't correlate with reality, with material reality, with the actions of a class or classes, we would drop it wouldn't we? Or we'd say we have to explain, using the tools and categories of our critique, why it doesn't correlate right now in appearance, but will correlate in the future in essence. Now I know that correlation is not causation, but after a while.....


[RedHughs]
Quote:
However, as is clear from Heinrich's text, and various other comments, this is not about proving an equation. From Marx's work it should be clear that this is about the inherent tendency of capital to reduce "v," replacing it with fixed assets, transforming the increased "fc" (fixed capital) into increased circulating capital in order to (1) reduce its cost of production and (2) appropriate a larger share of the total socially available surplus value to achieve an average rate of profit.

Now I think that is what will, must, drive the average rate of profit down; I think this can establish a link between overproduction and the growth of the means of production as capital (linking overproduction to declining profitability in exchange as opposed to insufficient consumption or lack of "effective demand"), and declining profitability to slowing turnover time of the capital invested in production.

Well... I can get you don't like equations. But hear me out.

If we look at this beast that I and others are going on about; p=(s/v)/(c/v +1), it really is saying pretty much what I think you want to say above - if s/v remains constant. As the organic composition of capital increases, as living labor is replaced by dead labor, fixed capital, the rate of p, profit goes down.

So s/v being constant or simply increasing more slow than c/v, is the basic condition for the long term decline in the rate of profit to happen this way, the way you have been describing. So the argument about s/v matters.


[S. Artresian]

It does not have to remain constant-- in the fantasy of Ford it approaches infinity at the same time as it approaches zero. The rate gets expressed, "adjusted" realized however only in relation to all other rates of capital, only in exchange. Despite fantasy Ford's superior rate the social rate will eventually be driven lower as an average, and on averge. That's the "trend" or the tendency.

I think we need to draw a distinction between proof and truth.


[kingzog]
Not every model needs to conform to reality in order to be useful. Of course a model assuming wages at 0 is not realistic, but that's not the point.
[communisateur]

well, heinrich is correct that marx assumes assumes a constate rate of exploitation in his equations which fudges things (marx also gets a lot of other stuff wrong, obviously). but heinrich's assumption that you can't prove that s/v rises more slowly than c/v is incorrect, except under conditions in which constant capital is being massively cheapened, which marx discusses as a countervailing factor. this therefore explodes heinrich's claim that the law/tendency is incoherent before countervailing factors are considered.

s/v and c/v are entirely different kinds of ratio, a difference which will manifest over time, once one observes the results of successive attempts to extract relative surplus value...look at what happens to s/v when productivity is doubled. if we start off saying a worker works 5 hours for himself and 5 hours for the capitalist, then once productivity is doubled he works 7.5 for the capitalist and 2.5 for himself. if doubled again, he works 8.75 for the capitalist and 1.25 for himself. and so on and so on . the point is: the increase in the rate of exploitaiton gets slower and slower with each doubling of the productive forces. this is what we call a negative geometric progression. it approaches a ceiling.

c/v behaves entirely differently. now, heinrich is right that we can't know in advance how much a capitalist will have to expend in fixed capital outlays to get a doubling of the productive forces. but let's ignore fixed capital for a second and just focus on circulating capital. if the productivity doubles -- all things being equal -- the same number of workers will use twice as much raw material (in most industries), so we can assume that c/v does rise, at least incrementally (except in the case of massive cheapening of c, see above). moreover, it will rise arithmetically. that is, continuously, on a slope. here's the catch: if it rises even a little bit, even incrementally, then at some it will rise faster than s/v as s/v curves away from its upper bound and the slope c/v crosses it. this is a axiomatic. all things being equal c/v will eventually rise faster than s/v. in other words, heinrich is just flat wrong when he states that, for organic composition to matter, "the capital (c + v) necessary to employ the two workers is of an amount at least as great as that required to employ twenty-four workers before" under conditions when two workers are as productive as twenty four workers previously. all that is necessary is that the capital required is greater than two workers previously. eventually c/v becomes a problem, and with it the profit rate...

now, there is an exception here, as i indicated above, which is the situation where the value of c -- both fixed and circulating capital -- is radically cheapened. it's clear that heinrich is thinking of this condition when he imagines the equation unproveable, since it's the only situation which satisfies his description. but this is a countervailing factor, and already the source of much controversy. cf. okishio's theorem. i've never been sure what i think about this -- that is, sure about how stabilizing such cheapening can be, ultimately, in the long run -- except to say that the value composition of capital does seem, empirically, much higher today than it ever has been (though i've never seen a study proving this), and there's certainly a problem with rising superfluous populations which means capital is unable to add new workers. this would seem to indicate a situation where c can't be cheapened quick enough to offset rising c/v. it would also explain the observed weakness of the profit rate.


[andy g]
my problem with the "tendency / counter tendency" thing is it assumes that which is to be proved IMHO. capitalists are under competitive pressure to increase the productivity of labour to reduce unit costs and maintain of improve market position. this pressure produces the drive to revolutionise the technical conditions of production. increasing the rate of exploitation and changing the organic composition of capital are both effects of this process so to ascribe primacy to one over the other on the basis Marx does - by assuming a constant rate of exploitation in the exposition of LTRPF - is dodgy.
[communisateur]
you've misunderstood my point, which is that you don't need to assume a constant rate of exploitation. organic composition still rises.
[S. Artresian]

FWIW in Vol 3, I believe, Marx contradicts himself by saying first that competition does NOT cause the ROP to decline, but that the fall in the ROP causes competition; later on in the volume he says the opposite-- something along the lines of "we have seen how competition causes the rate of profit to fall"

In the Grundrisse, Marx really nails it, the it being competition: "Competition merely expresses as real, posits as an external necessity, that which lies within the nature of capital; competition is nothing more than the way in which many capitals force the inherent determinants of capital upon one another and upon themselves"

Now here comes an interesting (and maybe a bit confusing) sentence from Marx: "Hence not a single category of the bourgeois economy, not even the most basic, e.g. the determination of value, becomes real through free competition alone; i.e. through the real process of capital, which appears as the interaction of capitals and of all other relations of production and intercourse determined by capital. (Notebook VI Penguin, 1973, p 651)

I think what Marx is saying here is that competition is the expression of the internal determinants of capital which would still apply or govern even if the competition did not. Capital is value expanding value; even without competition, capital is driven forward to reduce necessary labor time, reduce circulation time, expropriate greater rates of surplus value, which surplus value, which objectified labor, which capital must then in turn be driven forward to reduce necessary labor time-- and extrapolating from that-- the entire notion of "monopoly capital" as somehow defying, "suspending" the diktat of value is bogus.

The tendency for the ROP to fall exists within every capital and gets manifested socially by competition.

Can I prove that mathematically? No, but that might be just a personal flaw. Can I demonstrate it empirically... I think so. In fact I thing I have, but that too may be just a personal flaw.


[RedHughs]
communisateur wrote:
heinrich's assumption that you can't prove that s/v rises more slowly than c/v is incorrect, except under conditions in which constant capital is being massively cheapened, which marx discusses as a countervailing factor. this therefore explodes heinrich's claim that the law/tendency is incoherent before countervailing factors are considered.

Wait,

Your argument for why that s/v rises more slowly than c/v looks nice, good job (well, it may need some further refinements but you're on the right track, I think).

But problem is that that isn't the argument Marx made - Heinrich is correct that Marx himself failed to prove his claim. That doesn't bother me, personally. I'd take your argument as a fine correction to the theory - I suspect what you are saying is equivalent to arguments I've made in various places - c/v is, more or less "additive", it rises with increases in in the total capitalization of the productive process and so with those sector where capitalization increases the most quickly, s/v is not additive, it is instead limited by the survival good sector where where capitalization increases the least quickly. I'd love to work with folks putting this stuff into a general pamphlet - I do include some basic argument here and elsewhere.

The thing is that engaging in such original research is scary to people. Saying that Marx didn't think of everything makes people nervous and takes away a unifying principle/authority. A lot of people considering themselves Marxists are marvelously good at textual analysis but don't have that much mathematical sophistication. If you look at Marx's Mathematical Manuscripts, in fact, it is clear that Karl himself had a limited and confused grasp of calculus. It would be nice to see that change but I'm not holding my breath.


[kingzog]

The Monthly Review School, basically Paul Sweezy, argued that the counter-tendencies to the LTFRP cancel it out.

However, I think Marx explained the tendencies and counter-tendencies as forming a unity;so that the counter-tendencies are taken into consideration and they play a role in the overriding tendency of the rate of profit to fall.

On pg. 356 of Capital, vol III, Marx talks about how a rise in the rate of exploitation is a counter-tendency to the LTFRP, but that this has limits and "cannot cancel it[the LTFRP] out " "[...]even though it "can certainly check the fall in the profit rate[...]"

I wonder if the MR school is moving closer to Heinrich's interpretation? They published his intro to Capital. Maybe parts of Heinrich's theories can be integrated in Sweezyism?


[Angelus Novus]
kingzog wrote:
hey guys, Marx says in this unfinished manuscript that he regarded as inadequate and unsuitable for publication that blahblahblah, so let's ignore the guy over there saying that in later manuscripts he started to express doubts about an assertion made in them. I like having an ersatz religion with holy texts.

FTFY.


[andy g]
Quote:
if the productivity doubles -- all things being equal -- the same number of workers will use twice as much raw material (in most industries), so we can assume that c/v does rise,

in truth you have misunderstood my point. here you collapse value composition into technical composition under the cover of a ceteris paribus clause of exactly the kind I was talking about


[communisateur]

"here you collapse value composition into technical composition"

um, yeah, that's right. that's also the definition of organic composition --- when the value composition of capital moves in line with changes in technical composition. it doesn't always move that way. but for the most part it does. that's to say when the technical composition rises, for the most part there's also a change in the value composition in the same direction: we call that rising organic composition.

i actually understand what these terms mean. do you?

which is to stay, please show me evidence of situations where productivity doubles and the value composition stays the same..they are certainly exceptional.


[communisateur]

Yes, I agree that this is not the argument Marx made. Heinrich is absolutely right about the inconsistencies in this section of Volume III. I also agree that Marx is inconsistent about value/price relationship (argument for another day).

I have no problem admitting Marx is wrong. That's why I tried to avoid the scriptural argument.

Heinrich is weird because he both relies on the authority of the Marxist corpus and tries to critique it. Much of his argument rests on this idea that Marx began to doubt his earlier thought. So it's an anti-scriptural sciptural argument. Witness Angeleus Novus above calling someone about for having a "religious" relationship with Marx texts by citing another (very obscure) Marx text. It's rather insane. All of this might be true -- that is, Marx might have doubted his earlier formulation (he contradicts himself all the time!). But who cares. It's just irrelevant.

So, to be clear: We should be arguing about what's right, not what Marx said. Sometimes clarifying what Marx said can be a prelude to figuring out what's right. But all too often, it's not...


[Zirkus]
RedHughs wrote:

Your argument for why that s/v rises more slowly than c/v looks nice, good job (well, it may need some further refinements but you're on the right track, I think).

But problem is that that isn't the argument Marx made - Heinrich is correct that Marx himself failed to prove his claim.

I believe in the Grundrisse Marx talks about the relation between necessary and surplus labour time having these diminishing results in the section on the FROP.
But I might be wrong and have conflated two different parts together in my head.


[RedHughs]
communisateur wrote:
"here you collapse value composition into technical composition"

um, yeah, that's right. that's also the definition of organic composition --- when the value composition of capital moves in line with changes in technical composition.

Well, the one thing I'd say is that the assumption that a production process uses double raw materials with doubled productivity is not always true. Some increases in productivity may involve ways of producing things more efficiently and so use fewer raw materials. Teasing out everything is quite tricky - why, it seems, Marx didn't come up with an argument that satisfied him.

A lot of bourgeois counter-arguments to the LTFP involve talking about "capital-saving improvements". I'd stick to the point that c/v is additive and s/v isn't - the industries with lots of capital saving improvements don't cancel the industries with fewer improvements but the necessity good industries with fewest increases in productivity overall, do "cancel" the productivity increases of the industries with many such increases - because proportionately more workers wind-up being needed for these low-productivity industries (since these necessity goods are needed by all workers still).


[kingzog]

Angelous, seriously... get a grip.

Where in the 'newer manuscripts' does Marx say that the counter tendencies neutralize the LTFRP? I might agree that he doubted his ability to mathematically prove the LTFRP; and I didn't think Heinrich was suggesting that the counter tendencies do neutralize the LTFRP? But if he did, then he would be quite close to the MR School.

Also, if I thought of Marx's work as such holy scripture, then wouldn't I be undertaking a Hadj to Berlin (or is it Amsterdam?) to study alongside Heinrich the esoteric, dead sea scroll holy texts that has become the 1864-65 manuscripts? Come on now, no need to be so rude, lets put that aside, Angelos.


[jura]
communisateur wrote:
which is to stay, please show me evidence of situations where productivity doubles and the value composition stays the same..they are certainly exceptional.

But that's kind of the point, isn't it? The tendency of the rate of profit to fall (i.e., the statement describing it) isn't a logical consequence of Marx's theory of value, i.e., it can't be proved. But if you feed the theory with the necessary empirical conditions (e.g., "The productivity improvements in the period X amounted to a net increase in organic composition"), a fall of the rate of profit that occured in the past can be explained. Or if you could, by whatever means, estimate that 93% of such improvements (in a certain technological epoch, let's say) result in a higher OC, then you could interpret the tendency (i.e., the statement describing it) as a probabilistic law, and even predict falls of the rate of profit and the resulting crisis-prone behavior. But the difference between the tendency being a logical consequence of Marx's theory and it being an empirical truth that can be explained by the theory would remain.

I think Heinrich's article has two relatively separate parts. In one part, he argues that the tendency cannot be proved within Marx's theory. I think he makes a very strong case, and that arguments to the contrary that we've seen so far have been futile.

In the other part, he makes the textological case for a different crisis theory without the tendency. This part is exciting for Marx nerds to read because of all the factoids about Marx's changing plans, but provides little in the way of a crisis theory, apart from a few pointers, like the necessity of involving credit relations in a theory of capitalist crisis (which all of us would agree with anyway, wouldn't we?). In a way, Heinrich seems to make the mirror-image of the mistake that he criticizes others for. The tendency is not a logical consequence, fair enough, but this doesn't mean that a reconstructed Marxian crisis theory must not involve the tendency at all.


[andy g]
Quote:
um, yeah, that's right. that's also the definition of organic composition --- when the value composition of capital moves in line with changes in technical composition.

problem: changes in the productivity of labour impact not only on the value of the outputs but also on the value of inputs into future rounds of production. if you double the productivity of labour in an industry producing plant and machinery you halve the value of the fixed capital investment in the fields employing said fixed capital. given the rate of profit is measured at the level of the aggregate social capital the net result of this process (and let's remember it is a process) is not self -evidently to reduce the general rate of profit over successive turnovers. It's an old argument and one made quite clearly by John Weeks, Saad-Filho, Fine, Harris and others. Fine talks about distinguishing a law of tendency in the abstract from a concrete empirical trend - meaning the actual movement of the ROP cannot be derived in the abstract. You can have it that way if you like but it seems a stretch of the language involved.

Apologies if the tone of my post last night was a little off - large quantities of cheap lager do that to you!


[communisateur]
Quote:
problem: changes in the productivity of labour impact not only on the value of the outputs but also on the value of inputs into future rounds of production.

yes, i discuss this extensively in my post, and i indicate that this is the one condition -- massive cheapening of constant capital -- that mitigates against rising organic composition.

marx does discuss this is in volume III as a countervailing factory. i'm fine if with we want to ditch the tendency/countervailing factor model and just say that the rop falls except in the case of certain very specific factors...it's a tendency, after all. to prove it's a tendency in the abstract, all you have to do is prove that the exceptional case is exceptional and not logically the way that capital always is.

and i do think there's a fair amount you can work out logically, in the abstract -- rather than empirically -- about cheapening of constant capital. okishio for instance disproves the falling ROP through logical proof, though I don't have the math to follow him. it seems from my own thinking about it that the fixed capital required to double productivity -- new plant and machinery, that is, a whole new technical system -- would have to get cheaper and cheaper by half with each new technical innovation. that seems a pretty exceptional situation.

as for the empirical, it would seem quite easy to prove that value composition of capital has risen over the course of the 20th century.


[communisateur]

The moment where I ask for empirical evidence is quite distinct from my argument against Heinrich. I think I've shown that organic composition rises (and profit falls) except where constant capital is massively cheapened. This is very different from what Heinrich argues, since he puts the exceptional condition at a deeper level -- indeed, he makes it so that rising OCC is the result of a certain exceptional condition which Marx assumes, a fixed rate of exploitation. If you want to say that what I've shown is not a tendency (a possibility?), fine. I think it's semantic at this point. The sticking point is this: do we think sufficient cheapening of constant capital is a logically necessary consequence of capitalist reproduction or an exceptional historical circumstance? I'd say that for those who want to say there's no TRPF then the burden of proof is on them to show that sufficient cheapening always happens. At this point, the empirical does become useful. If we look at history and see that, for the most part, yes, value composition rises, then we can say massive cheapening of constant capital is not a necessary consequence .

A final point: there's no time scale here. The moment in which the linear rise of c/v surpasses the negative geometric curve of s/v could potentially take decades or centuries, since were talking about time scales in which technical productivity is increasing tenfold. Or something like that.


[RedHughs]
Jura wrote:
The tendency of the rate of profit to fall (i.e., the statement describing it) isn't a logical consequence of Marx's theory of value, i.e., it can't be proved. But if you feed the theory with the necessary empirical conditions (e.g., "The productivity improvements in the period X amounted to a net increase in organic composition"), a fall of the rate of profit that occured in the past can be explained.

On the one hand, I more or less agree that the tendency of the rate of profit to fall can't be deduced from only things that Marx propounded before he articulated the falling rate of profit and that Marx didn't articulate, at least not in Chapter 13, sufficient argument to show that decline.

On the other hand, however, you are talking as if value theory constitutes a discreet logical system with which you prove things in a mathematical fashion, as if it had a tight, almost axiomatic statement, in contrast to looking at the mere empirical conditions of capitalist production. I think this kind of misses something. Value theory itself unfolds out of the specific conditions of capitalist production, right? In Capital, Marx doesn't simply set out a list of axioms and go about proving things. He brings more and more specific qualities of capitalist production into his reasoning as he goes along - qualities that themselves appear over the historical trajectory of capitalist relations. So I don't think there's anything alienation in the kind of argument such as Communisateur is making, that also brings in the overall tendencies of the capitalist system as well as previous arguments of Marx.

Of course, I've mentioned the tweek/corrections I think would be needed to make Communisateur argument work. But here I feel the most important thing is justifying the very legitimacy of investigations such this. I would claim that one can make a good argument, a reasonable correction, to Marx's argument (maybe from Communisateur's arguments, maybe from mine, I think Oisleep even sketched some points in one thread a while back). Correcting Marx? Horror but isn't Marx correcting himself on a regular basis by bringing in new aspects of capitalist production into his argument?

And sure, if there was definitely no theoretical demonstration why the rate of profit declines, we indeed could use the law of value to describe a given decline in the rate of profit but having a good theoretical justification for the decline just puts us in a stronger position in our ability to describe how capitalism works - it validates all the good practical descriptions that S. Artesian has given us, etc.


[jura]
RedHughs wrote:
On the other hand, however, you are talking as if value theory constitutes a discreet logical system with which you prove things in a mathematical fashion, as if it had a tight, almost axiomatic statement, in contrast to looking at the mere empirical conditions of capitalist production.

Well, quite the contrary, I'd say: it's people who insist that the tendency can (and should) be "proved" who are (implicitly) viewing it the way you describe; the problem is it just doesn't work (it can't be proved if we stick to Marx's premises). I'm fine with ascribing the tendency the status of a contingency (perhaps a very probable one) which depends on specific conditions that always have to be determined empirically.

(And like I said, I think "jumping to conclusions" in the opposite direction, i.e., saying that the fall of the rate of profit has no place in a reconstructed theory of capitalist crises, is just as wrong. A lot of other things can't be "proved", and we'd still want to keep them as parts of a theory of crisis; e.g., money as means of payment lays down the "abstract possibility" of crises, and credit relations are obviously important to a theory of crises, but I think one can't prove that the credit system will necessarily become detached from the underlying relations and wreak havoc.)


[RedHughs]
jura wrote:
RedHughs wrote:
On the other hand, however, you are talking as if value theory constitutes a discreet logical system with which you prove things in a mathematical fashion, as if it had a tight, almost axiomatic statement, in contrast to looking at the mere empirical conditions of capitalist production.

Well, quite the contrary, I'd say: it's people who insist that the tendency can (and should) be "proved" who are (implicitly) viewing it the way you describe; the problem is it just doesn't work (it can't be proved if we stick to Marx's premises). I'm fine with ascribing the tendency the status of a contingency (perhaps a very probable one) which depends on specific conditions that always have to be determined empirically.

Yes, perhaps the very worst offenders on this score are those wanting to claim that Marx proved the falling rate of profit in an airtight fashion. But we want to be good, not just better than them.

Just consider that the tendency of capital to experience crisis has had a lot more empirical validation than the tendency of capital to have money be a commodity and the later claim is something that in my understand of value theory is fully "proven" by Marx.

So it seems to me that shouldn't make absolute distinction between the theoretically demonstrated claims and the empirically shown facts. Rather, a critical theory would be using something like a nested series of assumptions, some nearly universal, others more specific, down to specific statistics but with other in-between a universal statement and a specific statistic. So it's entirely normal make the "theoretical conclusion" based on variety of plausible but not abstractly universal assumptions about modern industry - for example, we can assume that modern industry involves many, many departments distributed on a world scale.

communisateur wrote:
I'd say that for those who want to say there's no TRPF then the burden of proof is on them to show that sufficient cheapening always happens.

:
Correct but to expand this point; In some industries, the cost of constant capital isn't massively cheapened and the organic composition of capital expands tremendously, in some necessity good industries, the rate of productivity does not expand at a great rate. If this holds, then arguments such as communisateur work. (that is this, this reasoning doesn't work in a single product model of the economy, which is why the various "capital saving improvement" arguments have often been taken as refutations in the past. The arguments assume the cheapening of means of production would an agregate process affecting all industries equally whereas the situation is that each industry would use different means of production and a cheapening quite plausibly would only affect some industries).


[mikus]

A few points.

Communisateur is basically correct in his argument, by which I mean that the math is on his side. Mario Cogoy already made a basically similar mathematical argument in an old article called "Neo-Marxist Theory, Marx, and the Accumulation of Capital." It is available here.

This argument should be familiar to anyone who actually has read Volume 3 of Capital:

Marx wrote:
Two workers working for 12 hours a day could not supply the same surplus-value as 24 workers each working 2 hours, even if they were able to live on air and hence scarcely needed to work at all for themselves. In this connection, therefore, the compensation for the reduced number of workers provided by a rise in the level of exploitation of labour has certain limits that cannot be overstepped...

This is basically Cogoy's argument (and communisateur's, as I understand it) in an unmathematical form.

Secondly, as far as constant rates of surplus-value are concerned. Andrew Kliman demonstrated empirically in his book that the rate of surplus-value in the US has remained more or less constant for the last 30-odd years. Why exactly this is the case is up for debate, but in any case it makes the assumption of constant rates of surplus-value seem less arbitrary.

Thirdly, as for the issue of "laws." Being a product of 19th century science, Marx often spoke of "laws" of economics. IMO all talk of "laws", whether in the natural sciences or the human sciences, is nonsense. A law is just an observation that such-and-such is the case, and the necessity of such-and-such being the case is not only never observed, but is in principle impossible to observe. What Marx has provided is a theory of a causal mechanism, based on the law of value, to explain why rates of profit tend to fall over time. No more no less. It is not a "logical" law, as "logical laws" take the form of tautologies and the causal reason for the decline in the rate of profit (rising productivity) is most certainly not a tautology. (In any case "logical laws" such as the "law of non-contradiction" aren't "laws" in the normal sense of the word, since it is not only possible but exceedingly common for someone to, for example, contradict himself.)

And lastly, Red's argument that productivity in the "basic" goods sectors doesn't rise fast enough to allow the rise in the rate of surplus-value to make up for the rise in the organic composition of capital implies that it is not the rise in productivity that causes the rate of profit to fall, but rather the inability of productivity to rise that causes it to fall. Which means that even if it were true, it would have nothing to do with Marx's theory, which states quite the opposite.


[mikus]

I forgot to mention that Heinrich's footnote on Kliman is dishonest in the extreme.

Heinrich wrote:
"The many “proofs” of the law [the LTFRP] that can be found in the literature, either rest upon logical errors, similar to those just demonstrated in the case of Marx, or upon absurd assumptions, such as the precondition that v = 0, as in the work of Andrew Kliman, Reclaiming Marx’s ‘Capital’: A Refutation of the Myth of Inconsistency (Lanham: Lexington, 2007)."

First of all, Kliman's book does not give a "proof" of the LTFRP. He gives a disproof of the claim that it's impossible for the rate of profit to fall due to a rise in productivity. Anyone with an ounce of sense should be able to see the difference. Kliman himself makes this point throughout the book.

Just as importantly, the disproof does not rest on the condition that variable capital is equal to zero. The disproof works whether or not variable capital equals zero, and it was only assumed that v=0 in certain examples for ease of expression.

If Heinrich could actually show that Kliman's argument requires variable capital to equal zero, I'll eat my hat. But it won't happen.


[RedHughs]
Quote:
And lastly, Red's argument that productivity in the "basic" goods sectors doesn't rise fast enough to allow the rise in the rate of surplus-value to make up for the rise in the organic composition of capital implies that it is not the rise in productivity that causes the rate of profit to fall, but rather the inability of productivity to rise that causes it to fall. Which means that even if it were true, it would have nothing to do with Marx's theory, which states quite the opposite.

By your reasoning here, Marx's assumption that rate of surplus-value is constant [in Capital vol 3, c13] is what causes the rate of profit to fall, since under this assumption too, the rate of surplus-value doesn't rise fast enough to make up for the rise in the organic composition of capital.


[andy g]

Cogoy said:

Quote:
Marx's law of accumulation and of the tendential fall in the rate of profit, in contrast, does not express empirically verifiable relations from which the analysis can begin. The fall in the rate of profit, seen as a tendency of the system to depart from the narrow path of growth, can never manifest itself except in crises. It is the negative rule of capitalism: it represents the shoals to be avoided if capital is to be able to continue to be able to be accumulated without shocks

I think we can all agree on that. The idea that there is a limit point on the expansion of the rate of surplus value set by the length of the working day is fine as far as it goes. The point I was making is that the effect of productivity change on the value of constant capital inputs is less straightforward.

I am not pro-Heinrich or anti-Kliman - I've found Kliman's stuff really illuminating and the basis of TSSI seems self-evidently true to me. As some people said on the thread about Heinrich's Intro to Capital I have a nagging feeling that Heinrich's approach relegates value to the "philosophical" rather than the "empirical", to put it extremely clumsily. I am open to arguments though.


[S. Artresian]
RedHughs wrote:
[

By your reasoning here, Marx's assumption that rate of surplus-value is constant [in Capital vol 3, c13] is what causes the rate of profit to fall, since under this assumption too, the rate of surplus-value doesn't rise fast enough to make up for the rise in the organic composition of capital.

That's not Mikus' reasoning; it is exactly Marx's reasoning. The increases in the rate of surplus value tend to not offset for the rise in the organic composition of capital. If such increases in the rate of surplus value could, and could always, there would be no tendency for the rate of profit to decline.

Which is why it's a tendency-- increased rates of surplus value become increased rates of the accumulation of objectified labor, of capital, of the means of production organized as capital.


[RC]

We have published a refutation of Heinrich’s criticisms of Marx’s law of the tendency of the rate of profit to fall here.

This is important because capitalism has the contradiction that this form of wealth makes labor its source, but it constantly strives to minimize this source. This has consequences!

As always, the best proof of the theory of value is the real practice of the capitalists themselves, who fanatically follow it, even if they know nothing about it. In this case, it can be seen in the oft-heard complaints of capitalists about how expensive workplaces have become for them. In order to stay in the competition, they have to invest more and more; for every dollar invested, ever more is tied up in machinery and equipment.

Heinrich doesn't get what Marx means by “law”: that this is what is necessary for a capitalist to do in order to achieve his economic interest as a capitalist. It does not mean: this follows in every imaginable case from advances in productivity like a law of nature. As pointed out in this critique, Heinrich downplays the hostile interest of the capitalists. He is so impressed that the system functions, he does not explain what it functions at.

The weakness of Heinrich’s “monetary theory of value” is striking in the Monthly Review article posted by AN:

Quote:
The social substance of wealth or value in capitalism is abstract labor, whereby it does not matter whether this abstract labor can be traced back to labor-power expended in the process of production ...

It is not wrong to say that labor is reflected in money and hence can’t be counted up in labor hours. But that’s just a small part of the critique. More interesting is the relation between abstract and concrete labor: the former completely subordinates the latter. Abstract labor shapes and defines what the concrete labor is like for the worker because its purpose is to make money. This matters!

Quote:
Marx makes fun of the notion that the determination of value by labor is called into question by the fact that in capitalist production, the point is to reduce the labor time required for the production of an individual commodity.

Wrong. Marx points out that in capitalism the more and more humans are freed from the need to work because the productivity of labor has become so enormous, the more and more people can live from less and less labor – at the same time there is an urgent “need for work” in this society. Toil can never be gotten rid of in capitalism. In capitalism, the need for the concrete labor necessary to support a good life for all decreases, while the need for abstract labor never lets up. Its completely absurd.


[Angelus Novus]
kingzog wrote:
I only want to add that Heinrich's monetary theory of value displaces the working-class as revolutionary subject.

LOL.

Yeah, and Trotsky was right to denounce Shachtman/Burnham's theory of bureaucratic collectivism as "petit-bourgeois!"

Good to see that the good old Leninist habit of ascribing a class nature to abstract theoretical positions isn't a dead art.


[kingzog]

Angelos,

you know Heinrich's theories possibly more than anyone here, right. Do you think his theory posits the working class as the revolutionary subject?

Also, I would like to know what you think the implications of value originating (or "arising" or "actualizing" or "materializing," or whatever) in the act of exchange are.

For instance, does the MTV imply that any group or class (a government for example) need only suppress (or abolish) exchange in order to "abolish" the law of value? It seems clear to me that if capitalism lives or dies on exchange alone and therefore, on money alone, then the previous conclusion follows.

Your thoughts on this? This is an honest question. Does Heinrich think (or do you think Heinrich's theory implies) that abolishing money, and money alone = abolishing capitalism.


[andy g]

I don't presume to speak for Angelus so forgive me for sticking my oar in...

I haven't heard anything to justify the idea that Heinrich's interpretation of "Capital" involves a rejection of the revolutionary potential of the working class. Whether the idea of a "collective subject" is one I would defend is a whole different question.....

On money I would reverse your question - what would capitalism without money look like? Aren't there a multitude of instances in Marx where the necessity of the money-form for capitalism is asserted?

As an aside, as someone who hails from the "state capitalist" tradition, this question has occupied my attention at points too. It quite obviously impacts on the idea that military competition between blocs of state capital can play an analogous role to market competition. Enough of my boring diversions.....


[jura]

Heinrich goes to great pains to show that much of the first chapter of Capital is a critique of Proudhonism. I really can't see how anyone who's read anything by him could infer that he thinks the abolition of money equals the abolition of capitalism.

As regards the role of the working class, Heinrich criticizes the idea of a privileged subject (epistemic, not political) that can "see through" the relations of capitalism and over time automatically comes to realize that the mode of production has to be overthrown. Nowhere does he say that the working class cannot or should not play the central role in overthrowing capitalism.


[duvinrogue]

Part 3 of Capital Volume III does read as if Marx has found a basis for cyclical crises in the falling rate of profit consequent upon capital accumulation itself.
Was this Marx's position on crises?
Well it must have been at some point to make it such a prominent part of his masterpiece. But maybe he had doubts towards the end of his life, & we must remember that he never published Volume III whilst alive.
Didn't Marx also state in Part 3 that disproportionality & 'society's power of consumption' (realisation problem) had something to do with crises?
He did, as Heinrich quotes, but nothing in the quote states them to be causes of crises. It reads as if the falling rate of profit is the cause that lies behind the disproportionality or generalised overproduction.
Was Marx right to hold such views?
This is essentially an empirical question. Can crises be explained by a falling rate of profit? The weight of evidence doesn't appear to be there. But that's not to say all crises have to be caused by a falling rate of profit. There may be evidence for some of them, e.g. the current crisis dating back to the fall in profitability in the 1960's (Andrew Kliman).
It could be argued, at least theoretically, that Marx was referring to a longer cycle (or wave) now generally referred to as the Krondratieff cycle. (I like Mandel's argument about it being a wave with a downward tendency that's endogenous to capitalism, but with no guaranteed upturn, unless gold, or a new more productive basis for production is discovered, e.g. oil).
But I think we need to be careful that we don't miss the importance of the falling rate of profit for capitalism. It is probably not the basis of the cyclical crises of capitalism over the last 200 years. But it can still be the nature of the final crisis of capitalism, even if that crisis takes an outward form of generalised overproduction. Because this would be the natural reaction capitalism would take to an underlying crisis of profitability, especially under a fiat money regime. By which I'm referring to the printing of money & the vast expansion of credit/debt to artificially support recorded profit rates. Profit rates based upon credit/debt are claims on future labour time that may not be realised. It that sense that are fictitious profit rates that delude the capitalists until realisation dawns that the debt can never be repaid. This sounds very much like the crisis of 2007/08. Governments & central banks coming to the rescue & taking some of the bad debts onto their books doesn't make the profit rates real or resolve the crisis of profitability. But again, all this is up for debate. The empirical evidence is far from conclusive because it's so difficult to calculate, or even estimate, in terms of Marxist labour values. It may, I accept, be just another crisis of overproduction. My guess though is that there is a profitability issue.
The easy way to look at it is to differentiate cyclical & breakdown crises, at least in terms of theory. Cyclical crises capitalism can always potentially recover from as the law of value brings prices back in line with values. But capitalism will eventually, if it continues, run into the material limits of planet earth. Oil & many other resources, such as fertile land, are limited. Only a certain number of human beings can be supported by earth's eco-system. When population growth reaches its limit, so too does labour time. This is then where Part 3 of Volume III takes on a particular importance. With labour time limited (as I think Marx assumes, correct me if I'm wrong) to make a profit capitalism has to increase relative surplus value, i.e. it has to steal a growing % of the working day. To do this without making the workers materially worse off requires productivity gains. This can theoretically happen & profit rates don't fall & workers just get a smaller & smaller % of the value they create, even if this value represents the same level of material well-being. But they would see a vast increase in inequality, even without any increases in profit rates. But given the resource limitations is it not more likely that the increases in relative surplus value at the expense of the workers, actually makes the workers materially worse off? As we can see with oil today, as the price of energy has increased both the labour time going to constant & variable capital can increase at the expense of surplus value. That is the rate of exploitation goes into reverse, workers are materially worse off & profitability suffers (if c increases more than v then we also have the increase in the organic composition of capital, even without new technological improvements). So without increases in absolute surplus value available, the falling rate of profit can go hand in hand with attacks on the workers standard of living & generate the conditions ripe for revolution.
So don't forget the importance of the falling rate of profit, even if it's necessary to make clear the role of credit/debt in crises of overproduction.


[kingzog]

Andy G wrote:

Quote:
On money I would reverse your question - what would capitalism without money look like? Aren't there a multitude of instances in Marx where the necessity of the money-form for capitalism is asserted?

In the Soviet Union "money" wasn't really a necessity. People shared rubles between each other casually. The state managed things and rationed things out for the most part. I do think that the Soviet Union was state capitalist, however.

The conversion of a commodity into "money" does not necessarily require a particular act of exchange, according to Marx. This is in contrast to Heinrich- and most Value-Form Schoolers from what I know...

On page 951 (or abouts?) of the penguin version of Capital vol I (The Resultate) Marx talks about how a single firm converts commodities into money and "sells" commodities to itself- a farmer and seed corn is the example-- no act of exchange between juridically separate owners is necessary for these goods to be commodities and for value-production to continue. Value-Form conflates conversion of commodities into money with the actual act of sale! This might be why they are often accused of "circulationism."

Also, I think Marx mentions somewhere in Capital that the limit to centralization in capitalism is one single firm or one single capitalist-- I'll let you figure out for yourselves the significance of this idea.

So I should probably apologize; I suppose my original question for Angelous was a "trick question" of sorts! Still waiting for his reply...


[kingzog]

Jura wrote:

Quote:
Heinrich goes to great pains to show that much of the first chapter of Capital is a critique of Proudhonism. I really can't see how anyone who's read anything by him could infer that he thinks the abolition of money equals the abolition of capitalism.

As regards the role of the working class, Heinrich criticizes the idea of a privileged subject (epistemic, not political) that can "see through" the relations of capitalism and over time automatically comes to realize that the mode of production has to be overthrown. Nowhere does he say that the working class cannot or should not play the central role in overthrowing capitalism.

I agree, Jura. but the issue is that I think that his (Heinrich's) inherently "circulationist" value-theory is in direct conflict with those other assertions you mentioned above.

(I'm glad you mentioned how the first chapter is also a critique of Proudhon, I couldn't agree more!)

EDIT: So the issue is whether or nor his theory is indeed "circulationist" and whether or not that theory displaces the working class as revolutionary subject and implies that abolishing money will abolish capitalism.


[Angelus Novus]
kingzog wrote:
So I should probably apologize; I suppose my original question for Angelous was a "trick question" of sorts! Still waiting for his reply...

There's no question to be answered, because of a basic incommensurability of our understanding of "value."

You see "value" as a thing, and pose the question as to where this thing is "created".

I see "value" as a social relationship, so asking where it's "created" in some spatio-temporal sense (circulation vs. production) is meaningless.

Your inability to understand that these are two incommensurable understandings of the term "value" is what leads you to falsely apply the label "circulationist" to those for whom the "production vs. circulation" question is a meaningless one.

You're basically asking me to adopt your understanding of value as a precondition for having a discussion about it. Not gonna happen.

Also, your repeated deliberate misspelling of my pseudonym also just kind of indicates that you're a massive douche, and I find interacting with massive douches is usually a waste of time.


[Angelus Novus]
mikus wrote:
This is kind of a side track. I'd rather stick to the myriad of false claims about the theory of the tendency of the rate of profit to fall made by Heinrich in his article, and which Angelus Novus has made no attempt to defend.

1) write article outlining what you think is wrong with Heinrich's article

2) submit article to Monthly Review

3) ????

4) profit!

I'm a guy who's translated some stuff by Heinrich. I'm not his Internet representative or the guardian of the "school of Heinrich." Heinrich is a very approachable guy. If you want to have a debate with him, go for it!

Also, your (meaning mikus) specific criticisms concerning what Heinrich says about Kliman, I can't respond to because I have not read Kliman (and have no interest in reading Kliman, sorry, there's only so much time in the day).

I also just find most of the objections trivial, along the lines of, "forget about all the counteracting tendencies and mitigating empirical circumstances, the point is capital's constant drive to minimize v!" which is basically the essence of both S. Artesian's and Gegenstandpunkt's objections. It's also the basis of the Kasama blog's objection, though they resort to quoting the machine fragment of the Grundrisse, of all things.

So, seriously, write a response. Send it to MR, send it to Heinrich, whatever. Hell, send it to OPE-L.


[mikus]

You say you're not interested in defending him, yet you continue to throw out lame insults at people who disagree with him. You even made a few weak attempts to defend him on page 1, so don't act surprised when I assume you'd want to defend him!

I don't have the time or interest in writing an article about Heinrich. (Actually, come to think of it I did write an article about 5 years ago which spends a little time on Heinrich, although I won't link you to it as I wouldn't agree with much of it anymore.) I find messageboards are almost as influential as published articles. And in any case, it's rather bizarre to post an article on a messageboard and then act as if it should only be debated in print, and not on said messageboard!


[Angelus Novus]
mikus wrote:
You even made a few weak attempts to defend him on page 1

Not really. It seemed to me that S. Artesian was misunderstanding Heinrich's article as a claim that the rate of profit can't fall, so I pointed out that the article is not really about an empirical investigation of profit rates, but rather the extent to which the "law" constitutes the central element of a Marxian theory of crisis. I wasn't making any kind of defense of the article (though I do find it convincing), but rather trying to establish whether S. Artesian understood the actual claims of the article.

As for "lame insults", well, I can't resist poking fun at Kliman's, *ahem* litigious zeal. Yeah, it's a non sequitur in terms of the discussion on this thread. It's also amusing.


[S. Artresian]

Angelus is as dishonest in his representation of my "position" as he flippant to other's objections to Heinrich's article.

I never said ignore countervailing tendencies, and I never said ignore the empirical circumstances. As a matter of fact my argument is that while "mathematical proof" can be missing, the truth of Marx's analysis is evidenced empirically and historical over periods of time.

It is Heinrich who argues-- ignore countervailing tendencies and empirical evidence, because in essence he is [edit:removed "not"] arguing that Marx did not mathematically prove the tendency of the rate of profit to decline; and he is arguing that Marx was dissatisfied with the FROP as an indicator and predictor of capital's directions and he was ready to get rid of it.


[mikus]

I somehow missed Red's mathematical argument from the first page. It might look impressive at first glance but there are two problems with his argument.

The first is that he acts as if he has proven something that was unknown to Kliman, which is false. It is well known that there are conditions under which C/V can rise and yet the rate of profit also rises -- namely when the rate of surplus-value rises faster than the organic composition of capital rises, which is precisely what happens in his example.

So the question becomes which scenario is actually keeping in line with our understanding of the process of the accumulation of capital. If you actually read through his example, it in fact assumes that C is decreasing throughout the process of production, which is tantamount to assuming that capital is not being accumulated but disaccumulated. Red excuses this by saying "that's exactly what would happen if you had constant output and increasing productivity." But what happens if you have constant output and increasing productivity? The total value produced falls, which I repeat is tantamount to assuming that capital is being disaccumulated. This is not generally what happens in the real world. Red has reversed Marx's famous dictum into "Disaccumulate! Disaccumulate! That is Moses and the prophets!"

In the real world what happens when productivity increases is that the first innovator is able to lower his price below the social average and, assuming a downward sloping demand curve, sell more of his product (i.e. output is not constant) while retaining or even improving his rate of profit. As every producer begins to adopt the new techniques of production, every producer sells a greater quantity of output because the average price has fallen (again assuming a downward sloping supply curve). It is basic economics that when price falls the quantity demanded rises.

What I'm saying here is really nothing new, it is simply that as capital accumulates and productivity increases, the rate of profit has a tendency to fall, and it tends to fall faster the faster that accumulation takes place. And if disaccumulation takes place, the rate of profit will have a tendency to rise (as in Red's numerical example). Marx already made these points over a 100 years ago and Cogoy made these same points mathematically precise in the article I linked to in an earlier post.

I think this also shows that S. Artesian and others shouldn't retreat into an anti-mathematical argument saying that it can't be proved with equations. Constant capital and variable capital are quantities of money, and what happens when those quantities change in certain directions can and should be analyzed mathematically. And when you do so, you'll see that Marx's argument holds up quite well.


[kingzog]

Sorry, Angelus.

But you were the one being a much bigger douche to begin with when you dismissed my original post and accused me of dogmatism.

Angelus wrote:

Quote:
hey guys, Marx says in this unfinished manuscript that he regarded as inadequate and unsuitable for publication that blahblahblah, so let's ignore the guy over there saying that in later manuscripts he started to express doubts about an assertion made in them. I like having an ersatz religion with holy texts.

That was low.

However, I agree with Mikus that we should probably stick to the LTFRP/crisis theory.

(All I will add about the value controversy is that I believe that Marx held value to be a social relation and a substance. Indeed, he called value a "social substance." Unfortunately, Heinrich is unable- or unwilling- to recognize that; there is no contradiction between value as "social" and value as "substance.")


[S. Artresian]

I never pretended to disengage. Angelus, unable or unwilling to respond to the arguments that 1) Heinrich offers only speculation regarding Marx's "post-Capital" assessment of the importance of the FROP 2) that Marx regards the FROP as a tendency, a persistent tendency, not an immediate, permanent reality 3) that Heinrich misrepresents the debates over Marx's crisis theory as being debates over the FROP all throughout the 20th century 4) that the historical evidence supports Marx's assertion of both the tendency and the importance of the tendency to capital 5) that Heinrich clearly doesn't understand jack shit about the real movements of capital, characterizing as he does, the 1873-1898 period as the "long depression" when it was not a depression at all, but a persistent deflation in prices as capital accumulation expanded and output grew, announced that all the inquisitors were simply Jehovah's Witnesses and that he was "out" of any further discussion.

But let's not trivialize Heinrich's important rendering of Marxism not as a critique of capital and exploration of the immanent forces of its abolition, but as a critical critique of texts, and simple-minded mathematical "proofs."

What Heinrich does offer-- that Marx never finished his analysis of capitalism is no news; that Engels had to render as publishable a volume from a "sea of notes" and "constantly interrupted thoughts" is well known, and is painfully clear to the most casual observer. Heinrich, in belaboring the obvious, trivializes what Marx did accomplish-- which was demonstrating that the determinant of capital, wage-labor, becomes its negation.

Mikus-- re mathematical proofs-- Marx's mathematical proof does not really qualify as a mathematical proof of a "law"- a law generally applies to all circumstances, all iterations of certain events, processes etc. What is proven is that in the very organization of capital, which must increase the proportion of surplus labor time by reducing the necessary labor time, the very mechanism by which capital accumulates, the capitalizing of surplus value, leads to declining profitability. Accumulation becomes the obstacle to further accumulation.

The "law" really is not a law, but a process of transformation where an expression of the relation of capital and wage-labor, profit, develops into its opposite, declining profitability.


[mikus]

You're right, Marx's arguments weren't mathematically expressed for the most part but it's not difficult to render his arguments in mathematical form.

I don't feel like getting into a debate about the meaning of the word "law", but note that Marx called it a law of a tendency. I would guess the reasoning for this is that what is law-like is the constant increase in productivity (which is enforced on each individual capitalist through competition) which creates a tendency for the rate of profit to fall (but which doesn't always fall, for the reasons discussed in the chapter on countervailing influences).


[RedHughs]
Mikus wrote:
It is well known that there are conditions under which C/V can rise and yet the rate of profit also rises -- namely when the rate of surplus-value rises faster than the organic composition of capital rises, which is precisely what happens in his [red's] example.
Kliman wrote:
Because of this, Sweezy, Robinson, Okishio, and many others have claimed that a sufficient rise in the rate of exploitation (s/v) can counteract any rise in the organic composition of capital (c/v), so that there's no "necessity" for the rate of profit to fall.
...(various maths)...
What this shows is a clear maximum limit to the profit rate, even with an
infinite rate of exploitation.

Kind of gives one the impression Kliman doesn't "know" what Mikus claims he knows.

Further, of course the example as given doesn't correspond to the real world, just as Kliman's v=0 doesn't correspond to the real world. It's about proving the properties of equations.

Of course, you could also have a counterexample where c rises but s/v rises faster and while that wouldn't involve "disaccumulation", it still wouldn't correspond to the real world. The situation isn't that all every counter example need to correspond to the real world. The situation is that to demonstrate a declining rate of profit, you need to construct a formalism sufficient to capture the real world world's qualities and then prove that this results in a declining rate of profit. If you claim a given formalism results in a declining rate, then anything within the constraints you specify should result in such a decline (rather than just "any real world example")


[RedHughs]

I should emphasize that I agree s/v can't rise to counter-act the rise of c/v, not in a modern capitalist economy as a whole, for a sustained period.

The problem is to present a descriptions of constraints on the capitalist economy, put these into mathematical terms and show how these result in limits on (system-wide) s/v and thus imply a declining profit rate.


[kingzog]

Red, I don't see what your point is. Kliman is saying Sweezy believes that a sufficient rise in exploitation can neutralize any fall in the rate of profit. Kliman's point is that there are limits to exploitation. So while this is indeed a counter tendency it won't always neutralize the tendency.

Arguing that there are limits to the counter tendency of rising surplus value is not the same as saying that this counter tendency never manifests itself! Its like you are accusing Mikus or Kliman of some sort of inverted Sweezy argument; where the tendency totally neutralizes the counter tendency in virtually every situation.

I think you miss the point. The point being: to take all these elements of the LTFRP into consideration as a unity.


[grahamb]

IIRC Sweezy's claim is that the ROP is indeterminate - why privilege a rising C/V over a rising S/V - and hence he views the TROPF as of little use. I think there is a limit to the rate of surplus value and the tendency of the rate of profit to fall is real and will eventually assert itself. This has little do with Kliman and he certainly isn't the first to note this.

I do see Kliman as close to an inverted Sweezy. Firstly, his corn model examples for the TSSI using pre-production costs show a rise in productivity causing a fall in the ROP - as opposed to his simultaneist corn model examples. Yes, he describes the role of an increasing rate of surplus value or the cheapening of the elements of constant capital as counteracting influences but they're not exemplified - at least what I've read so far.

Second, there is Kliman's later empirical work on the rate of exploitation in the US and his claim that the portion of national (US) income going to workers ("total compensation") has risen since the early 1980s, i.e. that the rate of surplus value has actually fallen.

Kliman emphasises the tendency, as others emphasis the counter-tendencies. I agree that the aim is to take all elements into consideration and, crucially, that the balance of influences changes over time.


[mikus]
RedHughs wrote:
Kliman wrote:
Because of this, Sweezy, Robinson, Okishio, and many others have claimed that a sufficient rise in the rate of exploitation (s/v) can counteract any rise in the organic composition of capital (c/v), so that there's no "necessity" for the rate of profit to fall.
...(various maths)...
What this shows is a clear maximum limit to the profit rate, even with an
infinite rate of exploitation.

Kind of gives one the impression Kliman doesn't "know" what Mikus claims he knows.

What in the world are you talking about? All Kliman is saying is that there is a maximum limit to the rate of profit, which we've all agreed is L/C. This holds even in your own example.

RedHughs wrote:
Further, of course the example as given doesn't correspond to the real world, just as Kliman's v=0 doesn't correspond to the real world. It's about proving the properties of equations.

Yes, and once you look at those equations, it makes sense to determine which ones most closely correspond to real world conditions, which is what I did.

RedHughs wrote:
The situation is that to demonstrate a declining rate of profit, you need to construct a formalism sufficient to capture the real world world's qualities and then prove that this results in a declining rate of profit. If you claim a given formalism results in a declining rate, then anything within the constraints you specify should result in such a decline (rather than just "any real world example")

This would be relevant if Kliman had ever claimed that all rises in productivity must result in a fall in the rate of profit, but he never has. He has said the opposite countless times. One example, in "A Value-Theoretic Critique of the Okishio Theorem":

Kliman wrote:
[The critique of Okishio has] not demonstrated that the rate of profit must fall, though it has shown that it will fall if the extraction of living labour fails to increase or if the pace of mechanization is rapid enough.

[mikus]
grahamb wrote:
IIRC Sweezy's claim is that the ROP is indeterminate - why privilege a rising C/V over a rising S/V - and hence he views the TROPF as of little use.

I believe you are correct here.

Quote:
I do see Kliman as close to an inverted Sweezy. Firstly, his corn model examples for the TSSI using pre-production costs show a rise in productivity causing a fall in the ROP - as opposed to his simultaneist corn model examples.

The corn models are all just simple disproofs of Okishio's claim that rises in productivity cannot cause the rate of profit to fall. They're not attempting to show that all rises in productivity must cause the rate of profit to fall.

Quote:
Second, there is Kliman's later empirical work on the rate of exploitation in the US and his claim that the portion of national (US) income going to workers ("total compensation") has risen since the early 1980s, i.e. that the rate of surplus value has actually fallen.

I'm not sure what your criticism is here. Why would he emphasize a rise in the rate of surplus-value as a counter-tendency during the last 30 years if his empirical work shows that this hasn't actually been functioning as a counter-tendency? It wouldn't make any sense. If you have a criticism of him, criticize the empirical work, don't criticize him for not emphasizing a rise in the rate of surplus-value which his own work shows hasn't happened.


[RedHughs]
Kingzog wrote:
Red, I don't see what your point is. Kliman is saying Sweezy believes that a sufficient rise in exploitation can neutralize any fall in the rate of profit. Kliman's point is that there are limits to exploitation. So while this is indeed a counter tendency it won't always neutralize the tendency.

Well, first, the Kliman quote squarely contradicts the position that Mikus, in a post previous, claims Kliman holds.

Then, if you read further in Kliman, he provides something that looks like math to show, to formalized, to make explicit, these limits to this exploitation. My problem is that this math doesn't seem to work, unless there are further constraints I've missed (and hey, feel free to tell me what those are).

And further, further, if you read Capital I on relative surplus value or even Heinrich, you'll notice that s/v is not exploitation in the naive sense. While I would claim that there are "limits to exploitation" with exploitation taken in the technical sense, it is crucial to first understand that these are not the obvious limits; they are not the limit to number of hours in the days or the limit to the intensity of human activity over a day. (for example in "Production Of Relative Surplus Value" - "...a fall in the value of labour-power is also brought about by an increase in the productiveness of labour, and by a corresponding cheapening of commodities in those industries which supply the instruments of labour and the raw material, that form the material elements of the constant capital required for producing the necessaries of life").

Heinrich's article, btw, is not coincidentally focusing on the same equation as Kliman plays with in my link earlier link here (which I believe you gave on Facebook, in fact). This has been a key point in the debate for a long time; if there's no obvious limit to s/v, there's no real demonstration, no proof that the rate of profit even tends to decline.

(Heinrich also argues that Marx in Capital III starts with this equation but then tries to come up with other arguments to show a decline in the rate of profit regardless of increases in s/v. So I suppose Heinrich is arguing that Kliman is following the later, more obscure arguments in "Contradictions of the Law" but that both of them are wrong).

Now I personally do agree that there are limitations to s/v but the point is to provide an exact analysis of why. As I've said, I think it's quite possible to put real maths to the demonstration that the rate of profit declines. Comuniseur's proof seems like a fine effort in that direction, for example.


[RedHughs]
mikus wrote:
RedHughs wrote:
Kliman wrote:
Because of this, Sweezy, Robinson, Okishio, and many others have claimed that a sufficient rise in the rate of exploitation (s/v) can counteract any rise in the organic composition of capital (c/v), so that there's no "necessity" for the rate of profit to fall.
...(various maths)...
What this shows is a clear maximum limit to the profit rate, even with an
infinite rate of exploitation.

Kind of gives one the impression Kliman doesn't "know" what Mikus claims he knows.

What in the world are you talking about? All Kliman is saying is that there is a maximum limit to the rate of profit, which we've all agreed is L/C. This holds even in your own example.

Any reasonable reading would take "Maximum limit" to mean a finite quantity. To further this claim [that "maximum limit" means finite in Kliman's context]; if all Kliman is saying is that there is an expression for the limit of the profit but that expression can go to infinity, then he's clearly not contradicting a claim that "there's no 'necessity' for the rate of profit to fall". So the motivation of the math in the quote has to be to show that there is a finite value to the expression L/C as t, as time, goes to infinity and I have already shown that this is not in general true.

And you conveniently don't acknowledge of the way the Kliman quote contradicts your previous post.


[mikus]

I'm afraid you're going to have to reread Kliman's original email before giving yourself any further pats on the back.

Immediately before stating that "there is a clear maximum limit to the profit rate", he mentions that as the exploitation of labor increases "r[ate of profit] approaches L/c". Which makes it quite obvious that he's referring to L/c as the "clear maximum limit to the profit rate". Going from here it does not take a mathematical genius to see that if the magnitude of constant capital forever decreases while the extraction of living labor remains constant (as in your example), the rate of profit will forever rise.


[RedHughs]
mikus wrote:
I'm afraid you're going to have to reread Kliman's original email before giving yourself any further pats on the back.

Immediately before stating that "there is a clear maximum limit to the profit rate", he mentions that as the exploitation of labor increases "r[ate of profit] approaches L/c". Which makes it quite obvious that he's referring to L/c as the "clear maximum limit to the profit rate". Going from here it does not take a mathematical genius to see that if the magnitude of constant capital forever decreases while the extraction of living labor remains constant (as in your example), the rate of profit will forever rise.

A. I'm not really interested showing that my point involves genius. If "Maximum limit" isn't finite then Kliman isn't contradicting the position he imputes to Sweazy et all.

B. You are right I indeed have to look at the email even though Kliman definitely is claiming finiteness. The key passage seems to be "unless one is a simultaneist, and keeps reducing c proportionately to L, ceteris paribus)." That's at least an "escape" so Kliman stands obscure if not refuted. Anyway, if someone cares explain the mathematical magic in a other than "simultaneist" position that limits c relative to L, I'd be happy to hear it. Edit: In any case, limiting C relative to L is nearly identical to limiting s/v so I think either way one has to offer the reason for this limiting.


[S. Artresian]

I think that Red needs to answer the objections raised to his post #61 where he exhibits a basic, fundamental misapprehension of Marx's argument by expressing incredulity at, essentially, reproduction of that argument by others.

Except where circumstances are such that the rate of increase in surplus value, s/v substantially exceeds the rate of accumulation, the rate of capitalization of surplus value as means of production, living and dead, s/c+v, the rate of profit tends to fall.

Now is it necessary that, over time, s/v does not exceed the rate of capitalization of surplus value? Yes. The mechanisms of expression, of manifesting, this involve 1) the distribution of the social surplus value, the aggregate profit, through prices of production and the establishment of a general or average rate of profit 2) conflicts between capitalist production time and the reproduction of capital as a whole which involves circulation, and circulation time. This latter expression takes the form most clearly as overproduction where the mass of commodities cannot "find a market"; or "markets contract" which is simply another way of saying value cannot be realized in exchange.

This in turn is particularly acute in the "less developed" countries of capitalism where 1) access to labor as free dispossessed labor encounters the obstacles of low productivity in agriculture 2) the unevenness of development where the domestic market is so encumbered that it drives industrial production and manufacture in these countries into the world market where competition is so intense, and productivity so augmented, that such production can only be sustained in "niche" areas of the economy like special enterprise zones, maquiladoras etc.

In Marx's critique of capitalism, we simply need to answer on question, and it doesn't require a mathematical "proof." Is it possible for capitalism to increase the rate of surplus value without increasing the accumulated value of the means of production as capital? The answer is logically NOT, since the whole point of capital is the accumulation of the means of production as capital and this can only be done through reducing the necessary labor time; while in fact surplus value depends, requires, the maintenance, and preservation, of the necessary labor time.


[RedHughs]

Jeesh

S. Artesian(ealier) wrote:
RedHughs wrote:
[

By your reasoning here, Marx's assumption that rate of surplus-value is constant [in Capital vol 3, c13] is what causes the rate of profit to fall, since under this assumption too, the rate of surplus-value doesn't rise fast enough to make up for the rise in the organic composition of capital.

That's not Mikus' reasoning; it is exactly Marx's reasoning. The increases in the rate of surplus value tend to not offset for the rise in the organic composition of capital. If such increases in the rate of surplus value could, and could always, there would be no tendency for the rate of profit to decline.

S. Artesian(new) wrote:
I think that Red needs to answer the objections raised to his post #61 where he exhibits a basic, fundamental misapprehension of Marx's argument by expressing incredulity at, essentially, reproduction of that argument by others.

In that earlier quote, you misinterprete what I mean in the context of a back-and-forth exchange and seemingly take it as some sort of fundamental statement (or perhaps some weird Freudian revelation?). I didn't reply earlier because it was such a gnarly, contentless red herring. Go back and look at the interchange the provoked this. The key statement is "By your reasoning here" ie, "if what you are saying is true" ie, conclusions coming off of antecedents of this sort is not by any necessity going to be what a person is asserting or what they are denying. 'Contrariwise,' continued Tweedledee, 'if it was so, it might be; and if it were so, it would be; but as it isn't, it ain't. That's logic.'

I whole heartedly agree that a theory of the falling rate of profit is based on the assumption "The increases in the rate of surplus value tend to not offset for the rise in the organic composition of capital." My argument from the get-go has simply been that this needs to be proven - well, at least if one is going say proven.

And I don't object to any of the rest of your statements here. It's just, if you want to say it's proven, formalize and show your formalization means what you claim. That is all.


[grahamb]

mikus wrote:

Quote:
The corn models are all just simple disproofs of Okishio's claim that rises in productivity cannot cause the rate of profit to fall. They're not attempting to show that all rises in productivity must cause the rate of profit to fall.

I never said that Kliman's corn models show that the rate of profit will always fall with a rise in productivity. The issue is that the numerical examples I have seen are chosen to show that.

You missed out my following sentence:
"Yes, he describes the role of an increasing rate of surplus value or the cheapening of the elements of constant capital as counteracting influences but they're not exemplified - at least what I've read so far."

If there are numerical examples based on the same corn model that show a rise in the rate of profit, please point me in that direction. Perhaps it is obvious and you believe it is only necessary to state it.

Quote:
I'm not sure what your criticism is here. Why would he emphasize a rise in the rate of surplus-value as a counter-tendency during the last 30 years if his empirical work shows that this hasn't actually been functioning as a counter-tendency? It wouldn't make any sense. If you have a criticism of him, criticize the empirical work, don't criticize him for not emphasizing a rise in the rate of surplus-value which his own work shows hasn't happened.

Why take only one's own empirical work into account? Unless you believe that it is such a clear advance on what came before. That's the point.

As I said previously, put all this together and the emphasis is on the tendency rather than the counter-tendencies.


[S. Artresian]

You can "formalize" it if you care to. The fact of the matter is that the rate of profit does not fall under all momentary circumstances; it is driven to fall by the process of accumulation itself, which is made evident in the actual fabric of capital reproduction. You can construct a proof that says- "except in such circumstances where the change in surplus value is sufficiently greater than the additional recapitalization of surplus value into production as capital, the rate of profit will tend to fall" --but exactly what are we "proving" in what amounts to or approaches being a tautology.

The issue is the actual process, the actual metabolism of capital where accumulation becomes its own obstacle. That is a truth demonstrated historically, as a "whole" so to speak, not a formalized proof.

I say it-- the tendency for the rate of profit to decline has been demonstrated historically as being inherent in, immanent to capitalist accumulation.

It's not a law; it's a tendency that is manifested by capitalism under most conditions and for certain irreversible reasons.

To me, it's like asking for the mathematical proof that abstract labor exists. It's a social relation.


[kingzog]

Did anyone else notice the argument between Kliman and a poster in the comments section? Kliman says that a jointly-authored response to Heinrich is forthcoming.

http://www.marxisthumanistinitiative.org/economic-crisis/more-misused-wage-data-from-monthly-review-the-overaccumulation-of-a-surplus-of-errors.html

He also brought up something that struck me about Heinrich's article; Heinrich never mentions how Marx always said that the LTFRP was "the most important law of political economy."

Something that also struck me while reading Heinrich's article was that he seemingly skips over the section on the LTFRP from the 1861-63 manuscripts. He basically goes from the Grundrisse to the 1865 manuscripts- which is only published in German. I think Heinrich should have gone over that if his intent was to give a historical break-down of Marx's work on the law!

EDIT: (Heinrich sticks it in a footnote to be fair)
http://www.marxists.org/archive/marx/works/1863/theories-surplus-value/ch16.htm#s3


[mikus]
grahamb wrote:
mikus wrote:
Quote:
The corn models are all just simple disproofs of Okishio's claim that rises in productivity cannot cause the rate of profit to fall. They're not attempting to show that all rises in productivity must cause the rate of profit to fall.

I never said that Kliman's corn models show that the rate of profit will always fall with a rise in productivity. The issue is that the numerical examples I have seen are chosen to show that.

Exactly, that's because the whole point of his corn models is to show that it is possible that the rate of profit can fall due to a rise in productivity. Creating corn models to show that the rate of profit might not fall due to a rise in productivity would have been pointless, as it wouldn't have served the function of the demonstration, which was to show that Okishio was wrong to deny the possibility that rates of profit might fall due to a rise in productivity.

grahamb wrote:
Quote:
I'm not sure what your criticism is here. Why would he emphasize a rise in the rate of surplus-value as a counter-tendency during the last 30 years if his empirical work shows that this hasn't actually been functioning as a counter-tendency? It wouldn't make any sense. If you have a criticism of him, criticize the empirical work, don't criticize him for not emphasizing a rise in the rate of surplus-value which his own work shows hasn't happened.

Why take only one's own empirical work into account? Unless you believe that it is such a clear advance on what came before. That's the point.

He does believe it's a big advance on what came before it. He explains why in his book, and he has written numerous papers since then criticizing other empirical approaches (particularly those in Monthly Review). IMO his criticisms are convincing.


[mikus]

This is going to be my last comment on the debate with Red. It's hard to debate with someone who demonstrates such severe difficulties with reading comprehension.

Let's look at what Kliman actually says in the email:

Kliman wrote:
...what Marx points out is that the mass of surplus-value is limited by the number of workers employed, even if the rate of surplus-value goes sky-high...as s/v approaches infinity (or v approaches 0), r approaches L/c. What this shows is a clear maximum limit to the profit rate, even with an infinite rate of exploitation.

It should be obvious to anyone with a minimal amount of honesty that the limit he is referring to is the fact that the rate of profit is limited by the length of the working day.

Furthermore, look at how he summarizes the position he is arguing against:

Kliman wrote:
Sweezy, Robinson, Okishio, and many others have claimed that a sufficient rise in the rate of exploitation (s/v) can counteract any rise in the organic composition of capital (c/v).

Note the bold. Any rise in the organic composition of capital. I.e. Under all conditions. He has indeed shown that this is false, since under certain conditions (for example, the very realistic one in which capital is actually being accumulated), the rise in the rate of surplus-value cannot counteract the rise in the organic composition of capital.

All you have shown with your numerical example is that under certain conditions a rise in the rate of surplus-value can counteract a rise in the organic composition of capital. But this is expressly not the position that Kliman is arguing against.

You are exhibiting basic problems with reading comprehension and/or logic.

RedHughs wrote:
If "Maximum limit" isn't finite then Kliman isn't contradicting the position he imputes to Sweazy et all.

Again, yes, it is contradicting Sweezy because Sweezy claims that in the real world, where accumulation actually takes place, increases in the rate of surplus-value might always counter-act the rise in the organic composition of capital. Kliman shows that this is not true.

RedHughs wrote:
B. You are right I indeed have to look at the email even though Kliman definitely is claiming finiteness. The key passage seems to be "unless one is a simultaneist, and keeps reducing c proportionately to L, ceteris paribus)." That's at least an "escape" so Kliman stands obscure if not refuted.

It's not obscure just because you don't understand it. Kliman is referring to the fact that in any simultaneist model, c will decrease proportionately to L because they retroactively revalue c every period as productivity rises. This is so basic to the entire discussion of TSSI that it is hopeless to even debate this with someone who doesn't understand it.

RedHughs wrote:
Anyway, if someone cares explain the mathematical magic in a other than "simultaneist" position that limits c relative to L, I'd be happy to hear it. Edit: In any case, limiting C relative to L is nearly identical to limiting s/v so I think either way one has to offer the reason for this limiting.

Coming from someone who likes to claim that other people are being obscure, this paragraph is a real gem.


[Zirkus]

I am reading Heinrich's book at the moment. There is maybe something relevant to this discussion -- in section 5.6 he disputes increasing industrial reserve army from machines replacing workers. Surely this underlies the present debate.

I don't understand Heinrich's argument though. He distinguishes between concentration of capital (capital accumulation) and centralization of capital (buyouts, takeovers). Concentration of capital tends to increase employment, and centralization of capital tends to reduce it. Then whether employment or redundancy effect occurs on the level of the whole economy depends on the frequency of centralization processes. So Marx's claim cannot be substantiated.
[I would quote from the text so that I do not misrepresent his argument from memory, but I have the ebook on my computer and the DRM won't let me open it]

But I do not remember the argument in Capital I being anything like this at all. I thought it was about how capital accumulation operates, investing in means of production to get relative surplus value, expelling labour from the labour process etc, not about centralization of capital. Anyone care to explain?


[grahamb]

mikus wrote:

Quote:
Creating corn models to show that the rate of profit might not fall due to a rise in productivity would have been pointless, as it wouldn't have served the function of the demonstration, which was to show that Okishio was wrong to deny the possibility that rates of profit might fall due to a rise in productivity.

That's fine, but is that as far as it goes - to refute Okishio? The Persistent Fall in Profitability Underlying the Current Crisis: New Temporalist Evidence (2nd draft) has amongst its conclusions:

"1. U.S. corporations’ rate of profit began to fall about a decade after the end of World War II and the falling trend has persisted until the present time. Some measures of the rate of profit leveled off or increased very slightly after the early 1980s, while others have continued to decline. None indicates that a genuine, sustainable rebound in profitability took place.

2. Claims to the contrary are based on cherry-picking of the data and on the use of current-cost “rates of profit” that are not rates of profit in any normal sense."

And concludes with:

"The record needs to be set straight, and the “Marxian economics” tradition –– which has given us “consistent” but spurious current-cost rates of profit that head ever upward while the economy goes down the tubes and, as a direct result, Marxian theories of the current economic crisis that take surface financial-sector phenomena to be essential causes of the economic crisis––needs to be repudiated."

It seems to me that much greater claims are being made for TSSI and that one of the grievous mistakes made in establishing a measurable Marxist rate of profit is simultaneism.

Quote:
He does believe it's a big advance on what came before it.

I'm sure he does. As Kliman points out himself in Lies, Damned Lies, and Underconsumptionist Statistics it is possible for the labour share to fall without blaming low wages for crises. A falling labour share doesn't necessarily lead to the underconsumptionist conclusion of the Monthly Review and other Left Keynesians.


[mikus]

Graham, you quote Kliman making strong claims about the tendency of the rate of profit to fall and (correctly) deduce that Kliman has done more than refute Okishio, but in your previous post you were criticizing him for the corn models not showing that the rate of profit might rise due to a rise in productivity. But again, the point of the corn models was very limited -- to refute Okishio. Certainly he has made other claims but those have little to do with the corn models.

grahamb wrote:
It seems to me that much greater claims are being made for TSSI and that one of the grievous mistakes made in establishing a measurable Marxist rate of profit is simultaneism.

TSSI stands for Temporal Single-System Interpretation. It is nothing more than an interpretation of what Marx was stating in capital. Whether or not Marx's theory was correct is a distinct issue. Kliman's first book, Reclaiming Marx's Capital, deals with the former issue and his second book, The Failure of Capitalist Production, deals with the latter.

grahamb wrote:
Quote:
He does believe it's a big advance on what came before it.

I'm sure he does. As Kliman points out himself in Lies, Damned Lies, and Underconsumptionist Statistics it is possible for the labour share to fall without blaming low wages for crises. A falling labour share doesn't necessarily lead to the underconsumptionist conclusion of the Monthly Review and other Left Keynesians.

Of course it's possible but I'm not sure what your point is here.


[mikus]
Zirkus wrote:
But I do not remember the argument in Capital I being anything like this at all. I thought it was about how capital accumulation operates, investing in means of production to get relative surplus value, expelling labour from the labour process etc, not about centralization of capital. Anyone care to explain?

I'm not familiar with Heinrich's book so I can't comment on whether or not his book gets it right, but your summary of Marx's argument seems to me basically correct.


[grahamb]
Quote:
TSSI stands for Temporal Single-System Interpretation. It is nothing more than an interpretation of what Marx was stating in capital. Whether or not Marx's theory was correct is a distinct issue. Kliman's first book, Reclaiming Marx's Capital, deals with the former issue and his second book, The Failure of Capitalist Production, deals with the latter.

So references to "current cost rates of profit" in work after Reclaiming Marx's Capital have nothing to do with TSSI from that book? As in my example quotes above.

I just want to know how "distinct" the two are, for clarification. Nevertheless, it may be that use of "current" or a "historic" cost makes little empirical difference, other issues being more important for establishing the trend in a measured Marxist rate of profit.


[mikus]
grahamb wrote:
So references to "current cost rates of profit" in work after Reclaiming Marx's Capital have nothing to do with TSSI from that book? As in my example quotes above.

The temporalist theory given in The Failure of Capitalist Production is based on Marx's interpretation, but the issue of whether or not the TSSI is correct is logically distinct. This is why Kliman uses the word "temporalist" to refer to the actual theory of capitalist production and "TSSI" to refer to the interpretation of Marx. One can agree with TSSI and disagree with temporalism, and vice versa. This is why he deals with these issues separately.

grahamb wrote:
I just want to know how "distinct" the two are, for clarification.

Completely distinct.

grahamb wrote:
Nevertheless, it may be that use of "current" or a "historic" cost makes little empirical difference, other issues being more important for establishing the trend in a measured Marxist rate of profit.

No, it may not be. In The Failure of Capitalist Production Kliman shows over and over again that this has made all of the empirical difference in measuring the trend of profit rates since the 1970s.


[grahamb]

mikus wrote:

Quote:
The temporalist theory given in The Failure of Capitalist Production is based on Marx's interpretation, but the issue of whether or not the TSSI is correct is logically distinct. This is why Kliman uses the word "temporalist" to refer to the actual theory of capitalist production and "TSSI" to refer to the interpretation of Marx. One can agree with TSSI and disagree with temporalism, and vice versa. This is why he deals with these issues separately.

To distill: you're saying Marx was a "temporalist" in his analysis of capitalist production.


[mikus]
According to the TSSI (which I agree with), yes.
[Zirkus]

OK, I had to type all this out.

Quote:
Marx assumed that capital tends to bring forth an increasingly growing industrial reserve army. At a roughly constant number of forces of labor, this is only possible when the redundancy effect of the rise in productivity outbalances the employment effect of accumulation, If one takes an individual capital into consideration, one cannot generally predict which effect is stronger. However, Marx argues that there are two possibilities of growth for individual capitals. one occurs due to the transformation of surplus value into capital; Marx refers to this type of growth as the concentration of capital; the other occurs due to the aggregation of different individual capitals (whether in a "peaceful" fusion or a "hostile" takeover), which he calls the centralization of capital. In the case of centralization, the individual capital grows considerably, which is then usually also expressed in an accelerated technical revolution (the increased capital has more possibilities for investment at its disposal, it can acquire machines for which the means of the smaller capital was not sufficient, etc), without a growth in total capital. In this respect productivity increases with significant redundancy effects as a result of the centralization, without any opposing employment effect as a result of accumulation. This thought is quite plausible; but whether an employment effect or redundancy effect occurs in the whole economy depends upon the frequency of such centralization processes and the relation between the redundancy effects resulting from them to the employment effects of the remaining capitals.
The tendency of a growing industrial reserve army assumed by Marx cannot be strictly substantiated as a claim.

[S. Artresian]
Quote:
The tendency of a growing industrial reserve army assumed by Marx cannot be strictly substantiated as a claim.

Hilarious. Of course it can be substantiated-- through the analysis of capital's actual waxing and wanings, and its historical movements, say post WW2 in Latin America, with massive migration to cities where capital had little ability to absorb and employ the labor. Or how about China, with the migrations from countryside to cities following the "Four Reforms"?

Or the US since 1974? Or Germany's fragmentation of its labor market, creating vast numbers of "minijobs"-- without protections, at lower wages, with lower hours-- to the point that the proportion of low paying jobs is greater in Germany than it is in other countries of the EU.

This what I mean about the difference between mathematical "proof" and historical truth.


[grahamb]

mikus wrote:

Quote:
According to the TSSI (which I agree with), yes.

Sure, what I'm trying to get to the bottom of is this previous statement:

Quote:
The temporalist theory given in The Failure of Capitalist Production is based on Marx's interpretation

You say that TSSI is Kliman's interpretation of Marx, but here we have a theory called temporalism that is based on Marx's interpretation.


[mikus]
My bad, I should've double checked my post before I submitted it. That sentence should say: "The temporalist theory given in The Failure of Capitalist Production is based on the TSSI of Marx, but the issue of whether or not the TSSI is correct is logically distinct."
[grahamb]

mikus wrote:

Quote:
"The temporalist theory given in The Failure of Capitalist Production is based on the TSSI of Marx, but the issue of whether or not the TSSI is correct is logically distinct."

OK, though your logic for the relationship between TSSI, temporalism and Marx is unclear.

TSSI and temporalism logically distinct? Let's take Marx's Law of the Tendency of the Rate of Profit to Fall.

1. Reject TSSI but accept LTROPF for reasons other than temporalism.
2. Reject TSSI but accept LTROPF based on temporalism.
3. Accept TSSI but reject LTROPF for reasons other than temporalism.
4. Accept TSSI but reject LTROPF based on temporalism.

1 and 3 are OK. What about 2 and 4?


[kingzog]

2 and 4 are wrong.

But I don't think Mikus was saying that TSSI and Temporalism are distinct. Temporalism is one very important facet of the TSSI. TSSI means Temporal Single-System Interpretation. Temporalism refers to how, in that interpretation, Marx did not use simultaneous valuation of input and output prices of production. The singe-system part refers to the how value an price are determined interdependently.

The opposite of the single-system interpretation is the dual-system. The Dual System interpretation says that value and price are determined independently of one another.

So temporalism, technically speaking, is distinct from TSSI, but only because it is just one part of the TSSI.


[mikus]

When I say that temporalism and TSSI, are distinct, what I mean by "temporalism" is the view that the profit rate that is really relevant in the functioning of the capitalist economy (namely in terms of regulating the rate of accumulation) is the historical cost rate of profit (rather than the current-cost rate of profit used by simultaneists).

One can be a "temporalist" in this sense, while disagreeing with the TSS interpretation of Marx, and one can agree with the TSSI of Marx while disagreeing with temporalism (in the sense I defined above).


[S. Artresian]

Apropos of nothing except how little Heinrich understands capitalism, this from David F. Nobles Forces of Production: A Social History of Industrial Automation, Oxford, 1984:

Quote:
Second N/C {numerical control, the original designation for digitally coded and controlled automatic machine tools} machine tools represented a substantially greater fixed capital investment than conventional machinery. N/C machines were more expensive to buy, more expensive to maintain, and--in many cases--more expensive to operate productively. Thus, cost effective use of the equipment was essential to offset the fixed capital cost, merely to break even. Moreover, because this new technology was evolving so rapidly, existing equipment quickly became obsolete. Thus it was important that it pay for itself as early as possible. Cost-effective use was vital to insure the quickest return on the investment in N/C.

Essentially, N/C equipment was cost effective if its use resulted in a reduction of the unit cost of each part produced, such that the savings gained thereby outweighed the investment in the equipment (in the case of GE, this mean the unit cost not only of each part but of the final assembled engine).

Now to anyone who has ever worked in an industry that actually makes capital investments, and big ones, this is not news. This is ABC. That Heinrich can pretend to be a "scholar" of Marx without having the slightest grasp of capitalism is another index to the impoverished condition of Marxism, of class struggle, in the modern world.

Here's my recommendation-- nobody should waste a second reading Heinrich or Harvey or anybody else who cannot and does not demonstrated the historical truth of their assertions in the actual movement of capital.


[kingzog]

Found this interesting interview of Heinrich from last year.

Heinrich says:

Quote:
My third book (Wie das Marxsche Kapital lesen?) is in some respects a
continuation of the second book [his introduction to Capital], it is written for people who want to go deeper in Marx’s Capital. This third book is a very detailed commentary on the first two chapters of volume I of Capital: the chapter on commodity and the chapter on the exchange process. I give comments on nearly every sentence of these two chapters: these two chapters have enormous importance for the understanding of Marx’s Capital, but on the other hand they reveal themselves to be very complicated

my emphasis added

Wow. I truly am all for people having different interpretations; but this seems to be going way too far. Do we really need Heinrich telling us what to think about nearly every single sentence Marx wrote in the first couple chapters of Capital? Are people so dumb that they need this Master Interpreter, Heinrich, to explain Marx's every sentence to them?


[grahamb]

To kingzog:

Thanks. Yes, 2 and 4 are wrong. It had been stated earlier that TSSI and temporalism were logically distinct and I don't think it is that straightforward.

I have read Kliman's first book and much of everything else online so I am conversant with TSSI and temporalism - if struggling with some aspects of it. I'm sure I'm not alone in that.


[jura]
Kingzog, this is ridiculous. You act like Heinrich's in the K-12 curriculum. Nobody's forcing Heinrich on you – obviously, since unless you can read German you couldn't have read the book he's talking about in that bit. Which makes the fact that you comment on that book even stranger.
[grahamb]

To mikus:

mikus wrote:
When I say that temporalism and TSSI, are distinct, what I mean by "temporalism" is the view that the profit rate that is really relevant in the functioning of the capitalist economy (namely in terms of regulating the rate of accumulation) is the historical cost rate of profit (rather than the current-cost rate of profit used by simultaneists).

One can be a "temporalist" in this sense, while disagreeing with the TSS interpretation of Marx, and one can agree with the TSSI of Marx while disagreeing with temporalism (in the sense I defined above).

No. TSSI - an interpretation of Marx - and the correctness of Marx in itself (i.e. TROPF) are logically distinct. That's true. But your further claim that TSSI and temporalism (as you have explained it, using historical cost) are logically distinct does not hold.

I guess it may be possible to conceive of rejecting TSSI but accepting a historical cost ROP but not the reverse. If you support TSSI - i.e. in it's entirety - you cannot get away from supporting a historical cost ROP. Does anyone in practice accept (reject) TSSI and reject (accept) temporalism?

That's the way I see it. One cannot consider the correctness of Marx without an interpretation of Marx. The empirical bit is to measure a "Marxist rate of profit" but you have to first define it somehow. Hence we all debate both the data and theory.

If one wants to make grand logical statements, absolute precision of definitions is needed to avoid confusion.


[mikus]

You're making this waaaay more difficult than it needs to be and it's hard not to think that you're being purposefully obtuse.

grahamb wrote:
I guess it may be possible to conceive of rejecting TSSI but accepting a historical cost ROP but not the reverse. If you support TSSI - i.e. in it's entirety - you cannot get away from supporting a historical cost ROP.

Not true at all. You can think that Marx calculated rates of profit using historical costs (i.e. you can agree with the TSSI of Marx) and however think that this is an incorrect procedure (i.e. you can disagree with temporalism). You can just as easily think that Marx calculated rates of profit using replacement costs (i.e. you can disagree with the TSSI of Marx) while thinking that one should in fact use historical costs (i.e. you can agree with temporalism).

grahamb wrote:
Does anyone in practice accept (reject) TSSI and reject (accept) temporalism?

The issue of whether or not the two concepts are distinct has nothing to do with whether anyone "in practice" accepts (or rejects) TSSI while accepting (or rejecting) temporalism. The fact of the matter is that one could in principle do this while being logically consistent.

It's as simple as this: Believing that Marx said x (i.e. having a certain interpretation of Marx), and believing that x is true (or false), are two totally different things. And that's all there is to it. I don't know why this is so confusing to you. If you disagree with this, then you must think that believing that Marx said x somehow requires you to believe that x is true (or false), which is self-evidently ridiculous.

Furthermore, I can think of examples of both cases. Robert Vinneau, a Sraffian economist, is at least sympathetic to the TSSI of Marx (I don't think he firmly stated a position either way), yet he remains a Sraffian economist and therefore is a simultaneist (i.e. he rejects temporalism). On the other extreme, there are people like Steve Keen who definitely don't accept the TSSI of Marx (Steve Keen is extremely dismissive of it) and yet have their own sort of temporalist theory (albeit not based on the labor theory of value).

grahamb wrote:
If one wants to make grand logical statements, absolute precision of definitions is needed to avoid confusion.

The most grand logical statement I've made is the simple statement that one can have a certain interpretation of Marx, and yet disagree with what Marx said. I don't think that anyone besides you is having difficulties understanding this basic point, so we really probably don't need to be any more precise than that.


[S. Artresian]

I think it's fine that Heinrich wants to provide commentary on Capital. I think it's fine for Heinrich. We need to recognize however that where Marx develops and deploys the critique of capital, utilizing the abstract, the distilled, the determinants free of external mediations, he does so to "bridge" the gap so to speak from that abstract to the concrete movement, transitions, expressions of capital.

If economics is for Marx concentrated history, and I believe it is, and if history is the history of the social organization of labor, then it behooves us to take Marx's "models" and "methods" and test them against the concrete rather than reverse Marx's critique and make it just another philosophy of the abstract.


[grahamb]

To mikus:

I agree with everything you said after the first substantive paragraph. There is no need for condescension and I haven't got a problem with this "basic point", not least because I've made the same point myself more than once. An interpretation of Marx and the correctness of Marx are distinct. Or, if you prefer, defining x does not make any claims on x being True or False.

Quote:
You can think that Marx calculated rates of profit using historical costs (i.e. you can agree with the TSSI of Marx) and however think that this is an incorrect procedure (i.e. you can disagree with temporalism).

If you agree with the TSSI of Marx then you have to use historical costs to calculate a Marxist Rate of Profit. This is all I was trying to say and I didn't understand what you meant by "temporalism". Subsequently, based on the evidence, you are at liberty to accept or reject the procedure. If you reject it there are consequences: either you reject your interpretation of Marx, or you come up with another measure of the ROP that differs from Marx to some extent, or you conclude that Marx was wrong.

Self-evident or more likely plain wrong. But hey.


[mikus]
grahamb wrote:
There is no need for condescension and I haven't got a problem with this "basic point", not least because I've made the same point myself more than once. An interpretation of Marx and the correctness of Marx are distinct.

And yet you keep debating my statement that that the Temporal Single-System Interpretation of Marx and temporalism itself are distinct.

grahamb wrote:
If you agree with the TSSI of Marx then you have to use historical costs to calculate a Marxist Rate of Profit. This is all I was trying to say and I didn't understand what you meant by "temporalism".

You must have missed my post #122 earlier, where I clearly defined what I meant by "temporalism":

mikus wrote:
What I mean by 'temporalism' is the view that the profit rate that is really relevant in the functioning of the capitalist economy... is the historical cost rate of profit."

(Except, you responded to it, so you couldn't have missed it.)

Your misunderstanding wouldn't have been so annoying if you hadn't tried to chastise me (immediately after giving you a clear definition!) for supposedly not supplying you with clear definitions and for supposedly making "grand logical statements."


[kingzog]
I don't see an issue with the way Mikus described temporalism. Certain Marxist academics agree with using the historical cost rate of profit but not accept the TSS interpretation. I guess the issue is that there are multiple elements to temporalism as well.
[jura]
You haven't seen the fucking commentary, how can you say it's excessive?
[kingzog]
Heinrich says that he gives commentary to "nearly every single sentence from the first two chapters of Capital." You don't think this is excessive? It seems excessive to me. But that is just my opinion.
[S. Artresian]

Maybe he just has a lot to say. Maybe some of it is right; some of it is wrong; some of it is interesting; some of it pedestrian. Those who want to read Heinrich's comments on "almost every sentence" can let us know.

Hey, I know that when I re-read the Grundrisse, each time I find more things to note, more things to extrapolate, more things to comment upon in my personal notebooks, I've got 3 sets of notebooks each with different comments on the same pages I've read the other two times (if my memory weren't so poor, I could save on notebooks and ink) so who am I to criticize the effort? What counts is the content.


[Nate]
I only skimmed this thread, gotta read it properly later. Someone cited Kliman saying Marx said the tendency of rate of profit to fall was the most important law of political economy, as part of an objection to Heinrich. I looked on marxists.org for the phrase "most important law" and it doesn't appear there in Marx's writing after 1861. Does anyone know of a later appearance of the term in Marx's work?
[KHM]
Nate wrote:
I only skimmed this thread, gotta read it properly later. Someone cited Kliman saying Marx said the tendency of rate of profit to fall was the most important law of political economy, as part of an objection to Heinrich. I looked on marxists.org for the phrase "most important law" and it doesn't appear there in Marx's writing after 1861. Does anyone know of a later appearance of the term in Marx's work?

Economic manuscripts 1861-1863. Or do you mean you found it there and you want a later date?


[Nate]

Yeah, I wonder if there's a later date where Marx says that or uses similar terms. I had the date wrong BTW. This is what I found -
http://www.marxists.org/archive/marx/works/1861/economic/ch57.htm

Which marxists.org says was written in January 1862.

I'm behind on a lot reading-wise and am not sure I've understood what I've read/skimmed, but my sense here is that some of the argument is about whether or not Marx changed his mind, and how much, and about what. As I understand it, Heinrich seems to be saying Marx rethought some stuff that Kliman says he didn't rethink. I took Kliman's point about Marx saying the falling rate of profit was the most important law to imply that Marx didn't rethink that. 'Marx says repeatedly that the falling rate of profit is a really important law' is diferent from 'Through January 1862 Marx says repeatedly that the falling rate of profit is a really important law' - especially because the argument seems to be about whether or not Marx changed his mind in later manuscripts.


[kingzog]

Marx called it "the most important law of political economy" in Grundrisse. Maybe in the 61-63 manuscripts where there is a significant amount of writing (40 pages or so?) on it he say's something similar, but idk.

One point is that there isn't evidence that Marx actually did change his mind even though Heinrich implies some mystical manu from the MEGA project is evidence ( and he provides few, if any, direct passages from unpublished works in the MEGA). But, again, no evidence from MEGA exists to lead us to believe this. I, and many others I'm sure, patiently await any revelations from MEGA, btw. So that's one reason why this MR article was such a disappointment-- it's highly misleading ( as well as unoriginal, I believe Simon Clarke wrote the exact same things years before Heinrich wrote this piece, and many others during the Okishio era too).

So why should we assume he changed his mind if he never said so? No reason to disregard the work Marx did do on the LTFRP. At least not for those of us who are interested in it.


[kingzog]
I also don't understand why Heinrich virtually ignores the 61-63 manuscript-- except for a short footnote about Ricardo on ground-rent in Marx's critic of Ricardo's "diminishing profit" theory in Theories of Surplus Value.
[Nate]
kingzog wrote:
Marx called it "the most important law of political economy" in Grundrisse.

He called it that in the bit I linked to in 1862 as well.

kingzog wrote:
I also don't understand why Heinrich virtually ignores the 61-63 manuscript

If I understand correctly, Heinrich thinks Marx rethought his stuff on the FROP and abandoned that idea. He also thinks it's not a very good idea and so when/if Marx abandoned that idea, Marx made a good move in doing so. As such, it doesn't seem to me a surprise that he wouldn't say much about the places where Marx talked about that idea. And if Heinrich thinks this rethinking happened after 1862 then it's no surprise he'd not mention stuff before the rethink much. And what Marx said before that supposed rethink happened wouldn't be evidence that the rethinking didn't happen.

kingzog wrote:
there isn't evidence that Marx actually did change his mind

That's the crux of the issue, what the evidence is for Marx rethinking that idea. I don't have an opinion the matter currently though I intend to develop one.


[S. Artresian]

First, Heinrich in the MR article wants to establish the argument that the categorical foundations of the Grundrisse are not established-- "insufficiently secure" and "unclear" is how he puts it. He is not about to, then, search through the rest of the Economic Manuscripts for that sufficient security.

Regarding the manuscripts of 1861-1863, and later, he focuses on Marx's changing view of crisis, from the apocalyptic collapse and abolition, to the "normal" course of capital.

Then after discussions of the difference between Marx's various notebooks, the mathematical "uncertainty" of Marx's analysis of the FROP, and the usual blaming of Engels for having the audacity to do what actually needed to be done-- make sense out of Marx's manuscripts, notebooks, fragment and try to arrange them as Marx might have-- we get to the end, and the end is this:

Quote:
A year-and-a-half later, Marx was thinking about a complete revision of the first volume of Capital. On December 13, 1881, he wrote to Danielson that the publisher had announced to him that soon a third German edition of the first volume would be necessary. Marx would agree to a small print run with a few minor changes, but then for a fourth edition he would “change the book in the way I should have done at present under different circumstances.”5

How that relates to anything specifically that Marx had written about crisis, overproduction, surplus value, the rate of profit etc etc. is unsaid, unspoken and unclear. So what we are left with is........speculation.

I mean, really, maybe Marx was having second thoughts about this whole use value vs. exchange value thing. Who knows? So why not choose that as something to be changed "in the way I should have done at present under different circumstances."?

The issue, IMO, is clearly, are the categories Marx developed and utilized in the Grundrisse, in his manuscripts "insufficiently secure"? I think we answer that in the concrete-- determining if capitalism here and now can actually be analyzed, critiqued, explained, apprehended, measured by those categories.

Note that in Heinrich's article there is nothing that indicates Marx ever had second thoughts or questioned if the categories he had developed in the early works were sufficient, sufficiently secure, to undertake any expanded and more detailed analysis of capital. He doesn't say "wage labor" is insufficiently secure. Nor does he say that about his category of fixed capital, nor turnover, nor rates of surplus value, etc. etc.

It seems to me Heinrich is really grasping, grasping at straws, and missing.


[44]

Response to Heinrich's MR piece, co-authored by Andrew Kliman, Alan Freeman, Nick Potts, Alexey Gusev, and Brendan Cooney.

http://kapitalism101.wordpress.com/2013/07/22/the-unmaking-of-marxs-capital/


[44]

And now Kliman has written a solo response to Matthijs Krul's critique of that paper:

Critique: http://mccaine.org/2013/07/22/kliman-vs-heinrich-an-exercise-in-marxology/

Response: http://akliman.squarespace.com/storage/A%20Defense%20of%20Pluralism%207.24.13.pdf

This is super entertaining. I'm still waiting for Heinrich to respond to Cockshott.


[Dave B]

The law of the falling rate of profit, IN CAPITALISM.

We should start therefore with some concept of Marx’s capitalism.

Capital Vol. III Part VII
Revenues and their Sources
Chapter 51. Distribution Relations and Production Relations

Quote:
The second distinctive feature of the capitalist mode of production is the production of surplus-value as the direct aim and determining motive of production. Capital produces essentially capital, and does so only to the extent that it produces surplus-value………….

………But only because this surplus-value thus appears as his profit do the additional means of production, which are intended for the expansion of reproduction, and which constitute a part of this profit, present themselves as new additional capital, and the expansion of the process of reproduction in general as a process of capitalist accumulation

.

http://www.marxists.org/archive/marx/works/1894-c3/ch51.htm

What does that mean?

Capitalism, by definition, converts surplus value, unpaid or unremunerated labour time into ‘productive’ or working capital.

The net surplus product of capitalism after all the buying and selling is more ‘productive’ capital.

The TOTAL or ‘MASS’ value of capital increases.

That is the ‘objective’ of capitalism; which is why it is called ‘capitalism’.

Other exploitative surplus labour systems eg feudalism don’t do that.

We can leave the why’s and the wherefores out of it for the moment for simplicity.

That is predicate and premise number 1

[Actually a change in the TOTAL or ‘MASS’ value of capital doesn’t have to alter the rate of profit; even if the rate of surplus value stays the same or not.]

The second predicate, number 2, is the Marxist definition of the rate of profit, P’; which is, at any one moment in time the total surplus value, unpaid and unremunerated labour time divided by the value of the capitalist invested or 'working capital' which I shall bunch together and call capital C.

C = Fc +c + v*

So;

P’ = s/C

[And we are dealing here with total s and total C, s is total surplus value and C is total working capital- that is what it means.]

But this is not a mathematically correct expression because; we are about to examine how the process changes with time?

We scientist have a way of dealing with this kind of thing.

We are dealing with what we call a 'series' of ( t -time related- turnover) mathematical expressions or equations and we thus redefine it as;

P’(t) = s(t)/C(t)

Or in other words in week one or t=1

P’(1) = s(1)/C(1)

Then in week 2

P’(2) = s(2)/C(2)

And week 3

P’(3) = s(3)/C(3)

Nobody knows or cares yet what s(1) or C(3) is relatively or absolutely.

We start in week 1; t= 1 and;

P’(1) = s(1)/C(1)

Then we move to week 2, t= 2

P’(2) = s(2)/C(2)

Brilliant!

Now mathematicians use a trick called ‘substitution’ into parallel equations, or whatever.

So in week (2); s(1) has augmented C(1); ie the predicate of capitalism so;

P’(2) = s(2)/{C(1) + s(1)}

“Lets” briefly ignore P’(2) for the moment; as something that is going to be ‘determined’.

And lets mathematically, for the hell of it and for the moment.

“Let” total s(1) = total s(2).

We will investigate what that means in the non mathematical world later.

Then

P’(1) = s(1)/C(1)

Goes to

P’(2) = s(1)/{C(1) + s(1)}

Because in week 2;

Total s(1) so happens to = Total s(2).

As;

s(1)/{C(1) + s(1)}

is smaller than;

s(1)/C(1)

P’(2), must be smaller.

But what if total or mass of s(2), total unpaid or unremunerated labour time, in week 2 or in later weeks in general is greater than s(1)?

That would tend to reverse the fall of P’(2) and later P(t)'s!

How can total s(2) or s(558), or whatever, be greater than total s(1)?

Well more workers?

If 10 million workers produce a total of s(1).

Then 20 million workers produce total surplus value of 2 x s(1).

Then you can just theoretically double the number of workers AND 'perhaps' double the value of capital that they work with (from previous surplus value) and the rate of profit remains the same.

The extra workers theoretically come from population expansion or extant coexisting simple commodity producing Scottish highland peasants being dragged into the orbit of capitalism etc.

[NB This limited scenario does not yet involve, to that extent, the rising productivity of labour by utilising the labour saving and value reducing advance of technology etc etc.]

It merely reproduces and expands, as it is, quantatively ( the mass) of working capital and workers.

One steam powered loom and 50 workers goes to two steam powered looms and 100 workers.

But what if there is no increase in total s(2) or total s(t), due to more total workers; as is required to stop the fall in the rate of profit?

Well total s(2) would have to be increased at the expense of n(1), or necessary labour time.

Or in other words the rate of exploitation, (or the working day- easiest to forget that), will have to increase.

Both can no doubt happen simultaneously; Chinese sweat shop workers and first world worker overlooking robots,

But we are ignoring the other variable, C, and making presumptions about it.

Whilst C should rise, that is what capitalism is all about, it can fall.

Albeit scientific technology drives the process forwards it is a fickle thing and can bite back.

Scientific innovation can make the embodied socially necessary labour of Capital unnecessary redundant and ‘valueless’.

The technological depreciation of the ‘value’ of advanced capital runs at 10-20% per annum these days.

That is not to say that a 150 year old steam engine or 10 year old computer can no longer do what it used to.

V* is the amount of ready cash that the capitalist has to have in the safe to pay his workers at the end of the week; it can in fact be zero, or less than zero, as with capitalist restaurateurs who receive the wages for their workers before the pay them.

As with fast circulating industrial capitalism.

Some of the stuff I make is sold before I get paid for it.


[Ocelot]

So I said on the OCC thread that I would put considerations on the Kliman et al response and Heinrich's MR paper on here, where it belongs.

First, in relation to Heinrich's MR paper, I find that his specific counter-argument (the (s/v)/(c+v) stuff) to the LTRPF section is faulty. Including for some of the reasons Kliman points out (and arguably Marx did as well), i.e. that s/v is not a fraction of two independent variables, but a ratio that can be at most 100% of a limited variable - hours worked in a production period (day/whatever). However, the tangled mess that Heinrich gets himself into in the last two paras of that section (beginning: "However, this conclusion is only correct if the capital (c + v) necessary to employ the two workers is of an amount at least as great as that required to employ twenty-four workers before.") actually could be made to make sense IF you drop the assumption of the OCC, i.e. that VCC in socially-aggregate constant capital is increasing. Kliman's argument that Heinrich's account presupposes the "dis-accumulation of capital" is based precisely on this micro-level OCC technical/value slippage, and on the macro-level "physicalist" error that capital can only be accumulated in the form of fixed and constant production capital, and not the financial and commodity moments of the full value-in-process cycle delineated in Vol II.*

Which really brings us on the meat of the disagreement between Heinrich and Kliman et al (and the whole neo-orthodox position as a whole, I submit) - that is on the question of whether Vol III actually contains a completed theorisation of credit - i.e. whether Marx's capital is "complete" or not. And here I side very much with Heinrich. For e.g. this appears to me to be broadly correct:

Quote:
[...] The realization of surplus-value in an amount of money beyond the capital advanced as c + v is ultimately made possible by the credit system. On the other hand, that which was already clear to Marx in the Grundrisse must also be systematically assimilated: “in a general crisis of overproduction the contradiction is not between the different kinds of productive capital, but between industrial and loan capital; between capital as it is directly involved in the production process and capital as it appears as money independently (relativement) outside that process.”

So a systematic treatment of crisis theory cannot therefore follow immediately from the “law of the tendency of the rate of profit to fall,” but only after the categories of interest-bearing capital and credit have been developed. The theoretical position for crisis theory suggested by Engels’s editorship is definitely wrong, but this suggestion has been extremely influential: many Marxist approaches to crisis theory completely disregard credit relationships and consider the root causes of crisis to be phenomena that have nothing to do with money and credit.

Since Marx’s theory of credit remained fragmentary in the manuscript of 1865, and Marx no longer explicitly took up the question of the relationship between production and credit in his approach to crisis theory, his theory of crisis is not just incomplete in a quantitative sense (to the extent that a part is missing); rather, it is incomplete in a systematic sense.

The Kliman et al paper responds with a true confessio de fide in its Section IV "The Theoretical Completeness of Marx’s Crisis Theory" (even the title asserts it).

Quote:
This letter indicates that Marx had resolved, to his satisfaction, all of the theoretical problems he
had confronted (note the phrase “have been resolved”). It further indicates that he would not
allow volume 1 of Capital to be published until the whole of Capital was complete in a
theoretical sense. Thus, the publication of volume 1 a couple of years later is further evidence
that Marx regarded the whole of Capital as complete and satisfactory in a theoretical sense.

So there we have it - the "Complete Marx", nothing important left unfinished in the book on Capital. A complete theory of credit must either therefore be found within it, or be irrelevant.

And that, for me is the real dividing line. Any project for going beyond the incompleteness of Marx, for a real and useful theorisation of interest-bearing credit and financialisation (as something other than a evidence of decay) is prohibited from the outset, by the insistence on the completeness of Capital as a total, "scientific" theoretical deconstruction of capitalist dynamics. And in this day and age, that for me, is fatal.

* I'm tempted to call the considerations of the fuller composition of capital at a macro level, the "inorganic composition of capital", precisely to get away from this physicalist limitation.


[S. Artresian]

Ocelot:

check here:

http://thenextrecession.wordpress.com/2013/07/25/returning-to-heinrich/

and here:

http://thenextrecession.wordpress.com/2013/07/28/heinrich-a-small-rejoinder/

Roberts is "Marxist economist," whose background I think is in Trotskyism of some type. I generally find his "economic" proposals to be way too Keynesian for my taste, or what I consider to be "Marxist"-- see for example his stuff on Cyprus and Greece-- replete with "People's Banks" or some equivalent thereof.


[S. Artresian]

Regarding the "complete Marx"--- no such animal in the real world of course, not until the proletariat overthrows the bourgeoisie--- That is the whole point of Marx's critique of capital-- it is the conflict between labor and the conditions of labor.

What is important in what Kliman says is that Marx considered his book Capital completed, but unpolished and not fit for publication-- that what we know, or think we know as volumes 2 & 3 were completed as far as the elaboration of the critical themes.

That's a bit different from thinking Marx had elaborated a full complete permanent steadfast once and future analysis of capitalist crisis.

And let's keep in mind-- crisis is not the "omega" of capitalism-- it is exactly critical, necessary to capital, necessary to its reproduction-- the abolition is left to the "anti-capitalists" existing at the very core of accumulation.


[andy g]
I wasn't mightily impressed by some of Heinrich's article either. Not having access to the MEGA manuscripts makes it difficult to evaluate some of what he says . From what I have read (his article on the controversy surrounding Engels' editing of vol.3, for instance) have caused me to question the received interpretations I had accepted. The more I read the more convinced.I am of the fact that Marx's work is full of lacunae and contradictions and I feel much more.comfortable with the ready acceptance of Marx's fallibility than with declarations of.completeness that invite intellectual closure. Still have lingering reservations about aspects of VF analysis admittedly but sympathies are swinging from Kliman
[kingzog]

Yeah, Capital obviously wasn't completed so it's not a finished work. I think the point that Kliman makes, however, is that Marx felt that the three books were theoretically complete but not exaclty presentable. That doesn't mean they are just because he said so, but if we want to make claims to the contrary then we need to actually provide evidence. And the system as is appears to explain a lot so it shouldn't be just taken as a given that there are holes or contradictions all over Capital-- that was actually the standard practice until fairly recently; people just assumed that Marx was completely discredited because economists said his work was full of holes. Personally, I agree with the TSS interpretation that at least Marx's value-theory was coherent-- that's one of only two small claims that TSSI makes, btw, but I'll admit that beyond that there may indeed be contradictions.


[RedHughs]

This Micheal Robert paper is at least interesting.

Micheal Robert wrote:
Even a small increase in the organic composition might require a socially unsustainable rise in the rate of surplus value and thus in the socially acceptable extension of the working day. What 
determines how long it will last before the rate of surplus value reaches its limit is not the time derived from mathematical formulas but the time of class struggle, the time needed by labour to stop the increase in the rate of exploitation and possibly reduce it. This is the meaning of ‘in the long run’.

I'm doubtful you can frame things quite this simply - the problem is the phase of relative surplus allows a rise in the rate of exploitation that's different than a simple increase in the working day.
But if you frame this argument "more broadly", it might indeed be "ultimately true" - class, social and material factors together limit the rate of exploitation.

What I'd be curious about is where in Marx one find Robert's argument? I don't recall something like this in Capital III.


[RedHughs]

Yes,
The thread debates are interesting.
The Boffy character is interesting. His blog argues a rising global rate of profit.

He also argues:

Boffy wrote:
The argument that the rate of surplus value cannot simply keep expanding is based on the idea that the working-day is limited in length to 24 hours. But it isn’t. It is only limited to 24 hours of any particular concrete labour! For example, a bricklayer can only work for 24 hours. But, value and surplus value are measured in abstract labour not concrete labour. There is essentially no limit to the number of abstract labour hours in a day, because an hour of any particular concrete labour, as complex labour, might be the equivalent of 10, 100, 1000 hours of abstract labour, depending upon what consumers are prepared to pay for the product of that abstract labour. On that basis the argument that the number of hours available to be surplus becomes ever proportionately smaller falls.

Think that might be another way to frame the point that the "limits of the working day" as a limit of the rate of exploitation argument failing when you look at the production of relative surplus value. (And I personally think there is limit on the rate of exploitation, it's just you one can't derive this limit simplistically - ie, Marx himself doesn't derive this limit, at least not correctly).

On the other hand, when

boffy wrote:
Although, it is possible to argue that for any individual capital there is a noted tendency for the organic composition of capital to rise with the increasing magnitude of the capital – though as Marx demonstrates even this is limited by all those countervailing forces that reduce the value of constant capital – there is no reason why this should apply for Capital in General or indeed across many capitals.

If economies consisted only of the same capitals that just continually got bigger that would be so, but that is not the way economies develop. As Marx describes in Volume 1, capitals continually fragment as well as concentrate and centralise. Indeed some even very big capitals, that had high organic compositions of capital, like motor car makers, go bust, whilst other new capitals with relatively low organic compositions of capital, like high technology companies, take their place.

If more old companies with high organic compositions go bust, but more new companies with low organic compositions (and high rates of profit) take their place, maybe utilising some of the now defunct capital from the former, then for the economy as a whole, the organic composition of capital will fall, and the rate of profit will rise,m even without any consideration of whether such a process has also raised the rate of surplus value.

He/she is missing the fact that the total capital of a society isn't measured by enterprise but by capital (sum of the value of the enterprises). If some high capital enterprises are replaced by low capital enterprises and other high capital enterprises get larger, the high capital enterprises wind-up being the only whose OCC matters. Craiglist, the enterprise, replaced a large chunk of the newspaper industry with a website run by twenty people and not mobilizing a terribly large capital base. So now, craiglist OCC just no longer matters, the declining or rising OCC is only whatever large enterprises do remain.

And just in general, it occurs to me that the dogmatic idiocy of "Marx is totally correct and complete" just pollutes too much of the interesting discussion concerning are the dynamics of prices, value, profits and so-forth. Andrew Kliman's acolytes and sympathetic might even be saying interesting things but they should realize that when it's wrapped in this kind of ideology, it is simply counter-productive (the way Kliman abuses even the sympathetic Mathias hopefully could serve as something for people to think about).


[Dave B]

As in;

P’ = s’/{C/v}

Where

C = total working capital

ie fixed[Fc] + constant[c] + wage fund {v)

The rate of surplus value can increase to infinity; or 30 million if that is not enough, without any extension of the working day.

So the necessary labour time might diminish to a milli-second in an 8 hour day;

so s’= s/v

8 x 60 x 60 x 1000 -1/1

= 28,800,000 -1 /1

That is the argument for the inevitability of socialism and the realm of freedom thing in volume III

If you use;

P’ = S(total) /C(total)

Then S(total) can increase due to;

more workers

longer working day

increase rate of exploitation.

There is ‘a tendency’ in the place I work ie manufacturing for less workers and thus ‘less S’ (as long as the rate of exploitation remains the same) and more capital.

Thus lowering of the rate of profit.

(and more use values greater output).

I realise that the likes of myself working in modern industry are now a minority in the ‘West’ , but that was ‘the tendency’ that Karl was focusing on as a trend in his day.

However a lot of ‘new’ products or services now can have a low composition of capital eg call centres etc.

C/v is about 500 where I work; it is probably about 1 where Michael Heinrich, Kilman etc work; if you call what they do work.

And low paid workers in the third world make it possible to produce hard concrete commodities profitably with low levels of fixed capital etc.

That starts to get a bit complicated comparing ‘them’ with ‘us’.

Depreciation of the value of Capital or C(total) due to the development of technology is a nightmare problem, literally, for the poor capitalist class thanks to scientists and engineers like myself.

It cheapens everything including capital.

That caused the demise of Jeremy Clarkson’s (of top gear) millionaire capitalist ancestor in the episode of Who Do You Think You Are ancestry programme.

The ones that don’t get caught out get spooked easily and don’t reinvest their surplus value back into productive capital and keep the profit as money.

Then there is too much money sloshing about and that can result in ‘nominally’ low interest rates.

The interest rate on loaned money capital ‘shadows’ the rate of profit.

If you think you can make a safe 10% rate of profit on loaned capital to purchase manufacturing capital; you go to ‘Dragons Den’ and borrow it at 0% from the bank of Japan and do it.

But mass usury and debt peonage is becoming more extensive in modern first world capitalism and that requires another analysis.

We are also living in a strange world today though with green paper money.

When the old capitalist wanted to turn there surplus value into non productive capital when they got spooked they used it to purchase gold.

That was OK for capitalism as the surplus product of wheat, shovels and clothes etc went to and exchanged with the producers of the universal money commodity, the gold miners.

In fact you had five departments of production, not two

Stuff for the workers to consume.

Stuff for the capitalist to consume. [Karl combined the two]

Raw material for production.

Fixed capital production. [Karl ommited that completely]

Universal money commodity production. [Karl ommited that completely]

What determines the rate of surplus value is interesting.

Karl basically said it was determined by the what was required to reproduce the workers labour power (which is left a bit arbitrary and undefined)and the workers productivity.

Adam smith had an interesting idea that it was the ratio of productive capital to available labour power.

Not a bonkers idea; during the Black Death the amount or quality of available
productive capital ie good land increased in proportion to the number of workers and so did wages


[RedHughs]
Ocelot wrote:
First, in relation to Heinrich's MR paper, I find that his specific counter-argument (the (s/v)/(c+v) stuff) to the LTRPF section is faulty. Including for some of the reasons Kliman points out (and arguably Marx did as well), i.e. that s/v is not a fraction of two independent variables, but a ratio that can be at most 100% of a limited variable - hours worked in a production period (day/whatever).

It took a little time to parse this paragraph but it seems it is the same old insufficient argument. "s/v is limited by the working day". Except it isn't. Heinrich deals with the claim and it has been raised many times previously.

S would be output from a working day
V would be the price of labor-power for a working day.

First in the case of an arbitrary mathematical model, With enough hypothetical productivity , there is no limit to S/V. S could be zillions of times higher than S. [ Say you have a good G, one unit of which that satisfies all human needs for a day and you have a machine that operated by a single person produces a million units of G per day. Pay each worker the price of one unit of G and then S/V= one million QED ] . There is no abstract proof of the limits to S/V within the "space" of arbitrary models. The Marxian situation where S/V is limited by the working day includes the situation of absolute surplus value production and all those situations production is assumed already to be proportionate to labor power input and of course, if you are assuming this situation, you are putting the cart before the horse.

However, alternatively to the above paragraph, you get concrete and look at the specifics of a capitalist economy in the modern world and argue there that material factors do limit the output versus the price of labor-power. It seems like Michael Robert does that. I would do that. I think there are numerous good arguments here.

The thing is Heinrich makes a fairly plausible argument that Marx wanted a proof in the world of the absolute abstraction, of any mathematical model and in this "space", no proof is satisfactory. But maybe Heinrich is wrong in this regard. Maybe Marx didn't approach things that way, sure. The problem is that I don't know of any reference in Marx to the kind of particular structural limitations within capitalist relations that would limit S/V (and if ya'll very read folks can find such, please tell me). And there are the loud, shrill voices calling Marx's theory full, true and complete and (clearly though implicitly) cursing those who would sully this theory by extrapolating from it to any degree.

So, what to do...?


[KHM]
RedHughs, aren't you guilty of what Kliman calls physicalism? Increasing productivity means more units produced, not value. Of course the objection about the limit of the working day does not apply if you do not determine value by labour time!
[RedHughs]
KHM wrote:
RedHughs, aren't you guilty of what Kliman calls physicalism? Increasing productivity means more units produced, not value. Of course the objection about the limit of the working day does not apply if you do not determine value by labour time!

Hmm,

I would say that the example I've given actually shows that a limit on the rate of exploitation is pretty much a necessary for price to have a strong relation to the amount of labor time input into production. That also seems rather intuitively obvious - if capitalist could get an indefinitely larger amount out of workers than they put in, then labor-power wouldn't be much of a constraint.

Again, I would argue that in the real world, there is a basic limit to the rate of exploitation. Indeed, I'd say that's what makes the labor theory of value true.

But I claim that's because of the concrete conditions of production and social relations, rather being something one can glibly assume a-priori.

Edit: This is in reference to Heinrich's article and Kliman's reply. Heinrich argues that Marx didn't publish his theory because he couldn't prove the rate of profit declined without assuming the rate of exploitation is constant. Kliman has repeatedly claimed that there's some proof or other that the rate of profit declines without the need for assuming a limit on the rate of exploitation.
-- I'm not arguing for the part where Heinrich says the rate of profit doesn't decline but I am agreeing that one needs to show a limit on the rate of exploitation to the rate of profit to decline and to get prices to follow labor-value for that matter.


[Ocelot]

KHM is right. Given the LTV, s (surplus value)* is bound by hours worked, lets call it h.

h = s + v
s = h - v => max(s) = h [with assumption v non-negative]

The trouble with s/v is that we abstract from h, reasonably because the ratio remains the same whatever the value of h (8 hours, 12 hours, etc). However when we use it as a function, i.e.

s = f(v)

we forget that the result of f(v) is still bound by h - that is v is not genuinely an external unbound variable in relation to f(). Another way of saying this is that because f() is defined (circularly) in terms of s & v, then the range of possible inputs v is limited such that the output of f(v) can still never exceed hours worked (h). The only way to determine the absolute value of s, in labour time, is to make a proper (non-circularly defined) function F with external variable h, such that s = F(h), where F() is defined as 1/x . h where min(x) = 1.

In the example RH gave of an extreme rate of exploitation of 100,000,000%, if the working day was 8 hours, then v is going to be 28.8 milliseconds and s... is still going to be 8 hours minus 28.8 milliseconds.

The rate of profit is defined by the absolute surplus (in relation to absolute productive capital) not the rate of the surplus.

All of which to say, that I basically agree when Kliman (in the comments thread to the first Robert's post) says:

Quote:
I can prove and am prepared to prove that the following conditions alone do NOT guarantee that the rate of profit s/(c+v) wll eventually fall: (1) value is determined by labor-time, and (2) c/v rises continually. If we add ALL of the following additional conditions, then we can guarantee an “eventual” fall in the rate of profit if said conditions obtain: (3) total capital (c + v) increases continually, (4) the increase in total capital is unbounded, and (5) the increase in c/v is unbounded.

What I disagree with is that 2) is real.

* let's stick to the conventional use, s is not RH's "output".

errata: " the ratio remains the same whatever the value of h (8 hours, 12 hours, etc)" is incorrect, given a general level of social productivity, the absolute time of necessary labour is an unchanging given, therefore the s/v ratio changes as the day shortens or lengthens (absolute surplus value strategy)


[RedHughs]
Quote:
In the example RH gave of an extreme rate of exploitation of 100,000,000%, if the working day was 8 hours, then v is going to be 28.8 milliseconds and s... is still going to be 8 hours minus 28.8 milliseconds.

Sure but that's doing nothing but changing the unit of measurement.

If we all the way back to s/C, the rate of profit, from Volume, Chapter 13, we see that C is a variable capital advanced. In this case, C will be one the price of 28.8 milliseconds of labor-power (what the capitalist buys the labor at), s is going to be the price of eight hours of labor-power minus 28.8 milliseconds and the rate of profit and the rate of profit will again be around a million.

The only thing that looks awkward is that the capitalist's capital is now seen as having very small units. That is true but so what? One obviously, we could concoct less extreme counter-examples along these lines involving Internet companies and such. The overall material world is different but we talking the implications of hypothetical models. Keep in mind that when one wishes a model to prove things about the real world, one introduces constraints into one's model that better fit the real world.

Quote:
The rate of profit is defined by the absolute surplus (in relation to absolute productive capital) not the rate of the surplus.

I've heard this before as some kind of objection. I'm still mystified what it would mean in concrete terms.

IE, Does that mean profit never equals s/C, that it sometimes equals s/C or that it always equals s/C? If profit only sometimes equals s/C, what are the conditions in which it doesn't equal s/C?

Edit: One might object that the capitalist has to pay the workers in unit of labor. Sure, then change the units again and you get the same result. One could object that the capitalist has to buy in units of labor and then sell for the same price of units of labor plus profit but that is what he does, only the profit is assumed to be very high.

Again, again, I have no objection to whatever argument (class struggle, social structure, etc) one makes to plausibly claim s/v is limited. What I'm objecting to, again, again, is the claim that there a magic arithmetic or insight or something that pushes profits down without s/v being limited.


[KHM]

You are dealing with rate of exploitation, not rate of profit. I assume your factory where a single worker can produce one million units has a reasonable amount of constant capital invested. One would imagine that it is a lot larger than the amount of variable capital, and there is only one labourer to be exploited. Sounds like a pretty low rate of profit.

Strangely enough, your counter-example resembles Kliman's argument in favour of the TFROP, where V approaches 0. This was the condition Heinrich dismissed in a footnote in the original article (but misconceived as v=0).


[RedHughs]
KHM wrote:
You are dealing with rate of exploitation, not rate of profit. I assume your factory where a single worker can produce one million units has a reasonable amount of constant capital invested. One would imagine that it is a lot larger than the amount of variable capital, and there is only one labourer to be exploited. Sounds like a pretty low rate of profit.

Ah, I had a feeling that objection would come up. My "quick" statement assumed no constant capital. However, if you got back to the first page of this thread, I concoct a full counter-example with constant capital also taken care of. This example works no matter what units one use and no matter what equivalent formula one uses for the rate of profit (well, equivalent formulas lead to the same results for all situations, of course, but it seems I have to handle claims to the contrary, lol).

I gotta keep repeating, I concocting counter-examples to show that a given set of assumptions is insufficient to prove an assertion My examples here are how the real world doesn't work but the argument is about what set of assumptions can prove what.


[Ocelot]
RedHughs wrote:
If we all the way back to s/C, the rate of profit, from Volume [3], Chapter 13, we see that C is a variable capital advanced.
Volume3_ChXIII wrote:
Assuming a given wage and working-day, a variable capital, for instance of 100, represents a certain number of employed labourers. It is the index of this number. Suppose £100 are the wages of 100 labourers for, say, one week. If these labourers perform equal amounts of necessary and surplus-labour, if they work daily as many hours for themselves, i.e., for the reproduction of their wage, as they do for the capitalist, i.e., for the production of surplus-value, then the value of their total product = £200, and the surplus-value they produce would amount to £100. The rate of surplus-value, s/v, would = 100%. But, as we have seen, this rate of surplus-value would nonetheless express itself in very different rates of profit, depending on the different volumes of constant capital c and consequently of the total capital C, because the rate of profit = s/C. The rate of surplus-value is 100%:

If c = 50, and v = 100, then p' = 100/150 = 66⅔%;
c = 100, and v = 100, then p' = 100/200 = 50%;
c = 200, and v = 100, then p' = 100/300 = 33⅓%;
c = 300, and v = 100, then p' = 100/400 = 25%;
c = 400, and v = 100, then p' = 100/500 = 20%.

This is how the same rate of surplus-value would express itself under the same degree of labour exploitation in a falling rate of profit, because the material growth of the constant capital implies also a growth — albeit not in the same proportion — in its value, and consequently in that of the total capital.

Here total capital C = c + v, as normal.

C is not "variable capital advanced".

RH in general I am no longer able to follow the thread of your argument or see what it has to do with my contention that Heinrich's argument, in the section of his piece entitled “The Law of the Tendency of the Rate of Profit to Fall”—and its Failure (1865), based on the supposedly unbound or "unknowable" dynamics of s/v is fallacious.

I should also have added, for completeness, that I also agree with Kliman et als response, that the contention that Heinrich makes that the technical composition of the immediate production process cannot change without a change in the rate of exploitation, also to be a non-sequiteur (for reasons which should really be obvious, but I can expand on if necessary).

And finally, to reiterate - those specifics aside - I find Kliman et als. overall defence of LTRPF on the basis of the OCC (and the "complete Marx") to be entirely wrong and Heinrich's assertion that the argument is "systematically" wrong, in the absence of a proper theory of credit basically correct. The latter, imo, simply makes the mistake of not seeing the LTPRF as consequent of the OCC (and certain additional requirements of expansion of production and accumulation etc, as specified in the Kliman quote above).


[S. Artresian]

How does the absence or presence of a theory of credit make a defense of the LTRPF on the basis of the OCC wrong?

Credit, clearly, is derivative, is derived (as IMO is made clear in the Grundrisse) in the different turnover times of capital. Credit is the mechanism for "bridging" those differences, and as such has distributive properties-- working in the main to establish an "average" rate of profit, but also in accordance with Marx's notion that capitals of equal size will claim equal profits.

So unless we have an argument of credit being able to create value, without itself organizing the means of production as capital and without engaging labor power as wage-labor, exactly what impact on the accumulation of capital, and in the rate of re-valorization can a "properly functioning theory of credit" or the real functioning of credit play, except to make more acute the dynamics of such accumulation that leads to the LTRPF?


[kingzog]
yeah, why is credit considered the missing part of the theory for Heinrich, without which the LTFRP cannot be "proven"?
[Angelus Novus]
kingzog wrote:
yeah, the "Monetary Theory of Value" is Heinrich's innovation.

No.

Hans-Georg Backhaus


[Angelus Novus]
S. Artesian wrote:
How does the absence or presence of a theory of credit make a defense of the LTRPF on the basis of the OCC wrong?

Uh, because Marx?

"We have seen that the average profit of the individual capitalist, or of any particular capital, is determined not by the surplus labour that this capital appropriates first-hand, but rather by the total surplus labour that the total capital appropriates, from which each particular capital simply draws its dividends as a proportional part of the total capital. This social character of capital is mediated and completely realized only by the full development of the credit and banking system"

Vol. III, p. 742 (Penguin edition)

We now return you to your regularly scheduled anti-Heinrich circlejerk, led by a union-busting management railroad consultant. Oh the irony.


[kingzog]
I mean, that quote says that a developed system of credit is needed for an average rate of profit to materialize. But it doesn't necessarily follow that we need some extra special theory about credit to prove that there is such a thing as this average profit and the LTFRP and so on. If you wanted to make an argument you'd have to explain why we need this extra theory to explain the LTFRP, no?
[S. Artresian]

Exactly-- the average profit is determined by the process of distribution of the total social capital. The is performed by banks and the credit system, with credit itself developing due to differences in the turnover rates of capital.

Now again, if in fact, the role played by banks and credit is a distributive one-- then how exactly does a fully developed theory of credit and banking system change this function of the banking system in the realization, distribution of profit.

Oh the ignorance of those who don't understand what they quote.

What is required is an understanding of the function of credit and banking as distributive-- as working partners in the establishment of the general rate of profit; not as somehow determinant of the rate of profit itself.

So one more time, how does the presence or the absence of "theory of credit" make the Tendency of the Rate of Profit to Fall, which is based on changes in the relations of the component parts of capital in the production process, right or wrong? And what does that theory of credit look like?

Take your time. Breathe deeply. .


[Angelus Novus]

Mr. union-busting management consultant is inventing a strawman. Heinrich's argument is that Marx wanted to develop a theory of finance and credit in order to complete Vol. III, not "prove" the alleged LTRPF. In other words, finance and credit is essential to Marx's entire theoretical edifice (because Capital was intended to be a theoretical whole, each category mutually presupposing, not a collection of mere episodes of the capitalist mode of production).

This is not a matter of dispute, BTW. This is based upon what Marx says to Engels and others in various letters. Without a theory of finance and credit, there is no complete theory of the capitalist mode of production.

It has a bearing upon the alleged LTRPF insofar as it cannot be regarded as "the" Marxian theory of crisis, but how you manage to twist that into something directly bearing upon the correctness of the LTRPF is just a testament to your poor reading comprehension skills.

In any case, I didn't mean to poke the hornet's nest and interrupt the circlejerk. Heinrich is writing a response to three critiques submitted to MR, and he's perfectly capable of arguing for his ideas.

I'll let S. Artesian continue his valuable work of advising bosses on how to more effectively squeeze surplus from railroad workers. I guess endless circlejerking about Heinrich on the Internet is his way of easing his bad conscience.


[Ocelot]
S. Artesian wrote:
How does the absence or presence of a theory of credit make a defense of the LTRPF on the basis of the OCC wrong?

As Angelus already pointed out, the challenge is not "a defense of the LTRPF on the basis of the OCC", but a systemic account of the immanent dynamics of crisis in capitalism. In that sense the attempt to ground a crisis theory purely on s/(c + v) is precisely an attempt to short-circuit an analysis of the total system - which requires a full theorisation of credit.

I have already made my arguments about why there is not only no demonstration as to why the VCC should rise, following the TCC, on the OCC thread, but that the basic historical development of production under capitalism is overwhelming evidence against rising social OCC/VCC. The attempts by some (including Kliman et al in that paper) to point to empirical evidence for FROP, as proof that Marx's OCC-based explanation must, ipso facto, be correct, is a monumental non-sequiteur. Such illogic can only be understood, imo, by the irrational faith position in the "Complete Marx" - a position, S Artesian, that I notice you fully supported in one of your comments on the Roberts' blog thread.

To reiterate, at the social level there is a basic contradiction between the development of the productive forces and the notion of a rising social OCC. But I accept that I will have to write up the ideas scattered throughout the OCC thread to make that argument more accessible (and open to proper critique). Nevertheless endlessly repeating "the TCC rises, therefore so must the OCC" like a mantra to ward off the evil "Marxists without Marx"* spirits, does not make it so.

S. Artesian wrote:
Credit, clearly, is derivative, is derived (as IMO is made clear in the Grundrisse) in the different turnover times of capital. Credit is the mechanism for "bridging" those differences, and as such has distributive properties-- working in the main to establish an "average" rate of profit, but also in accordance with Marx's notion that capitals of equal size will claim equal profits.

Your contention that credit is merely distributive is merely that - i.e. your contention. Certainly Marx ascribes the bridging function to it, in relation to turnover, in vol II, but it does not follow that Marx therefore felt that was all there was to say about the credit system.

S. Artesian wrote:
So unless we have an argument of credit being able to create value, without itself organizing the means of production as capital and without engaging labor power as wage-labor, exactly what impact on the accumulation of capital, and in the rate of re-valorization can a "properly functioning theory of credit" or the real functioning of credit play, except to make more acute the dynamics of such accumulation that leads to the LTRPF?

You seem to forget the implied assumption in the OCC-only "explanation" of the TRPF that capital can only be accumulated in the physical form of either c or v (or the "accumulation of the means of production" as I believe you prefer, iirc) but not M. Again, I'm not entirely clear what the justification for this physicalism is, because I've never really seen it made. It also strikes me that your position is effectively analogous to the neoclassical belief in exogenous money - i.e. that the growth of credit and its instruments (bank money, equity and other financial assets) is somehow external to the capitalist cycle and cannot affect its cycles of boom, bust, depression, etc.

I would like to hear how a "Complete Marx" explanation for a purely derivative credit function deals with the question of risk. What is the orthodox Marxist theory of risk again? How can you have a "Temporal Single System" without risk? I'd be interested to know the answer to that question.

---
* Such transparently religious symbolism in that chosen term of abuse.


[S. Artresian]

First off Angelus, I never was involved,participated in any union-busting activities. If you knew anything about US railroads you would know that employee organizations are protected under the Railway Labor Act.

I was the deputy chief of field operations, responsible for the safety and performance of the railroad and in that position I negotiated with the unions; opposed some of their initiatives; agreed with others; proposed my own, some of which were acted upon; disciplined employees; made day to day operating decisions and long term plans.

So you can either provide some evidence of union-busting or shut the fuck up. I expect however you'll do neither. So let me just tell everyone, I make no excuses nor apologies for what my profession was. Anybody is welcome to dig into the details and try and produce some evidence of "union-busting." Contact me privately, and I'll be more than happy to direct you to relevant sources of information with the Railway Labor Act Boards of Adjustment, and the unions that represented the railroad workers with whom I dealt.

Now, not to put too fine a point on it Angelus, but I was not responding to you. Ocelot made the comment :

Quote:
I find Kliman et als. overall defence of LTRPF on the basis of the OCC (and the "complete Marx") to be entirely wrong and Heinrich's assertion that the argument is "systematically" wrong, in the absence of a proper theory of credit basically correct.

That's what produced the question.

Just for clarification's sake-- public advisory-- I was a senior operating officer for a railway, and in that position actually rejected union claims for payment that were not justified according to the contract; actually issued mandatory directives to employees regarding the safety of the operation; and actually disciplined union members for violating the operating rules of the railroad.

And I did it all cheerfully, without regret. Never engaged in "union-busting."


[S. Artresian]
ocelot wrote:
As Angelus already pointed out, the challenge is not "a defense of the LTRPF on the basis of the OCC", but a systemic account of the immanent dynamics of crisis in capitalism. In that sense the attempt to ground a crisis theory purely on s/(c + v) is precisely an attempt to short-circuit an analysis of the total system - which requires a full theorisation of credit.

.

Sorry, that's not what you wrote in the earlier post. And that earlier post was all I was responding to. I have no horse in the race about complete theories of crisis in capitalism, other than what I myself have written, which is hardly a complete theory.

Quote:
I have already made my arguments about why there is not only no demonstration as to why the VCC should rise, following the TCC, on the OCC thread, but that the basic historical development of production under capitalism is overwhelming evidence against rising social OCC/VCC. The attempts by some (including Kliman et al in that paper) to point to empirical evidence for FROP, as proof that Marx's OCC-based explanation must, ipso facto, be correct, is a monumental non-sequiteur. Such illogic can only be understood, imo, by the irrational faith position in the "Complete Marx" - a position, S Artesian, that I notice you fully supported in one of your comments on the Roberts' blog thread.

Really? Can yo provide some evidence against rising social OCC/VCC over time in countries such as the US, UK, Germany, France... etc? I'd like to see that. Could you like take for example the S&P 500 largest non-financial companies and demonstrate that-- or the French 440 or the FTSE 100? Or is it your claim that the absolute surplus value extracted on a global basis offsets the increased OCC/VCC in specific areas.

I don't have "irrational faith" in the Complete Marx. I have no opinion, one way or the other about the complete Marx-- regarding Marx's own intentions to expand and deepen his work. In fact I wish he had.... I wish he had spent less time considering the Russian communal agriculture, and a bit more on the defeat of Reconstruction in the US, the transformation of agriculture under Juncker capitalism; the long deflation.

I do think is that it is very interesting, and I tend to agree with Kliman that Marx's correspondence means Marx thought Capital was complete, but only volume 1 was fit for publication. And I find it a useful antidote to the speculation Heinrich flogs regarding Marx's discomfort with the LTFROP.

I think Kliman raises a critical point, and then what Engels "did" to Marx, which Heinrich makes such a big deal of, was in fact the right thing, and Marx regards his own analysis of the LTFROP as complete.

Quote:
To reiterate, at the social level there is a basic contradiction between the development of the productive forces and the notion of a rising social OCC. But I accept that I will have to write up the ideas scattered throughout the OCC thread to make that argument more accessible (and open to proper critique). Nevertheless endlessly repeating "the TCC rises, therefore so must the OCC" like a mantra to ward off the evil "Marxists without Marx"* spirits, does not make it so.

Please do. And please account for the expanding value of the means of production, globally, over the last few years or so.

S. Artesian wrote:
Credit, clearly, is derivative, is derived (as IMO is made clear in the Grundrisse) in the different turnover times of capital. Credit is the mechanism for "bridging" those differences, and as such has distributive properties-- working in the main to establish an "average" rate of profit, but also in accordance with Marx's notion that capitals of equal size will claim equal profits.
Quote:
Your contention that credit is merely distributive is merely that - i.e. your contention. Certainly Marx ascribes the bridging function to it, in relation to turnover, in vol II, but it does not follow that Marx therefore felt that was all there was to say about the credit system.

Correct. That is my contention. That it is a bridge, and that it functions in accordance with Marx's analysis in establishing the general or average rate of profit. I never claimed that there is no more to say about credit. What I am asking is how does the fully developed theory of credit prove or disprove the validity of a theory of the LTFROP based on the OCC?

S. Artesian wrote:
So unless we have an argument of credit being able to create value, without itself organizing the means of production as capital and without engaging labor power as wage-labor, exactly what impact on the accumulation of capital, and in the rate of re-valorization can a "properly functioning theory of credit" or the real functioning of credit play, except to make more acute the dynamics of such accumulation that leads to the LTRPF?
Quote:
You seem to forget the implied assumption in the OCC-only "explanation" of the TRPF that capital can only be accumulated in the physical form of either c or v (or the "accumulation of the means of production" as I believe you prefer, iirc) but not M.

I don't understand what you're getting at? Are you saying that I'm not accounting for the implied assumption, or that I haven't explained why capital is accumulated in the "physical"-- actually social-- forms of "c" or "v"? Both?

My opinion regarding this "M" theory vs. physicality:

Why can't it be accumulated as "M"-- well it can, to a degree and for a certain time; but as Marx points out, in so doing, in accumulating it as "M" and only as "M" what happens? Self-expanding value has been interrupted. A cash hoard has been generated-- useful at times, but ultimately not capable of expropriating more surplus value, of offsetting the tendency of profits to decline, of competition to increase. Concrete example? Well, we can use the period of recession and recovery in the US 2001-2004-- when cash was hoarded, when the fixed asset replacement rate dropped below "1" in the US. What was the result? Some nice pockets of cash. And then what happened? Machinery had to be replaced. Investment had to resume. And then what happened? Capital expenditures increased in everything from airplanes to railroad freight cars to petroleum extraction. And then what happened? Krikey Jack, looks like the rate of profit peaked and started down (But we're getting ahead of ourselves).

How about we look at today with all those cash hoards of industry-- about $2 trillion for US industries alone-- with enough cash on hand right now to make every debt payment due over the next five years. So bustling right along is the economy, you think? Or maybe that extra cash all came because the OCC declined and more labor was employed? Doesn't exactly square up, does it, since the US labor force participation rate is at a post WW2 low?

I know, I know, I'm being US centric, but look if you've got some data that says "globally X Y Z have happened" please share it.

And if you or our Angel want to explain Heinrich's monetary theory of value, please go right ahead.

Simple version of "why not M?" Because, in short, M is nothing. M' is everything. On Wall Street, they say "Cash is trash." And they aren't kidding. Until suddenly everything turns to shit and then "Cash is king." See for example 2008, 2009-- when the Fed had to open up unlimited currency swap lines with central banks all over the world, and Brazil's central bankhad to use its to augment its dollar reserves so it could step in and directly provide guarantees for Brazil's export/import trade.

Another example of the "not M" as value of course, is the actions of the banks throughout Europe in the US which, upon obtaining funds in exchange for various levels of collateral from the Fed and the ECB did what with the M-- oh, they put it right back into deposit accounts at those central banks. And how was the old rate of profit doing then in 2008 2009? How was the old accumulation of capital making out? Good? How was the old expansion of value going.?

What was it Marx said, somewhere something like "try as we might, we can come up with nothing that counts as capital that does not in the end resolve itself into either the means of production or the means of subsistence"??? Something like that.

So I wouldn't be surprised if I'm totally misunderstanding what you are trying to get at with M, but there it is. Have at it.

One other point I'd like to make on the physicality argument: Let's not forget what capital is-- it is a specific social organization of labor, a specific social distribution of labor time; it is a specific method of producing use-values. Without the use-value, the exchange value wither and dies. And money is only the abstraction of and from exchange value. That's fundamental to Marx's analysis, no? The accumulation of capital as M' is, as Marx makes crystal clear is only the beginning of another lap around the park.


[S. Artesian]

Found the quote on Marx's "physicality" from volume 1:

“Accumulation requires the transformation of a portion of the surplus product into capital. But we cannot, except by a miracle, transform into capital anything but such articles as can be employed in the labour process (i.e. means of production), and such further articles as are suitable for the sustenance of the worker (i.e. means of subsistence)…In a word, surplus-value can be transformed into capital only because the surplus product, whose value it is, already comprises the material components of a new quantity of capital.”


[Dave B]

Whilst I agree for once with the thrust of S Artisan’s 185 post and quotation as regards capitalism operating normally, or not madly.

The topic is of capitalism in ‘financial’, or money ‘circulation’ crisis, I think.

Normally the functioning capitalist, the personification of capitalism, the profiteer of enterprise, converts his surplus product with surplus value embodied in it for cash ie he sells it.

Only to buy more raw material and labour power (and fresh fixed capital).

That capitalist of course could just sell his surplus product for gold money and hoard it in a tin box and become a “miser”.

Or be a ‘merely a capitalist gone mad’.

Gold in a tin box has no power to expand in value or lay more 'golden eggs'; to do that you need to buy labour power and use it to employ or work manufacturing productive capital.

However not all capitalist who sell their surplus product for gold money are mad.

They merely become money capitalists.

They lend it at interest to ‘profiteers of enterprise’ or ‘functioning capitalists’; for them to ‘buy labour power and use it to employ or work manufacturing productive capital’.

The money capitalist has opted out of being a ‘functioning capitalist’.

The ‘profiteers of enterprise’ and ‘money capitalists’ then split the surplus value, into interest for the money capitalist and profit of enterprise for the ‘profiteer of enterprise’.

Part or all of the productive capital that a ‘profiteer of enterprise’ utilises may be his own or part or all of it may have been paid for and be de-facto owned by the money capitalist.

At least as collateral of the loan made by the money capitalist.

These loans ‘roll over’.

In other words a profiteer of enterprise capitalist might borrow £100,000 for a year and at the end of it renew the loan or if not; the profiteer of enterprise capitalist pays it off by borrowing £100,000 from another money capitalist and carries on.

In the old days when concrete gold money was limited and didn’t grow on trees.

When there was an economic crisis due to overproduction or whatever the money capitalists got spooked first and worried that that the capitalist enterprises that they have lent money to might go belly up and the value of the collateral ie the productive capital might become worth scrap value.

They wanted to cash out and sit on their returned money capital until things looked safer.

A shortage of willing money capitalists meant the rate of interest on money capital rose potentially above the current rate of profit; which might have been stressed already.

When a profiteer of enterprise, who might in fact have not been in trouble, couldn’t roll over a loan without paying out more interest than he can possibly make as profit he packs in and/or defaults on his loan.

Defaulting profiteers of enterprise and factories closing down etc spooked the money capitalists even more and interest rates demanded by those that still dared to loan increased further and you had a chain reaction.

Including fire sales and reduced ‘market value’ of bankrupt stock and productive capital etc.

The departments of capital that produced raw material, or ‘c’, collapsed as did the department that had produced consumables for employed workers.

As did the department that produces fixed capital.

And maybe in part even the department that produces consumables for the capitalist class.

The department that produces gold money may have got a boost as more surplus value got converted to that.

I suppose after the value or at least market value of productive capital crashes to a certain level some capitalists who got out early with cash can snap them up later for a song and resume production as before.

In other words make the same amount of surplus value as before on capital that is nominally worth less or cost them less.

Or in other words make a higher rate of profit than the former now bankrupt owners of that productive capital had.

The capitalists after all are not Marxists (much) and their rate of profit is profit divided by the ‘market value’ of capital as they see it.

With the innovation of quantitative easing and unlimited green money for the capitalist class at 1% ; all that has been ‘nipped in the bud’.

It will no doubt blow up later.

------------

The money capitalist can also be a usurer which is slightly different to being an ordinary capitalist.

The usurer is only interested in someone who has an income stream potentially greater than they need to for themselves.

We have a situation now in the first world were the workers are up to the eyeballs in debt and spend a considerable proportion of their working day to pay interest on loans, which is surplus value at the end of the day.

So for instance I know of a train conductor who earns about £40,000 a year working 60 hours a week or whatever and half her take home pay goes on interest only on a home loan.

As an example that person might be working say 20 hours a week for themselves as necessary labour time or whatever. 10 hours a surplus value to her employer and functioning capitalist, and 30 hours to a non productive usurious money capitalist.

To say nothing of the payday 2000% per annum loan sharking stuff.

That is an increase in surplus value from an extension of the working day accruing to the usurious money capitalists.

And where interest payments on usury is not paid out of working longer hours it no doubt gets squeezed out of necessary labour time and the ‘physical’ things it can purchase.

Which doesn’t slot in perfectly with capitalism proper, as Karl analysed it I think.

You can actually increase the modern working day to more than 60 hours if you include double income working families.

Where the ‘traditional’ working man’s necessary labour time puts the bread on the table and the working woman pays the interest on the mortgage, or the other way round.

The usurious interest on national debt comes from some form of surplus value or in other words ultimately the workers.

National debt is OK for capitalism when it involves productive infrastructure because that is like investing in productive capital.

Pushing money onto workers for consumption in order to get them into a position of debt peonage is another.

Usurers and beneficiaries debt peonage were considered by Karl I think as essentially parasites of capitalists proper.

Actually some of these Von Mises functioning capitalist people are getting pissed of at this kind of thing.

Ie too much of the workers surplus labour time and value gravitating to the gangster capitalists and new feudal aristocracy of the financial class.

Déjà vue!

Quote:
The restless never-ending process of profit-making alone is what he aims at. [8] This boundless greed after riches, this passionate chase after exchange-value [9], is common to the capitalist and the miser; but while the miser is merely a capitalist gone mad, the capitalist is a rational miser. The never-ending augmentation of exchange-value, which the miser strives after, by seeking to save [10] his money from circulation, is attained by the more acute capitalist, by constantly throwing it afresh into circulation. [11]

http://www.marxists.org/archive/marx/works/1867-c1/ch04.htm

Karl defined economic crises as 'ultimately' a circulation of money crises.


[Joseph Kay]
I know the empirical question of whether or not profits are falling is slightly distinct from the theoretical/textual beef, but this may be of interest: Deloitte: On the Falling Rate of Profit. Seems to back up Kliman's empirical claims anyhow.
[Ocelot]
S. Artesian wrote:
Found the quote on Marx's "physicality" from volume 1:

“Accumulation requires the transformation of a portion of the surplus product into capital. But we cannot, except by a miracle, transform into capital anything but such articles as can be employed in the labour process (i.e. means of production), and such further articles as are suitable for the sustenance of the worker (i.e. means of subsistence)…In a word, surplus-value can be transformed into capital only because the surplus product, whose value it is, already comprises the material components of a new quantity of capital.”

Yes, but, Volume II*.

Unless you don't accept that volumes I, II & III represent presentation at differing levels of abstraction, descending towards the more concrete? The Rosdolsky-style reading is pretty widespread these days, but not universal, for sure.

However I do get the feeling that a lot of orthos are more comfortable with a Vol I -> Vol III reading that kinda ignores the section on the circulating process of capital, as distinct from the immediate process of production of volume I or the process of capitalist production as a whole of vol III. (and in this, as I previously stated some while back, Heinrich imo, once again fails to break sufficiently from the ortho habits).

Anyway, out of time at this end. Will return to SA's previous post at a later date (tho I doubt anyone's actually still reading this thread at this stage, but whatever...)

---
* The quotes from Vol II that justify the persistence of a portion of total social capital as money-capital are too many to choose from, and are implied in the entire logic of value-in-proces, but for the hell of it:

v2ch18 wrote:
To set the productive capital in motion requires more or less money-capital, depending on the length of the period of turnover. We have also seen that the division of the period of turnover into working time and circulation time requires an increase of the capital latent or suspended in the form of money.

[jura]

On the question whether Marx regarded the three volumes of Capital as basically finished, here's some interesting, if tangential, evidence – an article on Marx's interest in financial markets in the 1860s.

http://rrp.sagepub.com/content/45/2/162.abstract


[mikus]

Several randomish points.

1. Ocelot's claim that a rising TCC might go alongside a falling VCC is true in a general sense, but doesn't tell us anything about what actually does happen. Kliman's statistics show that the rate of exploitation (s/v) stayed roughly constant over the last 30 or so years, while the rate of profit fell. If this is the case, then it necessarily follows that c/v rose, since the rate of profit is simply (s/v)/[(c/v)+1]. So the possibility that the VCC of capital falls does not seem to have panned out. And this is where it's worth reiterating Kliman's point that the theory of the tendency of the rate of profit to fall is a claim about what does happen, not what must happen in every instance.

2. Red is still touting his own mathematical illustration as some sort of amazing point, but it doesn't advance the debate in anyway. Firstly, it shows that the rate of surplus-value might rise faster than the rise in the value composition of capital. True, but no one has ever claimed otherwise. Secondly, it shows that it might do so permanently, if capital is disaccumulated. True, but the theory is a theory of capitalist accumulation, not a theory of what might happen theoretically if capitalists disaccumulated their capital. Thus his maths show nothing about the theory of the tendency of the rate of profit to fall, which assumes constantly rising productivity over the course of capitalist accumulation.

3. There are two separate questions that I think might be getting conflated. The first is whether or not Marx himself thought that his theory was basically complete (and "completeness" is of course relative to what Marx himself wanted his theory to do -- it would obviously be possible to have a theory that attempts to explain more and more forever and ever, and thus it might be said that no theory is ever "complete"), and the second is whether or not the theory itself was in fact basically complete. It is quite possible to answer the two questions differently. In my opinion the answer to the first question is clearly "yes," given that Marx himself explicitly stated it in the letter that Kliman cites. My answer to the second question is "no", however, since there are certain issues with the theory, particularly surrounding the theory of money, that have to be corrected and updated to give a correct theory of finance.


[S. Artresian]

Actually Marx continues that "theme" from volume 1 in volume 2:

Quote:
vol. II, p. 470: “As long as we were dealing with capital’s value production and the value of its product individually, the natural form of the commodity product was a matter of complete indifference for the analysis, whether it was machines or corn or mirrors….In so far as the reproduction of capital came into consideration, it was sufficient to assume that the opportunity arose within the circulation sphere for the part of the product that represented capital value to be transformed back into elements of production, and there into its shape as productive capital...But this merely formal manner of presentation is no longer sufficient once we consider the total social capital and the value of its product. The transformation of one portion of the product’s value back into capital, the entry of another part into the individual consumption of the capitalist and working classes, forms a movement within the value of the product in which the total capital had resulted; and this movement is not only a replacement of values, but a replacement of materials, and is therefore conditioned not just by the mutual relations of the value components of the social product but equally by their use-values, their material

I don't see how we ever get beyond the materiality; the material relationships that make up capital... and their earthly origins.


[kingzog]
i thought Heinrich's article was about disproving the LTFRP? the title of this thread is Heinrich contra LTFRP. this sounds like either a major concession or some attempt to back-pedal Novous. EDIT: sorry this is a response to something further back, i somehow missed most of the new posts.
[ocelot]
S. Artesian wrote:
I don't see how we ever get beyond the materiality; the material relationships that make up capital... and their earthly origins.
v1ch33 wrote:
He discovered that capital is not a thing, but a social relation between persons, established by the instrumentality of things

or even

1859Contribution_ch1 wrote:
Only the conventions of our everyday life make it appear commonplace and ordinary that social relations of production should assume the shape of things, so that the relations into which people enter in the course of their work appear as the relation of things to one another and of things to people. This mystification is still a very simple one in the case of a commodity. Everybody understands more or less clearly that the relations of commodities as exchange-values are really the relations of people to the productive activities of one another. The semblance of simplicity disappears in more advanced relations of production. All the illusions of the Monetary System arise from the failure to perceive that money, though a physical object with distinct properties, represents a social relation of production. As soon as the modern economists, who sneer at illusions of the Monetary System, deal with the more complex economic categories, such as capital, they display the same illusions. This emerges clearly in their confession of naive astonishment when the phenomenon that they have just ponderously described as a thing reappears as a social relation and, a moment later, having been defined as a social relation, teases them once more as a thing.

If capital is not a relation between things, nor even a relation between things mediated by people, but a relation between people mediated by things, then there is no apriori prohibition on that relation being objectified not only in things (mop) but in the social constructs that govern people's relations to things (property titles, money, etc).

The whole significance of capital as value in process in part 1 of Volume 2 is that it makes no more sense to think of C or C' as "capital in itself" in isolation from the whole circuit. The blockage in one particular moment of the cycle of capital, the failure to progress to the next metamorphosis, means not the accumulation of capital in that phase (whether M or C) but the breakdown of the cycle.


[S. Artresian]

I said the material relationships that make up capital-- that is to say the social mediation of the labor process.

The labor process is not about the making of money. The social mediation is. Certainly and always, a portion of capital exists as money-capital. That's not at issue. The issue is whether an existence in any form that does not engage labor, does not counterpose labor to the conditions of labor, to the means of production organized as private property can be sustained by capital.

Can capital accumulate without expanding the means of production as commodities, as values?


[ocelot]
Joseph Kay wrote:
I know the empirical question of whether or not profits are falling is slightly distinct from the theoretical/textual beef, but this may be of interest: Deloitte: On the Falling Rate of Profit. Seems to back up Kliman's empirical claims anyhow.

While we're in the reports business, here's one from Forfás (Irish business research quango - kudos to GeorgeStapleton for finding this one). The tables of interest are 2.5 & 2.6 value added and payroll costs for Irish-owned businesses, and 3.5 & 3.7, the same for foreign-owned companies.

As in the eurostat structural business statistics (also worth having a play with, although sadly far too little historical data at this point - overview tables), the proposition would be to take turnover as a proxy for total product = c + v + s; value added (turnover minus goods & services purchased) as proxy for s + v; and payroll as proxy for v. The Forfás report only gives value added as % of turnover and payroll as % of value added, but eurostat has a convenient metric - gross operating surplus, which is value added minus payroll - i.e. a proxy for s. I leave you to look at the Forfás report, for e.g. which indicates, over the 2001 - 2010 period in Ireland, a rise in the value added as % of Sales/turnover, and a fall in the % of value added going to payroll - i.e. a rise in the rate of value added going to profit. Make of it what you will - but don't forget to marvel at the payroll as % value added for Chemicals (read Big Pharma making use of Ireland's tax haven status) in table 3.7.

edit: forgot to add, eurostat has a metric - general operating rate (INDIC_SB code V92110) - which is general operating surplus divided by turnover (i.e. s/(c+v+s)) which is not a perfect proxy for s./(c+v) but goes up and down correlatedly, if not matching amplitude (at least according to the spreadsheets I've played with so far).


[Dave B]

Karl and Fred discussed the banking crisis of the 1860’s in some depth in volume III I think.

Eg chapter xxix to xxxv

I wasn’t interested in it at time and thus didn’t pay too much attention to it when I read it almost 10 years ago; which was a bit stupid.

The problem with the rate of profit is determining the real or actual value of the key component of fixed capital.

rather than c+v+s; or turnover

What the capitalist class do is to value their business or their capital according to how much profit they are making; what Karl called "fictitious capital".

Thus if the average rate of profit is 10% and a business makes £10 million profit the company is worth £100 million as far as the capitalists are concerned.

That is reflected in the earnings (profit) to price ratio and its inverse.

http://en.wikipedia.org/wiki/Price%E2%80%93earnings_ratio

The moderating affect on that is that if some capitalists are making £10 million profit on capital that can be reproduced or bought new for £10 million. Then they will move in and go into competition and drive down the 'real' non fictitious rate of profit to what it should be etc.

And the fictitious value of the capital will return to normal real value.

That should be fairly straightforward with small capitals.

If a large business with a necessary large capital is making too much profit on the real value of its assets etc taking them on and setting up a Boeing or Lockheed Martin of your own is more difficult and liable to lead to overproduction and a nasty struggle to the death and winner takes all.

I seem to remember Karl or Fred almost endorsing the Bank of England increasing the quantity of credit money above the legal limitation of 60;40 or 40;60 gold reserve requirement or whatever to alleviate the credit or interest rate crisis.

And that Fred had known Baron Overstone personally when he was his banker in Manchester.


[Dave B]

I might be being a bit of a scientific pedant, like Karl was, but I don’t like this idea anyway of "proving Laws".

Or somehow a Law isn't a Law unless it is 'proven'.

Quote:
Laws differ from scientific theories in that they do not posit a mechanism or explanation of phenomena: they are merely distillations of the results of repeated observation. As such, a law is limited in applicability to circumstances resembling those already observed, and may be found to be false when extrapolated. Ohm's law only applies to linear networks, Newton's law of universal gravitation only applies in weak gravitational fields, the early laws of aerodynamics such as Bernoulli's principle do not apply in case of compressible flow such as occurs in transonic and supersonic flight, Hooke's law only applies to strain below the elastic limit, etc. These laws remain useful, but only under the conditions where they apply.

http://en.wikipedia.org/wiki/Scientific_law


[Nate]
Some further debate on this if you haven't seen it:
http://thenextrecession.wordpress.com/2013/07/28/heinrich-a-small-rejoinder/
[Dave B]

I mean this is just amazing coming from somebody who sits on a scientific committee!

Quote:
……..that the law ‘explains’ but does not ‘predict’ is in danger of conceding to Heinrich that the law is ‘indeterminate’, namely that it is the law of the tendency of the rate of profit to fall, rise and stay the same as circumstances permit.

That is no law, as Heinrich says.

That is what scientific laws are before they are ‘promoted’ to a “theory”.

There is a better example than gravity and that is the Gas Laws.

Early theoretical science that became the Rosseta stone to the whole subject of chemistry and much of physics

They were combined into the ideal gas equation or ‘Law’.

http://en.wikipedia.org/wiki/Gas_laws

The gas equations only work ‘as circumstances permit’ so much so that very few circumstances permit it at all!

I mean if we had been on a planet with an atmosphere 10 times denser than it is here it probably would have set back science 500 years.

Thus;

Quote:
An ideal gas, by definition, follows the Ideal Gas Law, which states PV=nRT. Any behavior for which that equation does not hold is considered non-ideal.
What then are the causes of non-ideal behavior? The Ideal Gas Law doesn't work for many gases (in other words, many gas are not actually ideal) because the Gas Law makes two assumptions, that in certain conditions break down.
circumstance #1 is that there are no interactions between atoms/molecules in the gas phase. In this model, there are no attractive or repulsive forces between two neighboring atoms/molecules in the gas phase. This is not always correct, and especially at very low temperatures, gases tend to condense, and so attractive forces between them start to be significant. Attractive forces tend to make the measured pressure lower than it is predicted to be.
circumstance #2 is that the volume of the container holding the gas is infinitely larger than the volume taken up by the gas molecules themselves. In other words, it assumes that molecules have zero volume, which is of course not true. This assumption breaks down significantly at very high pressures, where the volume taken up by the gas is significant compared to the volume of the container. To correct for this, the molecular volume taken up by the gas is subtracted from the volume of the empty container.
Therefore, there are significant deviations from the Ideal Gas Law at high pressures or very low temperatures. The actual amount of deviation depends on the molecules individual properties. H2 gas or He gas are both very "ideal" gases under most conditions. However, H2O, with strong intermolecular attractive forces, or SO2 (a fairly large molecule also with strong intermolecular forces) do not obey the Ideal Gas Law under most conditions.
http://wiki.answers.com/Q/What_is_deviation_from_ideal_behavior_of_gases

Are Boyle's law, Charles's law, Gay-Lussac's law and Avogadro's law “no laws” at all then because none of them were Germans?

They all led to the kinetic theory of gases that explained the 'circumstantial' gas laws.

The Kinetic theory of gases, as a theory is something proved, as much as anything is proved in science.

You can still theorize with laws under specified IF‘circumstances’.

If total surplus value in each successive turnover remains the same.

And if the second of the two definitive features of capitalism hold true and s accumulates or is added to C

Then

P(1) = s(1)/[C(1)]

P(2) = s(1)/ [C(1) +s(1)]

P(3) = s(1)/ [C(1) +s(1) +S(1)]

P(4) = s(1)/ [C(1) +s(1) +S(1) + S(1)]

And;

P(t) = s(1)/[ C(1) + {t -1}s(1)]

Divide numerator and denominator by s(1);

P(t) = 1/ [ {C(1)/s(1)} +t -1]

To tidy up a bit;

P(t) = 1/ [ {C(1)/s(1)} -1 +t ]

Bollocks to that as we say;

Let;

{C(1)/s(1)} -1 = k

It is a constant some never changing ‘given’ number.

Then;

P(t) = 1/ [ k + t]

Change that into standard format;

Ie

P(t) = y

And t =x

y = 1/ [ k + x]

and draw a graph with rate of profit as y or the vertical axis and t for turnover or time as the x or horizontal axis.

And you get a descending log curve, top RHS quadrant (you need to shift it to the left by k I think)

http://www.bbc.co.uk/schools/gcsebitesize/maths/algebra/furthergraphhirev2.shtml

Then you can ‘see’ what it looks like

You can differentiate or get the derivative to get the rate of the decline of the rate of profit;

ie dp/dt

or

dy/dt

as 1 /[ k +x] ^2

or in other words 1 over [k+x] squared or to the power 2.

Or

dp/dt = 1/ [ k +t] ^2

My algebra is rusty does anyone know of practising 18 year maths kid to check that standard differentiation?

That would have been like shelling peas when I was 18.

Karl and Fred weren’t that daft there never was a labour theory of value there was a law of value that only fully operated in the circumstances of simply commodity production in chapter one.

It broke down in capitalism as Fred reiterated in his supplement in Volume III.

The investigation of the law of value in chapter one led to a concept of value or at least an expansion of it as a ‘scientific object’ as the materialist Hegelian and Karl’s Mentor Fuerbach would have put it.

I did that on two bottles of wine so is bound to be something wrong with it.


[ocelot]

Louis Proyect: Some thoughts on Michael Heinrich versus “the classics”

for info

Quote:
I suppose my problem with the debate between Michael Heinrich and his detractors is that there is so little attention paid to this [international] dimension. Andrew Kliman, Michael Roberts, and the other “classic” Marxists are totally absorbed in what happens in a country like the U.S. or Britain, as if the most recent crisis was a sign of a mounting inability of capitalism to continue—functioning in some way as a machine that has faulty parts at the core, like the Yugo or the Edsel.

Heinrich is correct, I suppose, to point to deficiencies in this approach but does not do enough to acknowledge that Marx understood how the system could continue going forward mercilessly and relentlessly to maintain profits.


[kingzog]

Sorry for the belated response.

Nate wrote:

Quote:
If I understand correctly, Heinrich thinks Marx rethought his stuff on the FROP and abandoned that idea. He also thinks it's not a very good idea and so when/if Marx abandoned that idea, Marx made a good move in doing so. As such, it doesn't seem to me a surprise that he wouldn't say much about the places where Marx talked about that idea. And if Heinrich thinks this rethinking happened after 1862 then it's no surprise he'd not mention stuff before the rethink much. And what Marx said before that supposed rethink happened wouldn't be evidence that the rethinking didn't happen.

There is absolutely zero evidence that Marx did rethink the LTFRP---whatever "rethinking" means precisely. But, even if Marx recanted the LTFRP on his deathbed--- much in the same way that creationists like to say that Darwin did in regards to evolution... well, the LTFRP still stands as a coherent theory.

As far as the 61-63 manu goes; it was surprising only because Heinrich relies so much on Marxology otherwise. The MR article looks at only two instances of the LTFRP in Marx's work. It looks at Grundrisse and then skips to vol III. The 61-63 manu is the last unedited-by-Engels writing on the LTFRP we know about. However, your argument against "looking at places where Marx talked about the idea pre-1862" would apply to the Grundrisse just as much to the 61-63 manu. Why not just look at Vol III alone? And anyway, quite frankly, the argument that...

Quote:
it doesn't seem to me a surprise that he wouldn't say much about the places where Marx talked about that idea

...is just absurd. The LTFRP is the very idea that Heinrich is critiquing---whether or not the argument about Marx giving up on it stands. And since there was no "rethinking" on Marx's part ---that we know of--- then your argument is even more absurd as it would seem crucial to search, in every instance of the LTFRP's appearance, for some sort of clue as to whether or not Marx had second thoughts about it. Also, my point isn't that pre-1862 work on the LTFRP disproves later "rethinks" (theres that vague word again) it's that in light of the lack of any solid evidence of Marx refuting or "rethinking" the LTFRP, why (re)think Marx refuted or re-thought it?


[Angelus Novus]
kingzog wrote:
it was surprising only because Heinrich relies so much on Marxology otherwise. The MR article looks at only two instances of the LTFRP in Marx's work.

No.

There's this:

"These observations can be found in his Book on Crisis, a collection of materials about the crisis ordered according to countries. The Book on Crisis will be published in Karl Marx and Friedrich Engels, Gesamtausgabe (MEGA) (Berlin: Dietz-Verlag, later Akademie-Verlag, 1975), II/14 (henceforth MEGA; the MEGA is divided in four sections: the Roman number stands for the section, and the Arabic number for the volume in this section.)"

And this:

" In 1875, a comprehensive manuscript emerges which was first published under the title Mathematical Treatment of the Rate of Surplus-Value and Profit Rate."

And the various letters referred to indicating Marx's preoccupation with the importance of the credit system.

So your statement is demonstrably false. I'm not trying to be condescending, but this statement feeds my suspicion that a lot of people taking aim at Heinrich have only given a cursory reading of the article.


[S. Artresian]

The assertion that animated this latest round of the discussion was Ocelot's:

Quote:
I find Kliman et als. overall defence of LTRPF on the basis of the OCC (and the "complete Marx") to be entirely wrong and Heinrich's assertion that the argument is "systematically" wrong, in the absence of a proper theory of credit basically correct.

That's the issue that requires clarification. Whatever Marx's preoccupation with the credit system, the issue is how does the credit system determine the validity or lack thereof of a LTRPF which is based on the OCC-- the OCC being itself a mediation, an expression of the correlation between the technical composition of capital and the volume of capital.

So if we can address that issue, that would be most helpful, Determining the validity of the LTRPF is quite a bit different than simply giving the tendency its fullest, most acute, etc. etc. expression.

After we get an answer to that, I'm more than happy to sort some other issues...

can capital accumulate as capital without expanding the value of the means of production which are themselves produced as commodities?

with the the real domination of capital amounting to a shift to of relative surplus value to reduce the cost of production, is it inherent in that shift that the capital accumulated as expanded value in means of production replaces living labor disproportionately?

is there a "law" as Marx refers to it in the Grundrisse regarding the accumulation of fixed assets?

is there historical evidence that the law of the tendential fall in the rate of profit is just that: a "law" of a tendency? Can a historical connection be demonstrated between accumulation of capital ; impaired profitability; "crisis"-- or economic contraction; restoration of profitability and resumed accumulation, and/or failure to restore profitability and destruction of accumulated capital?

We are, after all, talking about historical materialism when we're talking about Marx.

But first things first... that bit about the fully developed credit system being determinant being first.


[ocelot]
S. Artesian wrote:
The assertion that animated this latest round of the discussion was Ocelot's:
Quote:
I find Kliman et als. overall defence of LTRPF on the basis of the OCC (and the "complete Marx") to be entirely wrong and Heinrich's assertion that the argument is "systematically" wrong, in the absence of a proper theory of credit basically correct.

That's the issue that requires clarification. Whatever Marx's preoccupation with the credit system, the issue is how does the credit system determine the validity or lack thereof of a LTRPF which is based on the OCC-- the OCC being itself a mediation, an expression of the correlation between the technical composition of capital and the volume of capital.

The quickest way to demonstrate the incompleteness of any argument based solely on the OCC (a foundation I reject, as previously mentioned), is to ask the following question: "What role does the wage labour and means of production employed in the state/public sector play in relation to total social OCC?".

Now, I grant you, that in itself, is a slighltly different objection than the missing credit system, in that it points out that you can't analyse the dynamics of a national economy - even at a level abstracted from international trade and the world market - without a descending to a level of abstraction that includes the role of the state as employer (and, via central banking, of the banking/credit system).

Nonetheless, it points out how little thought through ortho positions on the OCC really are, that this point is not admitted (at least within the argument over whether Capital I-III contains a complete explanation of capital's basic dynamic and its immanent crisis*).

Heinrich argues that Marx's initial plan to take elements and categories of the capitalist system one at a time in isolation from others, before progressing down the "abstraction chain" to more concrete levels of determination, kept breaking down - he gives the example of Marx's initial idea of treating "capital in general" and "competition of many capitals" separately for e.g. Heinrich's claim then is that the attempt to analyse the immanent contradictions behind crises at a level abstracting from a full theory of credit (including credit money, banking, etc) and the state (in its macro-economic roles as employer and MoP consumer and central banking manager) is unsustainable. Which I agree with - as I say, with the added observation that you can't even calculate the social OCC without including at least the state. However Heinrich also proposes that it is not possible to abstract from the world market either, which I am less sure on. Which is not to say that I believe its possible to explain the epochal crises of the 1930s and the present without looking at the global picture, but rather that it seems it should be possible to have a macro level of abstraction between vol III and the world market. In fact, it may even be necessary to explore the two-way, mutually determinative relations between economic development at the state level and at the international one. Not to mention the more regular cyclical crises that national economies experience without necessarily being tied to global crises.

Also the reasoning that Heinrich gives for the impossibility of analysing actually existing crises so long as "An exhaustive analysis of the credit system and of the instruments which it creates for its own use (credit-money, etc.) lies beyond our plan"**, seems fair enough to me:

Quote:
Here [following Vol3,ch 15 quote], Marx points out a fundamental contradiction between the tendency towards an unlimited production of surplus-value, and the tendency toward a limited realization of it, based upon the “antagonistic conditions of distribution.” Marx is not advocating an underconsumptionist theory here, which only takes up capitalism’s limitations upon the possibility for consumption by wage-laborers, since he also includes the “drive to expand capital” in society’s power of consumption.35 It is not only the consumer demand of the working class, but also the investments of businesses that determine the relationship between production and consumption. However, the limitations upon the drive for accumulation are here not further substantiated by Marx. To do that, it would have been necessary to include the credit system in these observations. On the one hand, the credit system plays a role here, which Marx worked out in the manuscripts for book II. The realization of surplus-value in an amount of money beyond the capital advanced as c + v is ultimately made possible by the credit system.36 On the other hand, that which was already clear to Marx in the Grundrisse must also be systematically assimilated: “in a general crisis of overproduction the contradiction is not between the different kinds of productive capital, but between industrial and loan capital; between capital as it is directly involved in the production process and capital as it appears as money independently (relativement) outside that process.”37

* in other contexts plenty of ortho-tradition authors have debated over what to make of the public sector, without coming to a consensus AFAIK

** Vol3Ch25


[Dave B]

There is a basic Marxist analysis or analyses of the state intervention in production and the invested capital involved thereof.

Although within different nationalist capitalist classes there are different ideologies.

The Scandinavian and European capitalists class adopt the ‘Marxist’ interpretation; not deliberately of course.

“Generally” the products and services of the ‘state enterprises’ are universally and to a certain extent equally utilised or consumed by all the individual national capitalist enterprises and/or the workers that are employed in them.

The products and services that they supply can be sold at a level that makes an average rate of profit on capital.

[Although that might be worthy of further analysis it is not particularly interesting at this point.]

They can equally be sold below there ‘price of production’ ie at a price that doesn’t realise the average rate of profit on capital and obtain all the surplus value due to it.

Thus those state enterprises ‘give up’ to somewhere a proportion of their surplus value.

The beneficiaries are the ‘general’ national capitalist class that might have for instance their coal, electricity, water and road transport provided at a discount price ie at cost of production and thus minus surplus value.

Thus the surplus value of and due to the nationally owned state capital is transferred to and redistributed ‘equally’ amongst the individual capitals of the nation state that consume them.

These state enterprises producing commodities below the price of production can also provide products and services to the working class themselves.

That, in that case, can have the effect of reducing the necessary consumption fund of the workers and thus the nominal price of national wage labour.

Which the national capitalist class can take advantage of by paying them less.

So we could take the national healthcare and education systems as an example.

It is ‘formally’ the workers ‘responsibility’ to reproduce their own labour power and the labour power of little immature future workers out of their own necessary labour time.

That might necessarily involve for more modern advanced workers paying into some health insurance fund and paying for the kids to go school etc.

If all that is ‘free’ in one country the national capitalist class are not going to pay their workers the same as another lot on the other side of a river for whom it is not.

There was a classic example of two General Motors factories on either side of a river dividing Canada and the US.

The Canadian workers got less and their wages were ‘deducted’ due to the fact that the American workers needed more, for medical insurance.

Many of the less ideologically daft US capitalists actually are in favour of national healthcare systems as the per capita or per worker costs for necessary healthcare, which the bean counters are cognisant of, are lower.

That kind of ‘Marxist’ justification to the capitalist class for the welfare system was in the Beveridge Report for the introduction of such a system in Britain.

There is a kind of seminal example of this I think, under a slightly different paradigm, as with the price of bread from Fred.

But you might need a bit of intelligence and imagination to join the dots so to speak.

http://www.marxists.org/archive/marx/works/1881/07/09.htm

There was a ‘brilliant’, and it was, ultra orthodox Marxist pamphlet by the SPGB opposing the child benefit system in the 1940’s.

The efficient supply of some national products and services eg the supply of utilities eg water, power, transport and healthcare and education are best provided by ‘monopolies’.

But you can’t trust an individual capitalist, even a patriotic one, with a monopoly.

Any muppet in the UK without a degree in economics can recognise what a bloody disaster the ideological privatisation of such things has been.

That is not to say there are not tensions within a national capitalist class.

Some sections of a national capitalist class don’t need educated workers (or healthy workers, who you can get ten to the dozen from Mexico or Poland) so get no benefit from having them available and paid for at a discounted price.

Some key national and transnational industries that require concentrated massive capital have a strategic importance even amongst allies.

Thus you don’t want to be dependent on the US for all your planes SAT NAV or internet etc.


[S. Artresian]

Re the "credit issue:" What's been presented in Ocelot's most recent post is pretty much the same as his original contention-- that without a fully developed theory of credit, we can't comprehend the real 'nature' or mechanisms of crisis. So we haven't moved the discussion very far along, since 1) the issue was how does the "fully developed theory of credit" determine the validity of the LTFROP which is based on changes in the organic composition of capital 2) I actually think the reverse is the case-- that without understanding the mechanisms of crisis, the functions served by crisis, the changes crisis introduces in the relation among c, v, s, there can be no understanding of the function of credit.

Re the state: 1) Many many Marxists have analyzed the role of the state in the reproduction of capital. The analyses of course vary in quality, accuracy etc etc but it's really a mistake to say that "orthos" (orthinologists?) have not even engaged the issue of the role of state employment and state owned production.

This by Heinrich:

Quote:
However, the limitations upon the drive for accumulation are here not further substantiated by Marx. To do that, it would have been necessary to include the credit system in these observations. On the one hand, the credit system plays a role here, which Marx worked out in the manuscripts for book II The realization of surplus-value in an amount of money beyond the capital advanced as c + v is ultimately made possible by the credit system.36 On the other hand, that which was already clear to Marx in the Grundrisse must also be systematically assimilated: “in a general crisis of overproduction the contradiction is not between the different kinds of productive capital, but between industrial and loan capital; between capital as it is directly involved in the production process and capital as it appears as money independently (relativement) outside that process.”37

just is NOT good enough. Yes, the credit system plays a role. No the credit system is not the source, the cause, the root of the realization of surplus value in either of its forms as money-capital, as commodity-capital.

Heinrich's quote from the Grundrisse is a fine thing......except he, as usual, misses the point-- which is that in a general crisis of overproduction the conflict between capital as it is directly involved in the production process and capital as it appears as money independently outside that process, is exactly that... the appearance, the manifestation of something other than a "conflict" between industrial and loan capital, but rather a conflict between the means and relations of production.

The conflict is not created by the distinction between capital in production and capital as money-- it appears that way given money's ascribed, apparent, exogenic status.

The cause of the generalized crisis of overproduction is no more between "industrial capital" and finance capital than it is due to the competition of capitals-- the competition of capitals only expresses, gives shape to, the inherent forces, dynamics, conflicts at the root of capital, which is of course the conflict between the labor process an the value process.

So, at the end, we have to engage Marx's fundamental contention-- which is that the conflicts, dyanmics, movements, accumulation, expansion, and contraction of capital are all the results of the originating determinant of capital-- its organization of the means of social production as commodities, as private property, as values through, by, and coincident with the organization of labor as a commodity, as value producing.

It is from that determination that Marx explores and analyzes the negation immanent to capital within capitalist reproduction.


[Dave B]

Thank you S Artisan that was a useful post.

however it is not just pure, black and white, capitalist production versus the credit system.

The two do interact with each other although the accumulation of surplus value, capitalist production (and over production) etc is limiting or ultimately determining factor, I think.

Capital Vol. III Part V
Division of Profit into Interest and Profit of Enterprise. Interest-Bearing Capital

Chapter 27. The Role of Credit in Capitalist Production

Quote:
But first this:

The credit system appears as the main lever of over-production and over-speculation in commerce solely because the reproduction process, which is elastic by nature, is here forced to its extreme limits, and is so forced because a large part of the social capital is employed by people who do not own it and who consequently tackle things quite differently than the owner, who anxiously weighs the limitations of his private capital in so far as he handles it himself. This simply demonstrates the fact that the self-expansion of capital based on the contradictory nature of capitalist production permits an actual free development only up to a certain point, so that in fact it constitutes an immanent fetter and barrier to production, which are continually broken through by the credit system.[4]

Hence, the credit system accelerates the material development of the productive forces and the establishment of the world-market. It is the historical mission of the capitalist system of production to raise these material foundations of the new mode of production to a certain degree of perfection. At the same time credit accelerates the violent eruptions of this contradiction — crises — and thereby the elements of disintegration of the old mode of production.

http://www.marxists.org/archive/marx/works/1894-c3/ch27.htm


[ocelot]
S. Artesian wrote:
Re the state: 1) Many many Marxists have analyzed the role of the state in the reproduction of capital. The analyses of course vary in quality, accuracy etc etc but it's really a mistake to say that "orthos" (orthinologists?) have not even engaged the issue of the role of state employment and state owned production.

Which is why the very post you are supposedly replying to said this:

Quote:
* in other contexts plenty of ortho-tradition authors have debated over what to make of the public sector, without coming to a consensus AFAIK

The point at issue is whether Capital 1-3 contains a theory of crisis that is complete and sufficient in itself - clearly this is not so, because until you determine what effect changes in the technical and value composition of state/public sector production has on total social OCC, the increase or decrease of the latter cannot be established. Therefore Kliman et al's contention is wrong, on this basis alone. There are many other bases on which their general position is unsustainable, but I picked this one as its the simplest and most direct demonstration of the fundamental incompleteness of Capital's analysis and its imputed "Marx's law of crisis".


[S. Artresian]

No the issue is not "does Capital 1-3 contain a theory of crisis that is complete and sufficient unto itself." The issue is does Marx's analysis in Capital volumes 1-3 provide us with the method, tools, and categories to apprehend the origins, the determinants of capital's impairment of its own reproduction? And we can answer that quite clearly and emphatically in the affirmative.

Ocelot's argument was that without a fully developed theory of credit, there was no way to sustain the LTFROP as a result of changes in the OCC.

This iteration focuses on the state-- but with the same implications. "Without.........X, we cannot know what the actual changes in the OCC are."

Ocelot's argument such as it is means quite simply and clearly that we can't understand the direction capital takes or why it takes it until we have 1) accounted for the state 2) incorporated that accounting into a "theory of crisis that will now be complete and sufficient unto itself."

I think it is quite evident that we can indeed account for the state's role in the development of capital, and in its taking over, absorbing, socializing the expense and the increased cost of the fixed asset base of certain sectors-- petroleum, steel, railroads, urban transport, telecommunications etc as part and parcel of increased OCC-- given the fact that these state enterprises function in world markets and must attempt to claim some of the total surplus value thrown into the markets.

It can, and has been done in analyses of the struggles in Bolivia, Venezuela, Brazil, Argentina, Mexico, Russia, South Korea, Japan, etc.

I have no idea what a "theory of crisis complete and sufficient unto itself" would look like, and I think the very construction of a requirement for a "theory of crisis complete and sufficient unto itself" contains an element of the collapse and "catastrophism" that is so often assigned to crisis in disregard of what Marx actually did write about the functions of crisis.

I don't recall Marx ever predicting capital would collapse. He did predict it would be overthrown, and that it would be overthrown on the basis of its inability to reconcile, contain the conflict between the labor process and the valorization process.

Marx doesn't provide a complete theory of crisis? Depends on what you mean by "complete"-- if you mean a theory of crisis that means the final, last act, adios muchachos of capitalism-- right he does not.

Asserting that without such a script to the last act, Marx's critique of capitalism does not identify the determinants of accumulation that are at one and the same time the impairment of that accumulation and the impulses to devaluation is in essence criticizing Marx for presenting a materialist critique rather than a religious resolution of dynamics of capital-- like the flood, or the ten plagues.


[ocelot]
S. Artesian wrote:
No the issue is not "does Capital 1-3 contain a theory of crisis that is complete and sufficient unto itself." The issue is does Marx's analysis in Capital volumes 1-3 provide us with the method, tools, and categories to apprehend the origins, the determinants of capital's impairment of its own reproduction? And we can answer that quite clearly and emphatically in the affirmative.

You're wrong. That is entirely the real issue in Kliman et al's attack on Heinrich's piece. Even the very title "The Unmaking of Marx's Capital" headlines it.

The question is not whether we - us - can make something of Marx, use his work as a basis for analysing our capitalist conjuncture, through the methodology of "embrace and extend" (to nick a Gates-ism). The issue for Kliman and his fellow ortho paladins is that of "canonise and defend", to defend "The Theoretical Completeness of Marx’s Crisis Theory", to assert above all other things a) that Marx's work is theoretically complete; & b) That Engels work in assembling vols II & especially III was simply following Marx's instructions "to make something of it". In other words, for us to suggest that we can "make" something of Marx's work, so long as we add the necessary extensions, is for them, to "unmake Marx" - to challenge its scriptural authority.

Authority is key here - if Marx's work is complete and represents an unfailing science that will faultlessly guide our actions (or those of our specialist Marxist leaders) then we can tell the masses to accept Marx as their saviour and listen to the guidance of his interpreters on earth. Disputes on interpretation or direction can be solved by appeal to authority.

If by contrast, we accept that however useful a base Capital 1-3 gives us, we absolutely need to add additional analyses and answer certain questions that were either not addressed or not properly answered therein, then when disputes arise we cannot resolve them by appeal to authority, but only by rational disputation and appeal to evidence. This is the terrifying vista that the "unmaking of Marx" opens up. Personally I don't find it so terrifying and really wish that alll these vain old men would stop getting so bleeding hysterical about it, so we could actually get on with applying ouselves to the work that remains to be done... which is considerable.

S. Artesian wrote:
Ocelot's argument such as it is means quite simply and clearly that we can't understand the direction capital takes or why it takes it until we have 1) accounted for the state 2) incorporated that accounting into a "theory of crisis that will now be complete and sufficient unto itself."

I think it is quite evident that we can indeed account for the state's role in the development of capital, and in its taking over, absorbing, socializing the expense and the increased cost of the fixed asset base of certain sectors[...]

Not only can we, but we must. That is the point at issue.

For Kliman et al, we can (are permitted to) look at the state or the credit system if we choose, but we must not even suggest that it is necessary to do so to "make something" of Marx, because that implies the Prophet's work is incomplete - we commit the heresy of "unmaking". The doors of Ijtihad closed with Engels death, all that is left for "genuine Marxists" is taqlid.

S. Artesian wrote:
I have no idea what a "theory of crisis complete and sufficient unto itself" would look like, and I think the very construction of a requirement for a "theory of crisis complete and sufficient unto itself" contains an element of the collapse and "catastrophism" that is so often assigned to crisis in disregard of what Marx actually did write about the functions of crisis.

1) by "theory of crisis complete and sufficient unto itself" I am simply rephrasing the idea of "The Theoretical Completeness of Marx’s Crisis Theory". 2) I agree entirely.

Someone previously asked what I meant by "orthodoxy" in this context. I'm not going to write an essay here, but one aspect that is directly relevant here is the origins of Marxist crisis theory (Krisentheorie*) and its relation to orthodoxy.

Orthodoxy always is formed in reaction to heresy. Historically classical Marxist orthodoxy was formed in the German social democractic party in reaction to the Bernsteinian "revisionist" heresy. To cut a long (but not uninteresting!) story short, one of Bernstein's key propositions was that there was no inherent crisis in capitalist development/growth and that therefore the workers movement could cut a "productivity deal" (Bernstein is an unrecognised forerunner of Keynesianism) with the bourgeoisie and gradually increase their standard of living alongside capitalist growth until either socialism was attained in installments or everyone was too prosperous to care.

In response it became a (if not the) key orthodox theme that capitalism contained internal economic dysfunction that was going to tear it apart sooner or later and then, at the point of final breakdown the choice between the alternatives of socialism or barbarism would come down to the strength (and ideological fastness) of the organised workers movement (SPD).

Here we have the ambiguity of Krisentheorie - on the one (progressive) hand the rejection of the reformist idea that there's nothing wrong with capitalism that a bit of reform can't fix; on the other (regressive) hand a much more reprehensible role of being an alibi for centrism - "lord make me revolutionary, but not just yet...".

Bernstein had seen the contradiction within the theory and practice of German socialdemocracy - of preaching revolution and practicing reformism - and called its bluff. The orthodox response was not a left-wards move to a fuller revolutionism, but rather a defence of this centrist position. Krisentheorie not only defended the theoretical revolutionism of the party, it also excused its reformist quietism and aversion to no-holds barred class struggle. Kautsky's advocacy of holding off from open class war in order to strengthen the party for the day when the "objective conditions" of the final crisis were upon us, were aptly and acerbically characterised by Pannekoek as the doctrine of "actionless waiting".

So Krisentheorie has this definite ambiguity within it. Today I would suggest that its principle reactionary role is not so much as an alibi for quietism - none of today's organised labour movements are big enough, powerful or combative enough, to require it - but rather as consolation for a demoralised left, intimidated by the tininess of their movement in relation to the size of the task.

Of course most of the contemporary champions of Krisentheorie insist that "of course class struggle determines the outcome of the crisis". However, it still remains that the more of their time people spend talking about crisis theory (and its lately unfashionable cousin, Zusammenbruchstheorie - breakdown theory**), generally the less they talk about class struggle. The (orth-dominated) Historical Materialism conferences I attend regularly, for e.g., generally contain hours and hours of lectures on the crisis, and usually very little on class struggle. [In fact I remember a few years back in one session on the sub-prime crisis, Costas Lapavitsas as chair, shutting up a "but how does this relate to the class struggle?" question from the floor with a rapid "that question is entirely out of scope", much to the amusement of the autonomists at the back of the class - it very much sums up much of HM. But I digress...]

Kliman et al accuse anybody who challenges "the theoretical completeness of Marx's capital" as being "Marxists without Marx". I would say the reality of their attitude would be better expressed if the term was "Marxists without the Messiah" or maybe just "Faithless Marxists". Either way, personally I have no interest in arguing with people over their religion, which is why I don't use the term Marxist as a self-designation (except on rare occasions to bait exceptionally sectarian or ignorant anarchists, but even then, only with the heterodox prefix)

---

* NB using the German word Krisentheorie may seem like a poncy affectation, but (at least in English) it's a handy shorthand for "classical Marxist crisis theory as inspired by the Bersteinian revisionism".

** Most contemporary champions of Krisentheorie insist that it's no relation to Zusammenbruchstheorie, but they are definitely more than kissing cousins.


[S. Artresian]

That may be the issue for Kliman, but our discussion here over the last few posts has not been centered around that argument. We've brought up different issues, and different points of disagreement/agreement. I think I pointed out from the getgo that I have very little skin in the game over the completeness of "crisis theory."

Kliman et al accuse Heinrich of misapprehending Marx's discussion, analysis, explanation, and demonstration of the LTFROP.

The discussion of the "completeness of Marx" is really tangential and immaterial to that original point.

FWIW, I think Marx regarded the critique he had developed in Capital as complete. That doesn't mean Marx regarded his critique of small c capital as complete.

It really boils down to this: Is a decline in profitability inherent [not inevitable] in capital, given the necessity for capital to accumulate means of production as EXPANDED VALUES (which is after all what accumulation is)?

Heinrich's answer is no. He has written that there are no inherent limits to the process of valorization, which is pretty astounding since almost every bit that Marx wrote is precisely focused on the inherent limits in valorization.


[Nate]

I don't see a difference between "inherent but not inevitable" and "not inherent" here. Those are either synonyms, or "inherent but not inevitable" is a contradiction in terms. Heinrich is clear that under certain conditions decline in profitability happens. And he's clear that under certain conditions a decline in profitability doesn't occur. To say a decline in profitabililty is "inherent but not inevitable" also means that under certain conditions a decline in profitability doesn't occur.

You might say "but Heinrich believes that such conditions could be established and continue to exist or be recreated indefinitely, and I don't believe that is the case." But then that would mean you do believe decline in profitability is inevitable.


[Nate]
Seen this?
http://akliman.squarespace.com/storage/A%20Defense%20of%20Pluralism%207.24.13.pdf
[S. Sartresian]
Nate wrote:
I don't see a difference between "inherent but not inevitable" and "not inherent" here. Those are either synonyms, or "inherent but not inevitable" is a contradiction in terms. Heinrich is clear that under certain conditions decline in profitability happens. And he's clear that under certain conditions a decline in profitability doesn't occur. To say a decline in profitabililty is "inherent but not inevitable" also means that under certain conditions a decline in profitability doesn't occur.

You might say "but Heinrich believes that such conditions could be established and continue to exist or be recreated indefinitely, and I don't believe that is the case." But then that would mean you do believe decline in profitability is inevitable.

The difference between inherent and inevitable is the difference, if you'll accept an analogy, between a chronic condition, and a fatal one.

An organism with a chronic condition expresses and experiences that condition in phases- in acute, more acute, less acute phases, and the condition continues to exist even when in remission. It is not inevitable that an organism die from a chronic condition.

A fatal condition means that indeed there is no alternative to death from that condition.

Heinrich argument is that that Marx did not demonstrate conclusively the law; that the law is not inherent in the very make-up of capital; and that Marx "had doubts" about the law's explanatory value. .

I think there most definitely is the law of the tendency to decline; that Marx does demonstrate conclusively the operation of the law, and Marx identifies the origin of the law in the very make-up of capital-- which is to expand the means of production as accumulated values in order to increase the extraction of surplus value.

Kliman, Freeman et al demonstrate pretty conclusively that what Heinrich is talking about has very little resemblance to what Marx was analyzing.


[Nate]

Sorry but I don't find the analogy helpful, and setting aside the Marxology for a moment. If I understand you correctly, you're saying there's two accounts of profit rates. One says "FROP is inherent, but avoidable." The other says "FROP is not inherent."

It seems to me Heinrich says "under certain conditions, profit rates decline but those conditions may be avoidable indefinitely." Do you agree, or not? (I'm not saying that's *all* he says, I just want to deal with this point.) If not, I'll get back to you with the quote where I think he says this.

If you do agree that Heinrich says that, then how is "FROP is inherent but not inevitable" different from "under certain conditions, profit rates decline but hose conditions may be avoidable indefinitely"? I just don't see the difference. And so I don't see the difference between "FROP is inherent but not inevitable" and "FROP is not inherent."


[Angelus Novus]
Nate wrote:
If you do agree that Heinrich says that, then how is "FROP is inherent but not inevitable" different from "under certain conditions, profit rates decline but hose conditions may be avoidable indefinitely"? I just don't see the difference.

I think Heinrich's "critics" might even be prepared to concede this, if not for what they regard as his far greater heresy: that there is no complete singular "crisis theory" in Marx's work (as opposed to various crisis-prone aspects of the total system elucidated by Marx), FROP is not that theory, and that the formulation of such a theory would necessarily have to take into account the role of finance in the total reproduction of the system.

So it's basically the "incomplete Marx" notion that drives these people crazy, even though that's a fairly uncontroversial idea among people working on MEGA.


[S. Artresian]
Nate wrote:
Sorry but I don't find the analogy helpful, and setting aside the Marxology for a moment. If I understand you correctly, you're saying there's two accounts of profit rates. One says "FROP is inherent, but avoidable." The other says "FROP is not inherent."

It seems to me Heinrich says "under certain conditions, profit rates decline but those conditions may be avoidable indefinitely." Do you agree, or not? (I'm not saying that's *all* he says, I just want to deal with this point.) If not, I'll get back to you with the quote where I think he says this.

If you do agree that Heinrich says that, then how is "FROP is inherent but not inevitable" different from "under certain conditions, profit rates decline but hose conditions may be avoidable indefinitely"? I just don't see the difference. And so I don't see the difference between "FROP is inherent but not inevitable" and "FROP is not inherent."

The difference between inherent and inevitable is that the TFROP is the default condition of capital. It exists always and is determining. It will become manifest unless offsetting actions are taken. It is determining in the sense that it drives the offsetting tendencies themselves.

Heinrich argues that Marx claims the fall is inevitable-- will always occur. Marx makes no such claim. Certain Marxists may make that claim, they may even demonstrate their assertions; they may even prove their assertions. Not the point-- for Marx's presentation.

Heinrich argues that the tendency of the rate of profit to decline is not inherent in the expulsion of living labor and its replacement by accumulated labor in the means of production. Any fall is not determined by the social relation at the heart of capital itself and its expression as the need to reduce the necessary labor-time.

That assertion is refuted by the real historical development of capitalism. Heinrich claims Marx has formulated a "very far reaching existential proposition, which cannot be empirically proven."

Indeed, if Marx said the fall is inevitable, will always occur now and in the future, it is indeed impossible to be empirically proven. But Marx never says that. In fact, Marx doesn't even describe the law without describing the law's internal contradictions. He states forthrightly "For capital, therefore the law of the increased productivity of labor is not unconditionally valid." (Volume 3, Penguin Classics edition, p 371), Get that, Mr. Heinrich? "not unconditionally valid."

And...... as Marx makes clear, it is the very productivity of labor that is theconditionfor the operation of the law, and it is that very productivity of labor that becomes the immanent, inherent barrier to valorization.

Marx's critique of capital is all about relations, condition, that are at one and the same time the determinants and negations of capital. That's what Marx means by "law"-- and in fact that's what every law of capital is-- a condition, a relation.


[Nate]
I should re-read the article. Because as I remember it "the TFROP (...) will become manifest unless offsetting actions are taken" sounds like Heinrich to me. He seems to think that these offsetting actions can continue indefinitely, at least theoretically/logically speaking. I'm still not clear if that's a point of agreement between him and others, or a point of contention
[ocelot]

Sorry for the delay, been away from internet, electricty and running water for a few days. Anyhoo...

S. Artesian wrote:
It really boils down to this: Is a decline in profitability inherent [not inevitable] in capital, given the necessity for capital to accumulate means of production as EXPANDED VALUES (which is after all what accumulation is)?

A clear difference between us is that I don't accept that the accumulation of the means of production (measured in value terms) is the definition of accumulation, as previously discussed. Imo such a "physicalist" interpretation rests on a neoclassical concept of exogenous money - money as perfectly transparent medium for a perfected barter society where commodities exchange only for each other.

S. Artesian wrote:
Heinrich argues that the tendency of the rate of profit to decline is not inherent in the expulsion of living labor and its replacement by accumulated labor in the means of production. Any fall is not determined by the social relation at the heart of capital itself and its expression as the need to reduce the necessary labor-time.

So, by the same token, I don't accept that the expulsion of living labour from the production process/development of productive forces/increasing labour productivity (synonyms for me) necessarily entail its replacement by accumulated labour in the means of production - at least as a secular tendency. That living labour expelled from production is necessarily replaced by dead labour in the means of production is a non sequiteur, in other words.

What we can say for definite is that the expulsion of labour/increasing productivity implies the reduction in surplus value realiseable per unit of product. Taken in combination with the "antagonistic conditions of distribution", referred to in the Vol III quote Heinrich selects, these two basic characteristics of the "social relation at the heart of capital itself" do in fact result in an immanent contradiction - but one, imo, which can manifest in different forms, depending on the regime of accumulation, class struggle strategies, etc.

The most consistent and relentless of these manifestations is the environmental unsustainability of the rising TCC - the need to produce and consume ever more stuff in the context of declining profit realised per product. But other manifestations such as the growth of unemployment and under-use of potential capacity, or Minskyite instability due to mispriced risk in a situation of oversupply of money/credit capital, or in the past, rising labour insubordination in a "productivity deal" strategy, etc, are all different forms of appearance of the underlying contradiction. There is not one privileged or "primary" form of appearance, to which all other forms are "counter-tendencies".

What is risk, in terms of capital's credit system? It is the risk of the loss or death of individual capitals. Imo it is not possible to complete the analytical progression from individual capitals to the general social movement (even if transitionally paused at the macro level of state economies) in a way that abstracts from or fails to incorporate the birth and death of individual fragments of capital. It would be like trying to find the laws of population dynamics or ecological systems while abstracting from the life and death of individual species members. In order to understand the aggregate dynamic of total capital, we have to include the moments of individual capital destruction within that. If capital is never lost or destroyed, then there can be no risk or defineable return on credit - indeed, given the relentless mathematics of compound growth, capitalism would have ended in a permanent oversupply of investment capital a long time ago.


[S. Artresian]
OK, guess I'll leave it at that. We disagree.
[RedHughs]
Artesian wrote:
The difference between inherent and inevitable is that the TFROP is the default condition of capital. It exists always and is determining. It will become manifest unless offsetting actions are taken. It is determining in the sense that it drives the offsetting tendencies themselves.

OK, aside from the various other issue here, I don't mind statements like as rough approximation of what happens to profits under capitalism. However, this is talking about quantitative phenomena, eh? And that means quantities, eh? So how does one add put quantitative meat on the bones of this bare summary? When profits down, it's the main trend, when they go up, it's an exception. The description starts to sound like technical analysis if you squint too hard. How do you fill this in to give it more exactness?


[S. Artresian]

You fill it in concretely, historically, by the changes that take place in the relation between the value components of capitalist production; through the actual changes in technique, in the labor process introduced to displace living labor, increase the relation of surplus labor time to necessary labor time and then analyze how that expansion flips into contraction.

Good example---the origins, development, and application of digital technologies (originally called "numerical control") to the production processes.


[Angelus Novus]
Heinrich's response to his critics.
[ocelot]
Actually there's a whole selection in the Monthly Review on this. Heinrich's response is to the other articles in that issue, rather than the long thread on Michael Roberts' blog or other places. It's actually worth reading the other pieces first, because otherwise Heinrich's response doesn't make a lot of sense. My attention was particularly drawn to the Carchedi/Roberts piece due to my interest in the OCC question. (For the record I thought their exposition was v. poor - fixed cap OCC, tsk, tsk - I may even respond, but probably in another place)