Heinrich: a small rejoinder

The debate in the comments section of this blog over the proper response to the misrepresentation by Michael Heinrich of Marx’s law of the tendency of the rate of profit to fall has got lively (see my previous posts, https://thenextrecession.wordpress.com/2013/07/25/returning-to-heinrich/ and https://thenextrecession.wordpress.com/2013/07/25/returning-to-heinrich/).  Some of the best Marxist economists in the world (Kliman, Freeman, Carchedi, Lebowitz) have pitched in and the debate continues.  I have not really intervened in the debate so far, but I thought it might be appropriate to add a short post now as a small rejoinder to some of the questions and differences raised so far.

I  think, understandably, that Professors Kliman and Freeman are concerned that none of us defenders of Marx’s law fall into the trap set by Heinrich who claims that supporters of the law are ‘fundamentalists’ and are trying to ‘prove’ Marx’s law by mathematics or by logic and that can’t be done.  Heinrich says at one point that Marx spent a lot of time with mathematical formulations to ‘prove’ his law but gave up.  But I am concerned (and I think Professor Carchedi is) that Professor Kliman’s formulation 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.  But perhaps our differences here are just a matter of wording when Professor Kliman says that if the law was confirmed in the past then it is likely to be confirmed in the future and that is good enough proof?  Or is he still making the law ‘indeterminate’ by this formulation?  That is what worries me.

Let me put it this way.  For the purposes of the debate, I think Marx’s law is similar to the law of gravity.  In other words, if we see an apple come off a tree, we can predict that it will fall to the ground, but counteracting factors could intervene and the apple could get lodged in the tree or wind could blow it sideways for some time.   But that would change nothing about the law of gravity and moreover our prediction that this apple and others would eventually fall to the ground.  Eventually, the wind would subside and the apple would fall.  Later there would be no wind and all the apples would fall, although there could be significant periods when no apples would fall.  This does not make the law of gravity indeterminate.  It would only be indeterminate if it was decided that the power of the wind was just as strong as gravity and also should be incorporated into the law of gravity.  This is Heinrich’s main point: that a rising rate of surplus value is really a necessary part of Marx’s law, contrary to Marx’s view, and has equal power or weight in determining the direction of the rate of profit and therefore the law is indeterminate.

Marx says that the strength of the law, namely the tendency of the organic composition of capital to rise as capitalism expands the productive forces, is greater than the counteracting factors over time, in the same way that gravity exerts its downward pull on the apple and over time counteracting factors like wind will not prevail in stopping the apple falling.  In this sense, the law is ‘unidirectional and irreversible’, like the law of gravity.  The law of gravity does not say the apple will fall, rise or stay where it is depending on the circumstances, but predicts that it will fall.  If, in reality, it does not fall but rises, that is because of the intervention of counteracting factors that are not part of the law as such.

Wind is not part of the law of gravity and a rising rate of surplus value is not part of the law of profitability (as such).  We can show that this is the case for Marx’s law by starting with some assumptions that are realistic (the law of value operates and the organic composition of capital rises).  On those assumptions, the rate of profit will fall.  Then we can show that there are limits in reality for counteracting factors like a rising rate of surplus value to outstrip a rising organic composition of capital indefinitely, just like the wind cannot indefinitely triumph over the law of gravity.  Thus the law is based on the reality of capitalist development and the class struggle, just as the law of gravity is based on realistic assumptions about the universe.

Moreover, it does not take hundreds of years before the wind gives way and the apple falls and before the law overcomes the counteracting factors and the rate of profit falls.  If that were the case, it would be a pretty useless for our lifetime needs, like knowing that the moon will leave the earth’s orbit in 1.5 bn years and then the earth will start to wobble uncontrollably and life would become extinct.  That is a prediction with not much immediate practical use.

In contrast, empirical evidence shows that the law of profitability operates over much shorter periods.  We can show that the law is confirmed empirically on numerous occasions.  There has been a secular decline in the rate of profit in the US since 1947.  Sure, there are periods when the US rate of profit rose.  In my view, the US rate of profit rose from 1982 to 1997, but the law tells me that this will not last and the rate of profit will eventually start to fall. Heinrich says you cannot know such a thing because the law is indeterminate.

What do Professors Kliman and Freeman say on  this point?  I’m not sure: they seem to say that, as the law is not ‘unidirectional and irreversible’, presumably you can have no idea if the US rate of profit will fall over the next decade or not until it has happened.  But then they say that as it has been shown to fall in the past, so it is likely to do so in the future.  I’m not sure that this interpretation of the law (even if it is Marx’s, as Professor Kliman claims) is a very powerful ‘explanation’ (to use their words) of the law.  Ironically, Professor Kliman has spent much diligent and careful time arguing that the US rate of profit did NOT rise after 1982 and there has been a persistent fall in the US rate of profit since 1947.  And Professor Freeman has recently presented a paper to ‘correct’ the evidence that the UK rate of profit rose after the mid-1970s, claiming that it continued to fall.  If they are right, would that not support the view that the law is ‘unidirectional and irreversible’ in the sense above, and not indeterminate, as Heinrich argues?  Perhaps the professors should make a study of periods when the rate of profit has risen and explain why.   Does the rate of profit only rise when there is a slump and the value of capital employed is sharply destroyed?  Does it not rise sometimes in periods of boom?  If so, can the law explain or even predict these periods?

And that brings me to another possible difference, at least in the debate between Marxists trying to refute Heinrich’s bastardisation.  Does the law just show how there are crises in capitalism, booms and slumps, driven by the up and down movement of the rate of profit; or does it go further and say that IN A WORLD ECONOMY, where capitalism is exhausting all sources of value creation, the rate of profit will fall secularly to new lows and thus make it more and more difficult for capitalism to develop the productive forces?  In other words, the law shows why capitalism will come up against the ultimate barrier, namely capital itself, and so is a transient mode of production like other earlier class-based systems.  It will increasingly descend into stagnation, decay and chaos unless the progressive class, the proletariat, takes over.  If the law is just one of explaining recurrent booms and slumps in capitalism, that would suggest that capitalism could go on forever expanding the productive forces, albeit with waste, inequality and injustice.  If it is more than that, then it provides support for the view that capitalism is not eternal.

In summary, can we reach an agreement in this debate? Let me pose some statements that could have yes or no answers.

1 ) The law is not indeterminate; instead it argues that the rate of profit WILL fall over time, like the law of gravity that the apple will fall if it breaks from the tree.

2) The law is not a fake mathematical ‘proof’ as claimed by Heinrich, but, based on reasonable realistic and relevant assumptions, it predicts that the rate of profit will fall over time.

3) The law is not a law of the tendency of the rate of profit to fall, rise or stay the same, depending on various counteracting factors that come into play.  If the latter do, the rate of profit may rise, but eventually (and not in a hundred years), the counteracting factors cannot hold sway.

4) There is empirical evidence to back up the law, contrary to Heinrich.

5) The law goes further than just predicting booms and slumps, but also predicts capitalism’s eventual demise (in the sense of not taking the productive forces forward).

These are the questions for yes and no answers that may help you to know where you stand.  My answers are yes to all these statements.

141 Responses to “Heinrich: a small rejoinder”

  1. Andrew Kliman Says:

    In his second paragraph, Michael Roberts repeats a serious error about what I say–a straw man version of what I say: “Professor Kliman’s formulation that the law ‘explains’ but does not ‘predict’.” I have already pointed out that this is incorrect in a comment (reproduced below) on his earlier post . For some reason, he has ignored or overlooked my comment. I ask that he withdrawn the claim.

    =====
    Andrew Kliman Says:
    July 27, 2013 at 5:37 pm | Reply

    carchedi: “As for the political consequences of the position that the law ‘explains’ but does not ‘predict’, or in Kliman’s more recent formulation, ‘if the ROP has fallen in the past, it may fall in the future’, …”

    Please supply a source for this quote, or retract it.

    Moreover, the characterization of our position as “the law ‘explains’ but does not ‘predict’” is incorrect. We say that the law is an explanation, not a prediction of what must inevitably happen. That statement is part of a *definition* of the law. It does not refer to the potential *uses* of the law. As I have said, “Obviously anything that can explain the past successfully can also successfully predict the future, if the future is like the past.”

    Let me spell this out for the hard of Kliman: if the LTFRP successfully explains why the rate of profit does tend to fall in the long run, and if the future is like the past in the relevant ways, then the LTFRP can be *used* to predict that the rate of profit will also tend to fall in the future, in the long run.

    carchedi: “… this is politically disastrous for revolutionary marxists. If we cannot predict that the ROP will inevitably fall (not might fall), in the sense just specified above, then we cannot predict that crises will return to visit us cyclically, and so we implicitly hold that crises might be avoidable.”

    This is a red herring. Your ability to make a prediction that the rate of profit must inevitably fall is NOT at issue here. Of course you can make that prediction. I can make a prediction that carchedi’s head must inevitably explode when he reads this. The issue is whether those who make such a prediction can PROVE that their prediction must inevitably be correct, i.e., prove that the rate of profit must inevitably fall. I say they can’t. And if they can’t, then we have been given insufficient grounds for accepting the claim that the rate of profit must inevitably fall, and we shouldn’t accept it, and they shouldn’t make it, and having made it, they should withdraw it. It is intellectually and politically irresponsible not to do so. It provides ammunition to the MR, Heinrich, and other opponents of the LTFRP and Marx’s theory of capitalist crisis.

    It is also false. “If we cannot predict that the ROP will inevitably fall … then we cannot predict that crises will return to visit us cyclically.” We can indeed predict the latter and our prediction can indeed be correct. The only thing we can’t do is prove that our prediction MUST INEVITABLY be correct. But the inevitabilists (carchedi, Morph, et al.) ALSO cannot prove that their prediction MUST INEVITABLY be correct.

    carchedi has just conceded that they cannot!!! “[F]uture developments cannot be ‘proved’, not even that the apple will fall to the ground because it has fallen in the past. Future developments can only be ‘predicted’. If the prediction comes true, the prediction has been proved correct after it has been made.” So the revised, carchedi-lite, claim reduces to “The rate of profit must inevitably fall, IF future developments prove that it must inevitably fall. But IF future developments prove that it it need not inevitably fall, then it need not inevitably fall.” Or as Doris Day put it, que sera sera. The revised, carchedi-lite claim just ISN’T a claim that the rate of profit must inevitably fall, much less a substantiated one. Nor does it tell us anything we didn’t already know. But it does have the advantage of not being wrong.

    • michael roberts Says:

      Okay. Professor Kliman says I have misrepresented his position. In his comment he clarified his position as: “We say that the law is an explanation, not a prediction of what must inevitably happen. That statement is part of a *definition* of the law. It does not refer to the potential *uses* of the law. As I have said, “Obviously anything that can explain the past successfully can also successfully predict the future, if the future is like the past.” Let me spell this out for the hard of Kliman: if the LTFRP successfully explains why the rate of profit does tend to fall in the long run, and if the future is like the past in the relevant ways, then the LTFRP can be *used* to predict that the rate of profit will also tend to fall in the future, in the long run.”

      I hope that I have now got that right, Professor. So the law can predict that the rate of profit will fall in the long run.

  2. Andrew Kliman Says:

    I appreciate the attempt. It’s almost right. IN TANDEM WITH an assumption that the future will be like the past in relevant ways, the LTFRP (which is not itself a prediction) can be USED to predict.

    • michael roberts Says:

      So the law cannot predict but can be used (given certain assumptions) to predict a fall in the rate of profit? Just want to clarify that I have now got your position dead right, Professor.

  3. John R Bell Says:

    I am intervening just once in this discussion as my good deed for the day as I think the participants are stumbling around in the dark. I am aware, of course, that no good deed ever goes unpunished.

    Are any of the participants aware that Marx was not theorizing historical capitalism in Capital and he said so more than once? He was theorizing the pure capitalism towards which British capitalism was tending to move during the 1st 7 decades of the 19th c. Historical capitalisms correspond with pure capitalism only to the extent that all use values in these societies are produced for an impersonal, self-regulating capitalist market by a great many competing capitalist firms employing the commodified labour-power of workers who have no access to productive land or income producing property where they might produce their means of subsistence.

    Capitalism’s inner laws of motion / Hegelian dialectical laws only operate in their pure form in the context of the pure dialectical theory. All of the laws and categories that Marx fully exposes in pure theory – e.g. the law of value, the law of relative surplus population, the law of average profit, the law of the falling rate of profit, the law of market value, etc. can be shown to operate in historical capitalisms only to the extent that all use values really are produced as commodities by means of commodities. Indeed, since there is always varying levels of intractable resistance posed by heavy and complex use values, collective human action and a sometimes unruly natural world, the laws and categories of pure capitalism cannot be applied in an unmediated way to any historical capitalism.

    Following Lenin and Kozo Uno, a stage theory of capitalism’s historical development must be developed to mediate between the laws and categories of pure theory and the many historical capitalisms that require empirical investigation. It should only be expected that the laws of motion of pure capitalism will ALWAYS be reduced to tendencies of varying strength in any of these historical capitalisms.

    Eventually these tendencies, together with the market mechanism’s effectiveness, and, thus, the grasp of the law of value over material economic life will be undermined entirely by collective human and intractable use-value resistance. If the impersonal capitalist market and the law of value can no longer effectively regulate economic life we are in a phase of transition away from capitalism headed towards ecosocialism or some form of barbarism. Maybe that’s where we are right now, which raises questions about how you are expending your energies.

    That’s my good deed for the day. Have a most fruitful and enjoyable discussion without me.

    If by chance you have read Thomas Sekine’s The Dialectic of Capital or An Outline of the Dialectic of Capital, either Rob Albritton’s or Kozo Uno’s publications on the stages theory of capitalism or, finally, Capitalism and the Dialectic by none other than yours truly, I would appreciate hearing from you. Otherwise, I will continue to enjoy my retirement and current blood pressure level. Cheers

  4. allan harris Says:

    I say yes to all five questions.

    The apple does not fall to the ground because it fell in the past, but because of the way the earth’s gravitational force acts on the apple. We didn’t know this before Newton. It is not inevitable that tomorrow the apple will fall again. A miniature black hole may develop next to the apple and take it to an alternative universe. Or the apple may reverse develop and turn into an apple seed. Both situations are possible, say the physicists. That does not invalidate Newton’s law of gravity. (Although we now know that gravity is not an attractive force, but rather a distortion in space-time. But that is another story.)

    In a similar way Marx explained why the rate of capitalist profit tends to fall (as also noticed by Adam Smith and Ricardo.) If tomorrow or next year or for the next five years, the rate of profit rises this does not invalidate the law.

    Now, if you don’t believe that the rate of profit has fallen over the past 200 yrs, then that is another story.

  5. sartesian Says:

    “The apple does not fall to the ground because it fell in the past, but because of the way the earth’s gravitational force acts on the apple. We didn’t know this before Newton. It is not inevitable that tomorrow the apple will fall again. A miniature black hole may develop next to the apple and take it to an alternative universe. Or the apple may reverse develop and turn into an apple seed. Both situations are possible, say the physicists. That does not invalidate Newton’s law of gravity. (Although we now know that gravity is not an attractive force, but rather a distortion in space-time. But that is another story.)”

    Or the apple may be eaten by birds, bats, squirrels before it falls. Or the apple may wither and simply stay on the tree. Nothing is inevitable even about the law of gravity in this scenario. What is important is its significance in connection with all other “laws” of the universe; not the particular fate of an individual apple.

    “Now, if you don’t believe that the rate of profit has fallen over the past 200 yrs, then that is another story.”

    And if it has… then we are forced to say… so what? At no point in its fall has it led, inevitably, to the collapse of capitalism, the abolition of capital, internationally. We can say… then there is no level of the rate of profit, below which capital cannot take action to reproduce itself. Actually we have to say that.

    What counts is not the “inevitability” of its fall, but what the fall signifies– that the bourgeoisie must find a way to increase exploitation to offset that fall… leading to the expanded reproduction of the very conditions that produce the fall. What counts is not the “law” but the significance of the tendency for the reproduction of capital, which is nothing but the reproduction of social classes.

    This is the problem with arguing “inevitability.” The rate of profit doesn’t decline say for 20 years. Do you keep saying, “inevitably it will”? Or do you analyze how and what the bourgeoisie have done that has sustained profits over the 20 years and what the contradictions are in those mitigations?

    See previous remarks about predicting the inevitability of rain.

  6. Andrew Kliman Says:

    carchedi and Roberts seem determined to snatch defeat from the jaws of victory.

    Marx claimed to have proven the LTFRP, as Heinrich correctly points out. However, Heinrich charges that Marx actually failed to prove it: “Marx circles around this problem in the text more than he actually delivers any substantiation. His uncertainty becomes clear every time he asserts that the law has been proven, only to once again begin with an argument for it.”

    carchedi and Roberts come down squarely on Heinrich’s side of this controversy. They, too, claim that the LTFRP cannot be proven. It follows a fortiori that Marx failed to prove it.

    They claim that the LTFRP cannot be proven because they are determined to turn the LTFRP into a prediction that the rate of profit must inevitably fall. A prediction cannot be proven in advance of the event(s) it predicts. So if the LTFRP is a prediction that the rate of profit must inevitably fall, it follows that the LTFRP cannot be proven. (As carchedi put it, Heinrich “wants a proof that something will fall in the future … this is impossible.”)

    Unconditional surrender to Heinrich and MR.

    This outcome is unavoidable if one construes the LTFRP as a *prediction* that the rate of profit must inevitably fall. It can, however, be avoided if one recognizes, as my co-authors and I do, that the LTFRP is instead an *explanation* of why the rate of profit does tend to fall.

    On our interpretation, Marx’s proof of the LTFRP is his demonstration of “the ability of his value theory, together with his theory of capitalist accumulation, to explain ‘an empirically confirmed fact,'” namely the fact that the rate of profit tends to fall in the long run. We say that Marx succeeded in demonstrating this, and that he therefore proved the LTFRP. Thus, Marx was right to claim that he proved it, and Heinrich denial that Marx proved it is wrong.

    (I reiterate that any principle or law that successful explanation of the past can be used in tandem with other assumptions to successfully predict the future, PROVIDED THAT the future turns out to be like the past in the relevant ways. This does not alter the fact that the LTFRP is an explanation of why the rate of profit does tend to fall, NOT a prediction that it must inevitably fall.)

    Inevitabilism isn’t just unnecessary to everything that matters. If it isn’t stopped, it’s going to provide ammunition to the opponents of Marx’s LTFRP and theory of capitalist crisis.

  7. Philip Ferguson Says:

    The ‘debate’ between Andrew Kliman and Michael Roberts seems a bit silly. You guys both clearly oppose Heinrich and clearly support the explanatory power of the LTRPF. You seem to be debating misunderstandings rather than be opponents of each other. Why don’t you just go for a coffee and sort it out or, given your’e in different parts of the world, skype each other?

    Clearly the rate of profit has fallen over time and, equally clearly, if conditions change dramatically – if the capitalists inflict a major defeat on the working class and are able to raise the rate of exploitation significantly – then the rate of profit can temporarily rise.

    I’ve never seen either of you write anything contrary to that. As an admirer of both of you, I hope this isn’t going to get blown up into something it’s not.

    Phil

    • allan harris Says:

      philip ferguson: I agree. This whole debate sounds like the sort of thing which causes socialists to ban each other from their sects and causes parties, groups, etc. to break up into “tendencies.” You might even call it the tendency of socialism to disintegrate into feudalistic debating societies, or TSDFDS.

    • michael roberts Says:

      I agree with Philip Ferguson and Allan Harris that the debate is in danger of getting blown out of proportion and silly. The aim for me is find the best defence of Marx’s law against Heinrich and perhaps in the process learn more about how the law works and so help me understand where the capitalist economy is going. In that sense, the debate has been useful, perhaps in showing that there are misunderstandings and any differences are not as great as they have been argued. I’ll be getting on with our papers refuting Heinrich and of course lots of other ideas and events in the capitalist calendar.

  8. Boffy Says:

    @Michael,

    The comparison with gravity may be relevant only from this perspective, that gravity is a very weak force. The tiniest magnet provides a greater counter force than even the entire Earth’s gravitational pull. The falling rate of profit occupies about the same kind of relevance for explaining capitalist crises and other economic events. The fact is that Marx himself says that it only exerts “localised” effects i.e. within some particular sphere or industry, and only manifests itself generally after a “very long time”, and then only indirectly. Marx does say it is as likely in the intervening long periods to move up, or sideways as it is to move down.

    “”In spite of the great changes occurring continually, as we shall see, in the actual rates of profit within the individual spheres of production, any real change in the general rate of profit, unless brought about by way of an exception by extraordinary economic events, is the belated effect of a series of fluctuations extending over very long periods, fluctuations which require much time before consolidating and equalising one another to bring about a change in the general rate of profit. In all shorter periods (quite aside from fluctuations of market-prices), a change in the prices of production is, therefore, always traceable prima facie to actual changes in the value of commodities, i. e., to changes in the total amount of labour-time required for their production…

    In view of the many different causes which make the rate of profit rise or fall one would think, after everything that has been said and done, that the general rate of profit must change every day. But a trend in one sphere of production compensates for that in another, their effects cross and paralyse one another. We shall later examine to which side these fluctuations ultimately gravitate. But they are slow. The suddenness, multiplicity, and different duration of the fluctuations in the individual spheres of production make them compensate for one another in the order of their succession in time, a fall in prices following a rise, and vice versa, so that they remain limited to local, i. e., individual, spheres. Finally, the various local fluctuations neutralise one another. Within each individual sphere of production, there take place changes, i. e., deviations from the general rate of profit, which counterbalance one another in a definite time on the one hand, and thus have no influence upon the general rate of profit, and which, on the other, do not react upon it, because they are balanced by other simultaneous local fluctuations. Since the general rate of profit is not only determined by the average rate of profit in each sphere, but also by the distribution of the total social capital among the different individual spheres, and since this distribution is continually changing, it becomes another constant cause of change in the general rate of profit. But it is a cause of change which mostly paralyses itself, owing to the uninterrupted and many-sided nature of this movement.

    2) Within each sphere, there is some room for play for a longer or shorter space of time, in which the rate of profit of this sphere may fluctuate, before this fluctuation consolidates sufficiently after rising or falling to gain time for influencing the general rate of profit and therefore assuming more than local importance. The laws of the rate of profit, as developed in Part I of this book, likewise remain applicable within these limits of space and time.”

    Vol III, Chapter 9

  9. Paul Cockshott Says:

    The fact that Marx did not come up with a consistent mathematical demonstration of the falling rate of profit does not demonstrate it is impossible to do so. Absence of evidence is not evidence of absence. Zachariah came up with a dynamic solution to the rate of profit equation in the last 10 years which demonstrates what Michael is asserting. See : http://www.reality.gn.apc.org/econ/Zachariah_AverageProfitRate_v7.pdf

  10. carchedi Says:

    Kliman: “The issue is whether those who make such a prediction can PROVE that their prediction must inevitably be correct, i.e., prove that the rate of profit must inevitably fall. I say they can’t”. Maybe Kliman should pay more attention to what I wrote. I said “Future developments cannot be ‘proved’, not even that the apple will fall to the ground because it has fallen in the past. Future developments can only be ‘predicted’. If the prediction comes true, the prediction has been proved correct after it has been made.” The inevitability of the fall is subject to empirical verification after the prediction has been made. If it has fallen, the prediction is correct. Nevertheless, Kliman comes back in a more recent post with the following prize winning piece of logic: “So if the LTFRP is a prediction that the rate of profit must inevitably fall, it follows that the LTFRP cannot be proven”. To err is human, to persevere is diabolical.
    And I said that the forces that caused the ROP to fall tendentially in the past, since they are inherent in the organization of capital, will TEND to operate in the future, necessarily, i.e. as long as capitalism is capitalism. Thus the prediction is not that the ROP must linearly fall, rather that it must tendentially fall, i.e. through upward and downward cycles. Or, that the upward cycle will necessarily generate from within itself the next downward cycle. If asked, I can show this necessity both theoretically and empirically.
    Kliman again: “if the LTFRP successfully explains why the rate of profit does tend to fall in the long run, and if the future is like the past in the relevant ways, then the LTFRP can be *used* to predict that the rate of profit will also tend to fall in the future, in the long run”. Well, we can use the law to predict the future development of the ROP. But if we cannot predict that the ROP will, in the sense of must, fall in the future (as Kliman holds), then “will” actually means “may.” So the law is a prediction of what may happen, i.e. in the future the ROP might tendentially fall, rise or remain the same. Not much of a prediction. Or as Doris Day put it, que sera sera. But musical references aside, Kliman’s (not Marx’s) law turns out to be indeterminate, which is exactly Heinrich’s position. Speaking of unconditional surrender.
    Let me now quote Marx. Crises “become more frequent and more violent, if only because, as the mass of production, and consequently the need for extended markets, grows, the world market becomes more and more contracted, fewer and fewer markets remain available for exploitation, since every preceding crisis has subjected to world trade a market hitherto unconquered or only superficially exploited”. (CW9, 228).
    This is clearly not only a description of the crises’ increase severity, or a prediction that crises might become more severe. It is a prediction that crises will, must, become more and more severe. Marx, as he once said, might not have been a Marxist but he certainly was not an agnostic. But the main reason for this quote is not to continue to debate agnostic Marxism. Rather, here Marx sketches the necessary development of the future of capitalism, the necessarily increasingly violent nature of future crises. It follows that if crises must be increasingly violent, the ROP must fall more and more.
    If this is the case, the debate on the nature of the prediction (must vs might) concerns not only the short-term cycles but also the future of capitalism. There are a few scenarios flowing from the prediction of the inevitability of the tendential fall in the ROP. Does this secular replacement of living labour by dead labour imply a coming breakdown of capitalism? This is a possibility, which however cannot be shown on the basis of mathematical models. It throws up the question as to what will come afterwards. On the other hand, capitalism has been able to overcome the 1929 crisis through a huge destruction of capital. It might be able to achieve the same feat through a new and even more horrible war than WWII. Be it as it may, one thing seems certain, that capitalism is increasingly exhausting, and will necessarily be exhausting, its capacity to create surplus value on a world level and that only a massive destruction of capital and its consequent reorganization on the basis of new technologies perhaps in a new centre of capital accumulation might give this system a new and protracted lease of life. In this case, new and more violent crises and new and more horrible forms of exploitation will be ushered in. Or will labour take over and impart a new course to humanity’s history? At this stage, all this is a matter of speculation.

    Finally, since Kliman and I are repeating the same arguments without bringing any new elements into the debate, I consider this discussion closed. Kliman may continue to post his comments. I will not reply.

    • Andrew Kliman Says:

      carchedi: “It follows that if crises must be increasingly violent, the ROP must fall more and more.” Finally, thank god, an honest-to-goodness argument that admits of proof or disproof. I would like to see the proof. I submit that it doesn’t follow, nor does it even follow that the average growth rate of output must decline.

    • Andrew Kliman Says:

      carchedi: “since Kliman and I are repeating the same arguments without bringing any new elements into the debate, I consider this discussion closed.” This isn’t so. My comment of July 29, 2013 at 3:47 am brought in new elements: (1) Marx said that he proved the LTFRP. (2) carchedi and Roberts side with Heinrich against Marx on this.

      carchedi quoted from my comment, but did not address this crucial point. Nor has Roberts (yet).

      A further observation: if one says that the LTFRP can’t be proven until the prediction that the fall in the rate of profit is inevitable is confirmed or disconfirmed by future events, one is tacitly admitting that it can NEVER be proven. “Inevitable” doesn’t mean “inevitable up to such-and-such a date”; it means inevitable after that date as well, and after the next date, etc., etc.

  11. Joseph Choonara Says:

    Couldn’t resist getting in my two-penneth.

    Marx’s LTFRP is not equivalent to a natural law (and the comparison with gravity is, I think, a little misleading). The status of the “law” depends at what level of abstraction you operate at. If you abstract from the sphere of circulation and simply look at what happens in the process of production, you can say there is a prediction that a rising organic composition of capital, the result of the (relative) expulsion of living labour from production, will lead to a falling rate of profit, unless this is offset by an increase in the degree of exploitation of workers engaged in production raising the rate of surplus value. Because there are mathematical limits (and before those are reached, social limits) on the degree of exploitation, the LTFRP will tend in the long run to overpower the capacity of this counteracting tendency.

    Once you integrate the sphere of circulation into the account, you have to also account for two other possibilities. The first is the cheapening of variable capital further increasing the rate of surplus value (s/v). But again, this operates within particular limits and does not, in the long term, annul the LTFRP. The second is the devaluation of constant capital. This is the main factor that has led to writers in the Marxist tradition seeing the movement of the rate of profit as indeterminate (a position that, like Roberts, I reject).

    But, as Marx pointed out, as you move from the abstract to the concrete, new determinants are required. This explains why the most important counteracting tendency does not, in the long run, annul the LTFRP. There are two reasons. First, investment takes place at a given point in time. Surplus value is generated subsequent to this. Andrew Kliman makes this point in his various writings. The devaluation of constant capital does not raise the rate of profit for those capitalists who have already invested, it undermines it. This diminishes the potential for the cheapening of constant capital to act as a counteracting tendency.

    The second is that, while there may be “capital saving” investments open to capitalists, there is always the potential for further “labour saving” investments above and beyond these. To the extent that the counteracting tendencies raise the rate of profit, they also expand the possibilities for further investment which, in the case of the most successful capitals, will typically include labour saving investments that raise the value composition of capital.

    This more concrete picture of how accumulation proceeds under capitalism is why the LTFRP and its counteracting tendencies are not equal and equivalent forces.

    That said, I don’t think it’s useful to argue that the LTFRP is “irreversible”. The point is that profit rates can be restored, but this process is not a smooth, trendless one; it is the result of crises, which violently destroy and depreciate capital. The great depressions of the late 19th century and the period of the 1930s and the Second World War do, as far as I can tell, seem to have reversed the fall in profitability that preceded them.

    I don’t think that envisaging some “final crisis” brought about by declining profitability is a hallmark of “true” Marxism. But acknowledging that crisis is, due to LTFRP, an inevitable feature of capitalism, and that capitalism is certainly capable of the “mutual annihilation of the contending classes”, certainly is important. Indeed, as capitalism ages, the crises of the system can become increasingly unmanageable, through the growth of the system and the scale of the units of capital making it up.

    Finally, I don’t think it’s helpful to imply that all crises are the direct working out of the LTFRP. There are various facets of capitalism that can contribute to leading it into crisis in the short term—the failure to realise surplus value that has been produced, the movements of interest rates, etc, etc. It is, in my view, far more important to see the LTFRP operating over several cycles as a long-term tendency, shaping the form taken by crisis and recovery at a particular point in history.

  12. sartesian Says:

    “This is clearly not only a description of the crises’ increase severity, or a prediction that crises might become more severe. It is a prediction that crises will, must, become more and more severe. Marx, as he once said, might not have been a Marxist but he certainly was not an agnostic. But the main reason for this quote is not to continue to debate agnostic Marxism. Rather, here Marx sketches the necessary development of the future of capitalism, the necessarily increasingly violent nature of future crises. It follows that if crises must be increasingly violent, the ROP must fall more and more.”

    1. I think the discussion might benefit if we drop the “agnostic” label being applied who are arguing, in essence, that what is inherent, and is a chronic tendency, is not categorically expressed at any and every specific moment in capitalism. Kind of invites those being classified as “agnostic Marxists” to counter-label others as “theocratic (maybe Calvinist?) Marxists.” Just sayin’

    2. Depending and how you measure “crisis,” and where, it is not always nor inevitably the case that crises increase in severity “progressively” “chronologically.” We can argue that the 1991 recession in the US was milder than the 1980-1982 double dip.

  13. carchedi Says:

    Sartesian says: “what is inherent, and is a chronic tendency, is not categorically expressed at any and every specific moment in capitalism.” This objection would apply if I had said that the fall is linear. But I said that the forces that caused the ROP to fall tendentially in the past, since they are inherent in the organization of capital, will TEND to operate in the future, necessarily, i.e. as long as capitalism is capitalism. Thus the prediction is not that the ROP must linearly fall, rather that it must tendentially fall, i.e. through upward and downward cycles. Or, that the upward cycle will necessarily generate from within itself the next downward cycle. If asked, I can show this necessity both theoretically and empirically.

    Sartesian says: “Depending and how you measure “crisis,” and where, it is not always nor inevitably the case that crises increase in severity “progressively” “chronologically.” We can argue that the 1991 recession in the US was milder than the 1980-1982 double dip”. I say: according to my data, in the 1980-81 recession the new value created contracts by -8.77% while in the 1990-91 recession it contracts by 12.36%. And, I may add, in 2001-02 it contracted by 18.84% and in 2007-09 by 28.4% (these data are taken from an unpublished paper that I am going to submit for publication shortly). Thus, in these cases, each crisis is more violent than the previous one. But there are examples of crises being preceded by more intense crises. Thus, if one can convincingly argue that Marx meant “progressively” and chronologically”, i.e. that each crisis must be more violent than the previous one, empirical verification proves him wrong. But I don’t think he meant that each crisis must be more severe than the previous one. Rather, this progression is influenced by the phase of the economic cycle in which crises emerge. Thus from 1947 to the beginning of the 1980s, when the total and new value generated increases vigorously, each crisis is not more severe than the previous ones. The succession of crises shows a fairly stable trend. In the 1980-2010 phase, when the rate of growth of both total and new value generated slows down dramatically, each crisis precedes a more violent one and the succession shows a downward trend. For the whole 65-year period, the trend is downward. On this interpretation, Marx is correct in his prediction. In any case, this is a different topic. The purpose of the quotation was to show that for Marx crises must (and not may) become more severe, right or wrong, and that the discussion is relevant for a much longer time span than the succession of short-term cycles.

    • allan harris Says:

      But, the 1929 depression was the worst in the history of capitalism. Many people thought it was the collapse that Marx had predicted. Capitalism recovered but only due to a factor that not even Marx could have foreseen: massive government spending to prop up effective demand, i.e. Keynesian economic theory.

      • CB Says:

        I haven’t done ample research on the matter, but my understanding of WWII and the recession is that in addition to the Keynesian element you favor, there was a remarkable increase in productive labor (surplus value producing labor) in order to maintain the war effort.

      • Boffy Says:

        I’m not sure it was actually more severe than the first Great Depression of the 1870’s. In fact, the Depression of the 1830’s/40’s, saw tens of thousands of workers starve to death which didn’t happen in the 1930’s, it required the dragoons to be stationed in major British towns etc.

        If anything it could be said that the more extensive nature of capitalism has caused such crisis themselves to be more extensive, but that the depth of the crises have become less severe. The Depression of the 1980’s was less severe than that of the 1930’s.

      • Boffy Says:

        Also, it was not Keynesian demand management that ended the 1930’s Depression. The economic downturn itself had started around 1914, as the previous long wave boom ended. In Europe, that downturn was marked by wars and revolutions, attacks on workers wages that led to the General Strike in Britain etc. By, the 1930’s the end of that cycle was beginning to turn as it had down with previous long wave cycles in the 19th century.

        The basis of it was the introduction of new technologies, Fordist mass production spread to Europe, electronics, pharmaceuticals and motor manufacture began to arise etc.

        It was the fact that these new high value, high profit industries developed that meant that whole new markets could be created, and whole new spheres in which labour-power could be exploited that already by the end of the 30’s had started to bring about recovery. The US, which had boomed during the 1920’s by comparison, was 10 years behind this development.

      • S. Artesian Says:

        “By, the 1930′s the end of that cycle was beginning to turn as it had down with previous long wave cycles in the 19th century.
        The basis of it was the introduction of new technologies, Fordist mass production spread to Europe, electronics, pharmaceuticals and motor manufacture began to arise etc.”

        Can you provide some more info on the changes in mass, and rate, of the introduction of these new technologies, and how and why they revived Europe rather than exacerbated the overproduction?

        One other thing, don’t you think WW2 played more of a role– destroying capital, “living” and accumulated in creating a basis for restoring such accumulation?

      • Boffy Says:

        I can’t provide exact data at the moment, but, for example, during the 1930’s, as car production started in the Midlands, and production of consumer goods production, firms like Hoover setting up in the South-East, workers were not only taken on, but received relatively high wages in these industries. For the first time, new building processes were started that created the first suburban estates in Britain, where houses for the first time were bought by these workers and the middle class, technicians, administrators etc. they employed.

        You shouldn’t get carried away with the idea of the 1930’s as a period of never ending gloom and persistent unemployment for everyone. It wasn’t. The average length of time someone was unemployed in Britain during that period was 4 months, and that average was increased because of the persistent, chronic unemployment of 20% plus in areas like the North-east.

        It didn’t add to overproduction precisely because for all these new kinds of commodities there was no overproduction! No one other than the very wealthy in Britain at that time owned a car, Only the upper middle class owned things like vaccuum cleaners, or washing machines or fridges. Most workers didn’t get a TV until the mid to late 1950’s. My parents didn’t get an electric washing machine or fridge until well into the 1970’s!!!

        Moreover, precisely because these were new products their organic composition of capital was low compared to the average. They required lots of, for then technical labour, production systems were far from fully mechanised etc. They were high value, high profit industries, that were thereby also able to pay higher than average wages.

        I did some blog posts some time ago showing precisely how during periods of Long Wave Boom, when a range of new technologies and industries based on them, are able to utilise capital that otherwise would have been over accumulated, and precisely because it is able to employ labour and capital in these industries with lower organic compositions and higher rates of profit, where there is also no over production of commodity capital, it can raise the rate of profit.

        The idea that physically destroying capital is a means of raising the rate of profit or making economic growth easier is crass. It has nothing to do with Marx’s theory. If a lack of capital made economic growth easier then Upper Volta would be a model case of economic development. It is not the physical destruction of capital that raises the rate of profit or makes economic growth easier – why do you think the Bolsheviks had such a big economic problem after the Civil War? – but the destruction of the capital value. What capital requires is the physical capital so as to keep churning out use values that have absorbed living labour, but preferably without having paid anything for the constant capital!

      • S. Artesian Says:

        “You shouldn’t get carried away with the idea of the 1930′s as a period of never ending gloom and persistent unemployment for everyone. It wasn’t. The average length of time someone was unemployed in Britain during that period was 4 months, and that average was increased because of the persistent, chronic unemployment of 20% plus in areas like the North-east.”

        I’m not and I won’t be. We know there was, in the US, a momentary uptick in 1936-37, which came crashing down, but seriously, “new technologies” did very little to remedy the decline in profitability for capital as capital, as a whole

        “The idea that physically destroying capital is a means of raising the rate of profit or making economic growth easier is crass.”

        OK, I’m good with that. Can’t think of anything more crass than capitalism, except for capitalist war. Sophistication, subtlety has never been capital’s strong point.

        ” It has nothing to do with Marx’s theory.”

        Disagree. It has everything to do with the reality of capitalism.

        ” If a lack of capital made economic growth easier then Upper Volta would be a model case of economic development.”

        No. that’s not how it works. Often it is the very lack of development, the lack of capital that makes the overproduction that much more acute, that much more explosive. That’s the basis for the theory of uneven and combined development.

        Case in point– ahh……Mexico at the turn and through the first decades of the twentieth century, where the bourgeoisie purchasing advanced means of production from the developed capitalist world were hard pressed to put those means of production to work in an economy that was so fragmented, so un-integrated, so dispersed, such that much of the industrial equipment never operated at more than 50-60% capacity. That’s overproduction. And in spades.

        “What capital requires is the physical capital so as to keep churning out use values that have absorbed living labour,”

        No. Again that’s not how it works. The whole point being capital cannot separate, cannot disentagle the “physical capital” from the “value capital” or from the devalued capital. Hence value cannot be destroyed in capital without a coincident devaluation, destruction, sequestering etc. of the physical assets.

        On the “small scale”– this is why farmers dump milk into the sewers– on the large scale why maritime ship concerns retire ships, send them for break up in Bangladesh, why arson seems attractive, why physical plant is abandoned, destroyed, scrapped.

        The means of production are not “physical capital.” They are commodities. Capital has no use for them save the use in exchange, in transferring their value to masses of commodities. Transfer impeded? Time to get the torches.

        To comrade Kliman: This is example of one of those diverging streamlets previously mentioned.

      • Boffy Says:

        As I said, the US was about 10 years out of synch with Europe, a point Kondratiev had made in the early 1920’s. So, in 1937, the US was only where Europe had been in 1927. By the mid to late 1930’s, these new technologies and new industries were increasing the rate of profit in Europe, they were creating jobs in the areas where these new industries were located, the workers and middle class employed in them were themselves starting to use their incomes to buy houses for the first time, which created jobs for other workers in those areas, and so on. Its the basic mechanism by which Marx and also Lenin in “The Development of Capitalism” describes the accumulation of capital creating its own market.

        I think the Mexico example speaks against the argument you were trying to defend that a physical destruction of capital makes it easier to increase the rate of profit or growth. What it demonstrates, besides bad economic management by the state, so nothing new there – is that a lack of physical capital throughout the economy, meant that simply introducing the latest high tech equipment was bonkers.

        The argument is quite simple. If firm A has £10,000 of productive capital in the form of warehouses, cloth, and workers, the latter comprising 20%, will it be easier for this firm to make a higher rate of profit if part of its warehouse gets burned down, and half the cloth gets destroyed?

        On the other hand, if this firm goes bust, and another firm picks up the £8,000 of constant capital for £2,000, will this destruction of capital value rather than physical capital, make it easier for this firm to now make higher profits?

        “No. Again that’s not how it works. The whole point being capital cannot separate, cannot disentagle the “physical capital” from the “value capital” or from the devalued capital. Hence value cannot be destroyed in capital without a coincident devaluation, destruction, sequestering etc. of the physical assets.”

        That isn’t true, as indicated above. Its why Marx distinguishes between the Technical Composition and the Value Composition of Capital. Its why he says in terms like the above, its frequently when firms go bust and new firms take over their capital the new firm is able to use it profitably.

        But, even if there is simply a moral depreciation of that capital due to an increase in productivity, which reduces the socially necessary labour-time required this is true as Marx sets out. That is so for several reasons. In Volume II Marx separates the circuit of M and m. M is always only the circuit of money capital on its first circuit. Having completed that circuit, M is always then the circuit of the money form of the productive capital, P…P. In other words, its value is always adjusted to changes in the value of the productive capital. If it rises during the production process, that value is transferred to the commodity-capital, and realised in M’, and vice versa.

        So, M is always then able to reproduce the productive capital in the same physical amount. That is not the case with m. m in so far as it is productively invested always assumes the role of M, newly invested money-capital. So, how much of that productive-capital it can buy depends on the value of that productive. If the value of the productive capital has fallen then this m will buy more of it, and vice versa. In other words, the real rate of profit, the proportional extent to which capital can accumulate will have risen.

        The reason farmers dump milk etc. is not because there was too much physical capital, but because the value of that capital was too high, and so the commodities produced by it, here milk, had too high a price to be sold profitably in the market – an overproduction of commodity-capital. Its exactly the same situation that Marx describes about the high price of cotton causing textile prices to rise to a level where they choked off demand. The high cotton prices were not the consequence of too much cotton, but of too little!

        When technological changes brought down the price of cotton, and increased its supply, the textile manufacturers could then reduce their own prices, and demand rose to a level where they could make profits. Again Marx and Engels describe that situation in the Chapter on the effects of price fluctuations.

        There can of course be situations where the demand for some commodities is essentially sated, and so no matter how low the price is reduced demand will not increase sufficiently to allow existing production to be undertaken profitably. But, that kind of under consumptionist argument does not apply across the economy as a whole. Generally, there are a whole range of commodities for which there is a need, and for which there would be a demand were prices lower. The point is that given the existing values of capital at the time, capital cannot produce those commodities at that price whilst still making a profit. The way to achieve that is not via a physical destruction of capital – which would tend to raise rather than lower its price, but to reduce the value of the capital.

        Where whole new ranges of commodities become available, it is often possible to sell even relatively small quantities profitably, precisely because little of the demand has been sated, and some consumers will be prepared to pay relatively high prices for them.

  14. Edgar Says:

    My ABC of Marxism tells me that:

    A. Crises are, to all intents and purposes, localised
    B. The market is not yet contracted enough to truly generalise a crisis
    c. It is possible to regress, a former highly developed region could become the extended market of the future.
    d. Capitalism will not fall by itself.
    d. Capitalism is crap whether it is in crisis or not.
    e.The point is to change, whether there is a crisis or not.
    f. If it takes a ROP crisis to change things no real change will occur.

    More on point f:

    Did slavery end because the ruling class could make more by turning people into wage slaves or did it end by slave rebellion? If the ruling class ended slavery because slavery wasn’t delivering the goods then it begs the question what will happen when capitalism is not delivering the goods? Or in other words what system will the ruling class turn to? The focus on the ROP as key leaves out of the picture working class agency in my opinion. It says history is the history of RULING class struggles and not class struggles.

    • allan harris Says:

      I would say that the barbarian invasions of Rome probably ended the economic system of slavery, esp. when the freed slaves and proletariat of the Roman Empire were allowed to develop into a burgher class under feudalism.

      Then the Spanish rape of the Americas helped end feudalism by flooding Western Europe with gold, silver and the produce of slaves.

      • Boffy Says:

        Economic systems rarely end because they collapse. Slavery was pushed, but with no progressive alternative available to it, resulted in the ruin of the contending classes.

        Feudalism was probably more powerful economically powerful at the point capitalism became dominant than it had ever been. Feudalism had rationalised, it had formed an alliance with Merchant and Money Capital, which extended feudal relations across large swathes of the globe in the form of Colonialism.

        It was not the collapse of feudalism that led to the rise of Capitalism, but the rise of capitalism that led to the end of feudalism. No economic system leaves the stage until its replacement has proved its superiority – a problem for Leninists who want to destroy Capitalism, before they have demonstrated in practice the superiority of socialism.

        The real capitalist revolutionaries were people like Stevenson and Watt not Cromwell and Robespierre, just as today’s real revolutionaries will be those that build the worker owned and controlled economy as a a practical and demonstrably superior form.

  15. Sjerp Says:

    I’m sorry but the law of gravity is about the force that objects with a certain mass have on one another. There’s no prediction in that: it’s absolute certainty. In fact there’s no prediction in Newtonian (you know, the guy from the Theory of Gravity) AT ALL. Uncertainty was introduced to physics only in the 20th century with modern quantum physics.

    I’m not saying your theory is right or wrong, it’s just that your metaphores don’t make sense.

    • CB Says:

      There isn’t certainty in that. At least not if one accepts Hume’s argument of induction, which to the best of my knowledge Kliman et al, are implicitly accepting, i.e., that inductive reasoning gives us probabilities (even up to 99.9%), but it cannot give us certainty. The same applies to the “law” of gravity, in that, there is always the possibility that “the force that objects with a certain mass have on one another” might operate differently than we’ve come to expect.

  16. allan harris Says:

    From Heinrich’s article:

    “When Marx claims a fall in the rate of profit, then he must demonstrate that in the long term the denominator grows faster than the numerator. Yet there is no evidence whatsoever for such a comparison in the speed of growth.”

    No evidence that costs grow faster than profits (s/C)?? Where has Heinrich been for the last 50 yrs? The entire basis for modern monopoly capitalism is huge spending relative to profits. This is why companies like Microsoft and Wal-Mart can drive smaller companies into bankruptcy. Just go to BEA statistics and check the numbers from 1929 to today. Profits relative to production costs show a steady decline. Only the financial sector, with its fictitious capital shows any increase in the rate of profit.

  17. Andrew Kliman Says:

    Joseph, you’ve made interesting observations about what it’s possible and not possible for US to say. But they go far beyond the issues that Heinrich and my co-authors and I are debating–what is the content of Marx’s own LTFRP (according to the text of Part 3 of Capital, vol. 3), whether he succeeded in proving it, as he claimed to do (and Heinrich, carchedi, and apparently Roberts deny), and whether it can be proven.

    For instance, social limits on the degree of exploitation are quite important (and a lot of my recent empirical work has stressed this, against the MR school and others taken in by stagnant real “wage” and falling “labor share” stuff). But they aren’t part of Marx’s own LTFRP–he didn’t invoke them or need to invoke them.

    In short, this is NOT a debate about different theories of capitalist economic crisis, as much as some people would like to turn it into that. It’s specifically about Marx’s own LTFRP, because we are debating Heinrich, who has no crisis theory, and because I’m not allowing myself to be diverted into a different discussion.

    I trust that you understand that I don’t fault you–much of the discussion had become off-topic before you intervened in it. For instance, a good deal of Roberts’ stuff on what “Marx’s” LTFRP says bears only a passing resemblance to the text of Part 3 of Capital, vol. 3, especially:

    “3) The law is not a law of the tendency of the rate of profit to fall, rise or stay the same, depending on various counteracting factors that come into play. If the latter do, the rate of profit may rise, but eventually (and not in a hundred years), the counteracting factors cannot hold sway”

    and

    “5) The law goes further than just predicting booms and slumps, but also predicts capitalism’s eventual demise (in the sense of not taking the productive forces forward).”

    I’ve read Part 3 of Capital, vol. 3 more times than I can count, and there’s just no textual support there for these statements. (Note especially the words “not in a hundred years” and the fact that number 5 claims that the LTFRP, not just Marx, predicted capitalism’s eventual demise.)

    If this kind of thing is permitted to represent the defense of Marx’s LTFRP in the eyes of the world, Monthly Review and Heinrich will have a field day. Serious Marx scholars, even ones far more sympathetic to Marx than Heinrich is, will rightly dismiss it out of hand. The idea that Marx’s own LTFRP can be defended will become a laughing stock.

    Unfortunately, carchedi and Roberts have decided to engage in the lamentable practice–which I’ve been battling for decades–of people attributing their own views to Marx’s texts. The main culprits have traditionally been Marx’s opponents, so it’s very sad to see self-styled defenders engage in such behavior as well.

  18. S. Artesian Says:

    ” I say: according to my data, in the 1980-81 recession the new value created contracts by -8.77% while in the 1990-91 recession it contracts by 12.36%”

    Do you? BEA figures on GDP growth show that in the 2 quarters of recession, 2Q and 3Q 1980, GDP growth was a negative 8.55%

    In the 2 quarters of recession in 1981-82– 4Q 1981, 1Q 1982, US GDP growth was negative 11%

    For 2 quarters, 4Q 1990, 1Q 1991, GDP growth was negative 5.3 percent.

    These numbers are derived from tables 1.1.1 Percent Change From Preceding Period in Real GDP Growth.

    http://www.bea.gov/iTable/iTable.cfm?ReqID=9&step=1#reqid=9&step=3&isuri=1&903=1

    You’re using a different measure? No kidding. Like I said, depends how and what you’re measuring.

    Yes, Marx has a crisis theory– no that crisis theory is not one of the imminent collapse of capital– rather, crisis is exactly that– critical, necessary to restoring accumulation.

    The real limit to capital is precisely when those mechanisms of crisis are inadequate to that task.

    What Marx does NOT do explicitly, or at least not explicitly enough so as to spare us the baloney from Heinrich, is to thoroughly integrate, link an analysis of overproduction with the overproduction of the means of production as capital, as expanded values. But that’s a whole other thread.

  19. Charles Andrews Says:

    Roberts: “…capitalism is exhausting all sources of value creation, the rate of profit will fall secularly to new lows…”

    The rate of profit recovers when its denominator becomes smaller, for example, when capital value is destroyed. The assertion of ever lower secular lows seems to imply that there a limit to the destruction of capital values. What limit?

    • Andrew Kliman Says:

      Damned good question! And what is the *proof*?

    • michael roberts Says:

      I agree with Prof Kliman. It is a damn good question. I think that all that I was trying to say was that in a capitalist (world) economy where there are still plentiful supplies of labour power still to be exploited by the mode of capitalist production, the law of the tendency of the rate of profit to fall has less impact on the accumulation of capital. Absolute surplus value can rise to keep rates of profit high. But as capitalism becomes global and starts to use up the reserve army of labour still outside the capitalist economy and the working population slows, then the law begins to operate with more strength. The ‘world rate of profit’ will tend to fall. However, as Charles says, that will mean more crises and slumps that will devalue capital values and restore the rate of profit. But the law will exert its power more and more and so crises and convulsion designed to break the ‘barrier of capital’ will be more frequent and deep. I’m sure Pro Kliman will tell me that this is not Marx’s view. But so be it, it seems an interesting perspective to me. The paper by Dave Zachariah on the trajectory of capitalist economies referred to by Paul Cockshott offers theoretical and empirical support to this perspective. http://www.reality.gn.apc.org/econ/Zachariah_AverageProfitRate_v7.pdf

  20. carchedi Says:

    Artesian says: it depends on how an what you are measuring. Yes. You use GDP figures. I think that GDP is not an adequate measure of crises. I use a measure of the new vale created, which seems to me to be more consonant with Marx’s theory. I explain why and how in my unpublished article that you can vision, if you want.
    This aside, how do you interpret Marx’s quotation ? does each crisis has to be less violent than the following one? If so, Marx seems to be proved empirically wrong. I submit a different interpretation.

    • S. Artesian Says:

      I say: Depends how and where and what you measure…

      You say: No, you’re wrong. My measurements confirm each crisis is more severe than the previous.crisis.

      I say: Well, according to the BEA numbers regarding the two successive quarters of negative GDP growth– which in fact is the measure the NBER uses to determine if indeed there is a recession, the recession of 1990-1991 is less severe than each of the recessions in the double-dip of the 1980s.

      You say: GDP is not an adequate measure…….

      And now I say: See my original statement, and please explain why you argued with that when in fact your argument confirms the original statement?
      _________

      Dialogue aside– in answer to your question as to how I interpret Marx’s quotation:

      1) my answer is the same that I provided to the discussion of the rate of profit: Marx is providing an examination of a TENDENCY. That is not the same thing as providing a theological canon that brooks no variation.

      2) Everything, IMO, in Marx’s writings about capital is about the inherent limitations of capital accumulation and how that leads to, reproduces, the condition of labor.

      Inherent, immanent critique is different from inevitable fate. Destiny is not the issue. The emancipation of labor is.

      To put in the terms of the improper analogy we are using about gravity: The law of gravity makes no proclamations regarding inevitability of any apple falling from a tree… of in fact anything falling whatsoever. The law says gravity is a force. That force accounts for conditions, relations…… IF this…….THEN that.

      The LTFROP itself has no element of inevitability to it. Again IF this…. THEN that. In my first probing of the Kliman/Freeman position, I pointed out that Marx certainly uses the tendency to predict. When Andrew explained the position he and his co-authors had developed, it was clear to me that I had no real disagreement with their argument.

      I also think Marx may have regarded the LTFROP to include elements of inevitability. But so what? The “inevitability” such that it is, IS NOT the law. The law is one of relations: IF this…….THEN that.

      There are big ifs, there are small ifs, there are even teeny weeny ifs– near certainties, so to speak. but all ifs are ifs, and “near” is not close enough to be inevitable.

      That’s all I’m trying to say with this. Do I think the rate of profit tends to decline? Yes. Do I think it has declined? Yes, beginning in or around 1969. Do I think the decline has been CRITICAL to the actions of capitalists? Hell, yes. Do I think that decline has been a sustained decline? Yes. Do I think within that overall TREND of decline, there have been interruptions, where the ROP exceeded certain prior lows? Yes. Has it, IMO, exceeded the peak in or around 1969? No.

      Is it inevitable that capitalism never exceed that peak again?

      a) hell no– our class of arsonists, of Jack-the-ripper capitalists isn’t dead yet
      b) the question itself is speculation– and look where speculation gets our ripper capitalists…….periodically and cyclically.

  21. Boffy Says:

    In the US in 1960, wages were around 65% of GDP. Profits were 6%. By last year, wages were around 58%, while profits were up to nearly 10%, according to Gavyn Davies’ FT blog.

    • S. Artesian Says:

      1.1960 was a year when the US economy was emerging from recession, IIRC.

      2, I think it would be better to compare profits as percentage, for example, and only as an example– GROSS and NET property plant and equipment for say 1965-1968 or 69 and the periods-
      1994-1998 (the “golden” Clinton years), 2005-2008, and the period 2008-2012– or take 1962- 1969 and compare that to 2005-2012.

      A single year does not a trend establish.

  22. GrahamB Says:

    The natural law of gravity is inevitable in it’s outcome on bodies – it’s universal. OK, nothing is ‘inevitable’ but that isn’t saying much. Many things can happen to the apple to impede or reverse it’s fall in the real world but put it in a vacuum and it *will* fall to the ground. If the wind is blowing it doesn’t mean gravity is suspended – it continues as exactly the same force on the apple as in the vacuum – only that another force has come into play and the sum of the forces has changed the motion of the apple.

    Is this a useful analogy to the LTROPF? I think I can see what Michael is getting at in that gravity is more ‘fundamental’ than wind. This is true but only at a level of abstraction. The apple falls in a vacuum, the rate of profit falls if the rate of surplus value is constant (although there are still the issues of ‘capital saving’ and cheapening of constant capital). But as others have said it’s not inevitable that the apple will eventually fall to the ground in the *real world*. Likewise for the rate of profit.

    One could view the pressure on the rate of profit to fall as fundamental in another sense, that it’s enduring and systemic like gravity – living labour as the sole source of surplus value and competition between many capitals – whereas the counteracting influences are transient and varied like wind or birds.

    Also, would Marx writing today call it the ‘Law of the Tendency..’ or just the ‘Tendency…’.

    (My own views, I’m not ascribing them to anyone else, or a correct reading of Marx come to that.)

  23. Charles Andrews Says:

    Ah, the tendency of the rate of profit! One reason that discussion of it has its own tendency to disperse into many little streamlets is this:

    Accumulation requires destruction of capital values from time to time. Prosperity and slump are inevitable under capitalism once it entered the industrial phase, roughly around 1800. Accumulation is done for profit, and the accumulation of capital is registered in the denominator of the profit rate. However, the fall in the profit rate does not reach a specific number deducible in theory that triggers the end of prosperity. (Here the analogy with Newtonian mathematical physics ends.) Crises are inevitable, periodic but irregular as Freeman says if I recall correctly.

    The barrier that appears when capitalist relations of production become a fetter on development of the productive forces is not visible during the vigorous industrial era. Marx could not see it because it had not appeared by 1883. Part of his broader, profound insight is that he deduced that such a barrier must emerge.

    This barrier is now upon us. It is a set of material relationships with material necessity in their consequences. The theoretical task is to lay out these relationships and consequences. (No Rich, No Poor) The task is not one of proving a secular decline in the rate of profit.

    Hence the decay of the discussion into recriminations over each others’ modal grammar.

    • Andrew Kliman Says:

      “The task is not one of proving a secular decline in the rate of profit.” Right. And because of the destruction of capital value, the secular trend (as distinct from tendency) is not necessarily downward. “If capital value has been destroyed on a massive
      scale, the peak rate of profit in the boom that follows is likely to be
      *higher* than the prior peak. And if major slumps become increasingly frequent, the tendency for the rate of profit to fall between slumps has less and less time in which to operate, so it is likely that trough rates of profit *rise* over time.” (The Failure of Capitalist Production, p. 25)

      I don’t understand the stuff about ” tendency to disperse into many little streamlets” or “recriminations over each others’ modal grammar.”

  24. carchedi Says:

    Artesian: “My measurements confirm each crisis is more severe than the previous crisis.” Carchedi: Let me try to understand. Is this the case since the first crisis after WWII (1949)?
    Artesian: “1) my answer is the same that I provided to the discussion of the rate of profit: Marx is providing an examination of a TENDENCY”. Carchedi: Right, I have stressed this point ad nauseam in my writings as well as in the posts in this blog. Artesian: ”That is not the same thing as providing a theological canon that brooks no variation”. Carchedi: I don’t know whether you refer to my position. If you do, don’t you think that it is a little unfair to label “ a theological canon” a position that states that predictions (including a prediction of an inevitable tendential fall, i.e. an occurrence that brooks variations) must be empirically substantiated?
    Artesian: “The LTFROP itself has no element of inevitability to it. Again IF this…. THEN that”. Carchedi: ‘If this… then that’ can be compatible with inevitability. If the same factors that determined the tendential fall in the ROP in the past keep operating in the future (and it is inevitable that they will keep operating because they belong to the essence of capitalism), then it is inevitable that the ROP will fall in the future. To repeat, this is not a linear but a tendential fall. Moreover, do you think that crises are inevitable in capitalism? If the answer is yes, then the fall in the ROP is inevitable. If the answer is no, then good by Marx and welcome Keynes.
    Artesian: “I also think Marx may have regarded the LTFROP to include elements of inevitability”. Carchedi: Which ones? The law does not predict an inevitable fall in he ROP but with elements of inevitability? Artesian:“But so what? The “inevitability” such that it is, IS NOT the law. The law is one of relations: IF this…….THEN that”. Carchedi: “if this then that’ is compatible with predictions of inevitable occurrences. See above.

    • S. Artesian Says:

      This is kind of the point where you ask me, “So how long has it been since you stopped beating your wife?” And I go… “Huh?”

      One mo’ time. I think crisis is inherent to capital; it is an essential, necessary, critical function to accumulation. It is an offsetting tendency to that of the rate of profit to decline as the mass of accumulated capital, dead labor, fixed assets, C.. increases.

      Again, inevitability is not a meaningful category. What is essential about inevitability to capitalism, to the accumulation of capital, to the conditions of labor, and to the emancipation of labor? My answer is… nothing, times 4.

      If it is not necessary as Marx used necessary in his critique of capital, then inevitability has no material basis in the organization of capital and/or its overthrow.

      See previous comments about predicting the inevitability of rain. Or the inevitability of apples falling from trees. The answer of course ls “not necessarily”– and if “not necessarily” then “inevitability” has no place in the material critique of capitalism, which after all is…. class struggle.

    • Andrew Kliman Says:

      carchedi: “If the same factors that determined the tendential fall in the ROP in the past keep operating in the future (and it is inevitable that they will keep operating because they belong to the essence of capitalism).”

      They’re only inevitable if it turns out that you’re right that they’re inevitable, and not just EXTREMELY LIKELY.

      Can you prove that they are inevitable?

      If not, do you have sufficient reason to be ABSOLUTELY CERTAIN, and not just 99.9% sure, that they are inevitable?

      How could this prediction ever be proven by future developments? That is, what event could ever possibly prove that the same factors will keep operating in the future SUBSEQUENT to that event?

  25. Andrew Kliman Says:

    I came across these interesting comments, elsewhere on this site, from someone who disagrees with Michael Roberts:

    michael roberts Says:
    July 12, 2011 at 11:31 am | Reply

    Ron
    I’m not sure the law of profitability in Marx’s Capital was just a footnote. It seems to me that it took a few chapters at least! See Volume 3.

    Again I dont think Henryk Grossman just wanted to piss off Bauer. I’m sure his thesis had more purpose than that.

    I agree that the law of profitability should not be viewed as a ‘breakdown theory’ of capitalism that does come out of Grossman’s analysis. There is no final collapse or countdown. Anyway the speed of any secular fall in the rate of profit so far in the US would suggest at least another century or more before we get to the bottom!

    That’s why the law should be seen really as explaining the cyclical process of capitalist as I attempt to develop. In my book, I use the law to explain why we are in a low class struggle period.

    • michael roberts Says:

      I think I now reckon there is both a crisis and a breakdown theory in Marx and I have edged towards that view – see my post Crisis or breakdown? https://thenextrecession.wordpress.com/2012/09/12/crisis-or-breakdown/ In that, I start by saying I am quite tentative. You see my views are not fixed in stone – I am always trying to learn and develop. That could lead to changes, or if you prefer, inconsistency!

      • GrahamB Says:

        Tentative, change – is this allowed?

      • michael roberts Says:

        I know, or rather I don’t know, or rather I am not sure.

      • S. Artesian Says:

        “Tentative, change – is this allowed?”

        Maybe.

      • Andrew Kliman Says:

        So a secular fall in the rate of profit throughout the whole of capitalism is *tentatively inevitable*??!!!

        Or, it wasn’t inevitable, but now it is, because you’ve changed your mind, but it might not be inevitable in the future, because you might change your mind again??!!!

        This is why I keep coming back to an issue that keeps being ignored, the need to DEMONSTRATE inevitability (and the fact that no event or set of events can ever demonstrate it).

        Otherwise, you’re simply confusing an objective statement, “it’s inevitable,” with the subjective statement, “I currently BELIEVE that it’s inevitable.” It’s like saying “there is a Santa Claus” when you don’t know that there is; you should instead be saying “I BELIEVE that there is a Santa Claus.”

      • GrahamB Says:

        “Tentative, change – is this allowed?”

        To answer my own question: no.
        Subject every statement ever uttered to thorough logical analysis. It’s the way to proceed, obviously.

    • Andrew Kliman Says:

      The post in which Michael Roberts announced the switch in his interpretation of what he called “Marx’s law of profitability”

      https://thenextrecession.wordpress.com/2012/09/12/crisis-or-breakdown/

      is not based *at all* on Marx’s OWN law of the tendential fall in the rate of profit (part 3 of vol. 3 of Capital).

      A lot of people’s views are considered–Grossman, Mattick, Kurz, Graeber, Lebowitz, and Dumenil and Levy. And various empirical stuff coming from Robert J Gordon, John Smith, Minqi Li, and Roberts himself is discussed. But what Marx HIMSELF said is entirely absent.

      This is simply not serious or even semi-serious Marx scholarship (or even quarter-serious, a la Heinrich). It is the working out of ONE’S OWN view, which is perfectly fine, and then attributing one’s view to MARX, which is not fine at all.

      As I always say about the Marxist economists: they are entitled to their theories; Marx is also entitled to his. What’s objectionable about attributing one’s theories to someone else is that his/her actual theories disappear in the process.

      In our response to Heinrich, my co-authors and I strongly protest against the whole “Marxism without Marx” tradition in which other Marxists replace Marx with themselves: “We find this gambit tactic objectionable not because we are *opposed* to a multiplicity of different theories contesting with one another, but because we firmly *support* it. What is objectionable is the attempt to make Marx’s own theories disappear by replacing them with one’s own theory, instead of letting both contend.”

      There is, however, a glimmer of a more productive approach by Roberts. Yesterday, he put forward his conjecture (it’s not a law) and then said, “I’m sure Pro Kliman will tell me that this is not Marx’s view. But so be it, it seems an interesting perspective to me.” I hope that he and Carchedi and others like HA Cox take to heart the difference between “Marx’s view” and “an interesting perspective.”

      Of course, the issue isn’t what Pro Kliman or Amateur Kliman says, but what Marx’s own texts say, and the proper methods of interpreting them.

      Any response to Heinrich that purports to be about MARX’s law in the tendential fall in the rate of profit, but substitutes the authors’ views for Marx’s instead of engaging in careful textual analysis and interpretation, will be ripped to shreds by Heinrich, and rightly so. (Of course, Heinrich himself doesn’t do a good interpretive job, as we show in our response to him).

  26. carchedi Says:

    I predict that they are inevitable because of what I said. “If the same factors that determined the tendential fall in the ROP in the past keep operating in the future (and it is inevitable that they will keep operating because they belong to the essence of capitalism)….” *After* the prediction, there is empirical substantiation. if they happen at a future point in time (when the counter-tendencies have stopped holding back the tendency), the prediction has been correct. I think I cannot be clearer than this.

    The prediction that they are (extremely) likely and not inevitable future occurrences means that crises might *not necessarily* emerge in the future (i.e. that the ROP might not necessarily tendentially fall in the future). I exclude this possibility as long as capitalism is capitalism. Capitalism MUST destroy itself, it MUST destroy the less profitable part of itself before it can overcome the barrier it itself has created, i.e. it MUST generate future crises.

    Some comrades find it difficult to accept the inevitability of the future tendential fall in the ROP. There are other predictions that concern the inevitability of future occurrences. IF I stop drinking, THEN I will inevitably die. IF capitalism is capitalism, THEN labour will inevitably be exploited. Or not?

    The inevitability of future crises is the inevitability that capitalism will *objectively* , i.e. because of its internal dynamics, keep trying (tend) to supersede itself. This, far from denying the need for labour to act consciously, is the objective basis for labour’s class struggle. Without it, labour’s struggle would be a purely voluntaristic action rather that being the collective consciousness of an objective tendency.

    One more prediction. If we don’t stop bickering, we will never get on with our critique of Heinrick.

    • Edgar Says:

      Is there only one objective factor that determines the class struggle? Isn’t the fundamental factor the actual exploitative relationship itself? Wasn’t this the fundamental conclusion of Marx’s analysis?

      In my opinion your reasoning here leads to right wing conclusions, i.e. people are happy to be exploited just as long as things run smoothly. When things go bad, some other form of exploitation will fill the vacuum. Absolutely no inevitability towards socialism, or the higher form. Just a guarantee of conflict.

      People must come to understand the nature of the system, which was surely the goal of Capital and what Marx dedicated his life to. Naturally when things go bad we hope that the understanding penetrates a little deeper.

    • Andrew Kliman Says:

      carchedi wrote: “If the same factors that determined the tendential fall in the ROP in the past keep operating in the future (and it is inevitable that they will keep operating because they belong to the essence of capitalism).”

      I responded, on July 30, 2013 at 11:13 pm:

      “They’re only inevitable if it turns out that you’re right that they’re inevitable, and not just EXTREMELY LIKELY.

      “Can you prove that they are inevitable?

      “If not, do you have sufficient reason to be ABSOLUTELY CERTAIN, and not just 99.9% sure, that they are inevitable?

      “How could this prediction ever be proven by future developments? That is, what event could ever possibly prove that the same factors will keep operating in the future SUBSEQUENT to that event?”

      Apparently, carchedi’s response is:

      “I predict that they are inevitable because of what I said. ‘If the same factors that determined the tendential fall in the ROP in the past keep operating in the future (and it is inevitable that they will keep operating because they belong to the essence of capitalism)….’ *After* the prediction, there is empirical substantiation. if they happen at a future point in time (when the counter-tendencies have stopped holding back the tendency), the prediction has been correct. I think I cannot be clearer than this.”

      I say “apparently, because carchedi’s “response” is completely non-responsive. I didn’t ask why he predicts that the same factors are inevitable!

      I’m 99.9% sure that I know the answers to my actual questions:

      “Can you prove that they are inevitable?”

      NO.

      “If not, do you have sufficient reason to be ABSOLUTELY CERTAIN, and not just 99.9% sure, that they are inevitable?”

      NO.

      “How could this prediction ever be proven by future developments? That is, what event could ever possibly prove that the same factors will keep operating in the future SUBSEQUENT to that event?”

      IT CAN’T EVER BE PROVEN BY FUTURE DEVELOPMENTS. NO EVENT COULD EVER PROVE WHAT WILL HAPPEN AFTER THAT EVENT.

    • Andrew Kliman Says:

      The point of intellectual production of this sort is–or should be–to get at the truth, not just to churn out stuff or express oneself. In the discussion here, we (or at least some of us) are trying to get at the truth. That’s not bickering.

      The notion that carchedi should “get on with” his critique of Heinrich seems to reflect a rather different idea of what’s important.

  27. S. Artesian Says:

    “One more prediction. If we don’t stop bickering, we will never get on with our critique of Heinrick.”

    I tend to agree with that.

    • Andrew Kliman Says:

      The point of intellectual production of this sort is–or should be–to get at the truth, not just to churn out stuff or express oneself. In the discussion here, we (or at least some of us) are trying to get at the truth. That’s not bickering.

      The notion that carchedi should “get on with” his critique of Heinrich seems to reflect a rather different idea of what’s important.

  28. Choppa Morph Says:

    Well, I’d like to send everybody here on a summer boot camp to work through Hegel’s Logic together.

    Programme:
    Prepare by reading the lot — Part One, Objective Logic, Book One: Being, Book Two: Essence; Part Two, Subjective Logic: The Concept.

    Daily routine: participants take turns presenting papers in plenum, followed by group sessions. Morning and afternoon same story. Evening free form social hive buzzing over day’s harvest.

    Expected course of events:
    First week, “Being”: leads up to dissolution of Kant’s mind-forged manacles and Saturday night dance and barbecue round the bonfire of the Antinomies.
    Second week, “Essence”: leads up to acknowledgment of contradiction as fundamental and inescapable ground of knowledge, thought and being. Dissolution of “induction” as a possible source of knowledge😉
    Third week, “The Concept”: leads up to acknowledgment that Kant’s a priori insight was a damn sight more powerful than he ever imagined😉, and that Hegel didn’t exactly stand him on his feet regarding this but rather blew open the gates of concrete and steel that he misused the antinomies to construct in the path of scientific and philosophical inquiry.
    Fourth week, Science and Philosophy: papers and discussion on Anti-Dühring, Dialectics of Nature, Empirio-Criticism, and free choice topics. Purpose: to digest general methodological consequences of weeks one to three.
    Fifth and final week, Economics and Politics: “Capital” and Marx’s and Engels’s trajectory from the 1840s using the methodological foundations and consequences thrashed out previously.

    After such a learning experience our present discussion would be much less of a mess. Fewer misunderstandings and grabbing the wrong end of sticks. Because everyone would have a much better grasp of criteria for scientific validity in general, and of Marx’s understanding of scientific procedure in particular.

    For instance, we wouldn’t be sloshing around in the dark in an Arctic quagmire trying to wallop each other with cudgels labelled “induction” or “inevitability”. We’d have a much better idea of what Marx considered his categories of the theory of capitalism to be, as he presented their unfolding and development from the simplest “cell” of economics, the commodity, into the most advanced organism the capitalist mode of production could generate – the credit system.

    There’s a technology of thought as well as machines, and except for a very few exceptions (Boolean logic, for instance) it’s been stagnating since 1848. The suppression of Hegel’s revolutionary advances on Kant, and Marx’s revolutionary advances on Hegel has been much more effective in crushing progress in thought than even the institutional and legal instruments of patents and copyright have been in crushing progress in material technology and culture.

    As I’ve written earlier, there’s a difference between the collapse of capital as a mechanism of production and circulation (the immanent, ideal, “mathematical”, pure, deductive, theoretical, whatever aspect) and the collapse of capitalism as a social formation, a mode of production. Capital is a process involving dead elements of completed labour. Capitalism is a social formation composed of living human producers caught up in the capital process. Living labour trying to orient itself and navigate a violent ocean using alien instruments in a ship it has been forced to build to an alien design.

    The better we understand the design of this ship Capital, and the currents swirling under it, and the strengths and weaknesses of its boiler and hull, and the way it is being sailed, the easier it is for us to mutiny, seize it and expel the capitalists from the bridge, sail it into calmer waters, and carry out a complete refit to our own design for our own ends.

    This discussion is not just about Economics, it’s not even just about Political Economy. It’s about understanding political economy in the context of human society and history in general. And while digging into what Marx actually wrote is a sine qua non for being able to do this, and consequently a huge benefit emerging from this discussion of Heinrich and his distortions of what Marx actually wrote, we mustn’t stop there or we’ll just end up being so many clever dick Jack Horners admiring the plums our thumbs have pulled out of the pudding and pie. We have to understand why he wrote it, and how he was able to write it, and in what circumstances, both material and immaterial.

    This is the challenge of social-historical practice, of thinking politics, and it is the challenge that would make our Hegel boot camp into a more exciting intellectual experience than most of us might imagine. Hegel is no agnostic, unlike Kant. He is after the Truth and won’t rest till he can grasp it, judging the correlation between ideas, reality and experience. And once you are in the hunt for the truth, you’re hooked: “das einzig konsequente Mittel gegen die Vernunft ist, sich mit ihr gar nicht einzulassen” (“the only consistent way to fight reason is not to engage with her at all”).

    • S. Artesian Says:

      sadist.

    • BenP Says:

      Dialectical materialism = scientific validity = LOL

    • Andrew Kliman Says:

      I don’t think Morph’s comments sufficiently appreciate the differences between (a) philosophical knowledge of the kind that Hegel sought, (b) the kind of knowledge that Marx understood the LTFRP as providing, and (c) what people are engaged in when they make inductive inferences, which is not knowledge-acquisition. AFAICS, Hegel was saying that philosophy needed its own methods, not that other methods are incorrect in their own spheres.

      • Choppa Morph Says:

        Thanks for “engaging with reason”😉 We shouldn’t forget that our Reason is not just thundering in revolt, but is also Red in tooth and claw!
        Hegel was concerned with the processes of thought and logic in relation to the truth. The energy with which he explored the foundations of every element involved in this is unexampled – his intensity is on a par with Marx’s and I’m not exaggerating. But it was a different field and more in thought than reality – although once he came to a conclusion he applied what he had learned in more applied fields of knowledge. So I think Andrew K needs to be more specific about “philosophical knowledge” before we can start comparing. But let’s say that Hegel sought the ultimate foundations of knowledge, continuing and developing Kant’s almost equally ferocious and dedicated drive in the same direction.
        We can’t single out Marx’s view of the place of the LTFRP and compare it to this. We have to see it in its place in the totality of Marx’s public work, both intellectual and political to make a fair comparison. Marx tackled the whole of Western Philosophy head on as a student, as we know from his doctoral thesis among other things, and came to the conclusion that Hegel, using the whole of this tradition, had found the ultimate foundations of knowledge as far as they could be discovered using an idealist perspective. From then on Marx applied himself to continuing and developing Hegel’s revolutionary work on a materialist basis – the dialectical aspect of Marx’s work coming in from Hegel’s fundamental solutions of the problems of thought, which Marx had no reason to reject or modify, except as regards their roots in the spirit. We know this from his comments in the correspondence with Engels regarding the use he made of Hegel’s logic. (And as we also know, Marx never regarded anything as correct unless it arose from first principles, and he applied first principles everywhere and always, with a speed and sure-handedness that comes from long practice that makes it hard to spot sometimes).
        So Andrew’s distinction between Marx/LTFRP and Hegel’s search for philosophical knowledge doesn’t really hold water. Marx was criticizing a whole mode of production, a whole civilization, and this is a very general agenda that has clear parallels with Hegel’s criticism of all hitherto practised philosophy, especially given Hegel’s extremely broad and inclusive view of philosophy as including thought and human practice – maybe I should have mentioned the Phenomenology or brought it in as part of the preparatory reading for my boot camp to make this clear.
        As for inductive inferences not being knowledge acquisition this is nothing but verbal wand-play. I brought in induction in a slighting (not sleighting😉 ) way because all induction is based on principles and axioms that can only be teased out deductively. This is the inescapable a priori of thought so to say, the revolutionary insight Hegel acknowledged in Kant, and an insight that freed up Marx to pursue such a ferociously (again) deductive method in his study of capital.
        We could compare it to the gravitational power of a black hole – the deductive theoretical black hole of Capital centred on the commodity and the value theory sucking astronomical quantities of inductive empirical material into its orbit (eg the material on the 10-hours day, primitive capitalist accumulation and all the parliamentary Blue Books). Only I won’t, because we’d have to invert the whole metaphor and turn a black abysmal Inferno of a black hole into a Paradiso of clarity and light.

  29. Andrew Kliman Says:

    Michael Roberts has basically endorsed Grossmann’s breakdown model in a post of his he referred to in a comment above.

    In that post

    https://thenextrecession.wordpress.com/2012/09/12/crisis-or-breakdown/

    he wrote the following:

    The most well-known proponent of this breakdown interpretation of Marx’s theory is Henryk Grossman … crises of capitalism and its final collapse are explained by Marx’s law of the tendency of the rate to fall. But even more important, it was not specifically the fall in the rate of profit that provoked a crisis or slump, but a fall in the mass of profit or surplus value. It was this observation that Grossman reckoned was ‘decisively important’ in Marx’s theory of crisis.”

    =====

    I have produced a spreadsheet, available at

    http://akliman.squarespace.com/breakdown

    which shows that, in Grossmann’s breakdown model,

    (1) The breakdown has nothing to do with the fall in the rate of profit. Using the same initial figures, and the same c/v and s/v in every period, the exact same fall in the rate of profit occurs when growth rates of supply (c + v + s) and demand for next year’s c & v are constant and equal to one another. But no breakdown occurs.

    (2) Hence, the breakdown occurs simply because, in Grossmann’s model, the demand for next year’s c & v grows faster than supply (see “Percentage Growth Rates” and “Supply-Demand Relation” graphs).

    (3) The breakdown does not occur in Grossmann’s model because supply is growing less rapidly over time. It grows more rapidly over time.

    (4) But investment demand (demand for c & v) grows even faster. Note, therefore, that in Grossmann’s model, the cause of the breakdown is that investment demand grows too rapidly, so that it eventually exceeds supply.

    (5) This is the opposite of what occurs in capitalist crises. In these crises, investment demand falls, and this is the main factor that causes total demand to fall short of supply.

    The spreadsheet was not produced in order to disrespect Grossmann’s model, much less his work. His model is fine as an internal critique of Otto Bauer’s claims (but not as a theory of capitalist development or crisis (see point (5) above). His work was pathbreaking, and it’s to be expected that someone would see implications of his model that he didn’t see, since we’ve had 84 years to reflect on it and we now have spreadsheets and fast computers that enable us to explore lots of possibilities quickly, an advantage that he didn’t have.

    • Andrew Kliman Says:

      I’ve removed the spreadsheet because it contained an important error. All of the stuff I said above about Grosssmann’s model is correct EXCEPT for the second sentence of point (1).

  30. carchedi Says:

    Since, again, we have reached the point at which we keep repeating our positions without moving an inch further, I will not intervene any longer on this topic in this blog. If somebody prefers to amuse himself with the idea that I quit because I have been *defeated*, so be it. It’s time to move on.

    • Andrew Kliman Says:

      The reason why “we keep repeating our positions without moving an inch further” is that you haven’t responded to some of my arguments, especially the ones about the facts that (1) you side with Heinrich against Marx on the issue of whether the LTFRP has been proven, and (2) events can’t prove inevitability.

  31. carchedi Says:

    sure

  32. S. Artesian Says:

    Proved? How about “demonstrated.” The tendency for the rate of profit to decline as the means of production as capital accumulate has certainly been demonstrated and in different concrete circumstances of place and time.

    Here’s my favorite rejoinder to Heinrich, written by David F. Noble in his The Forces of Production, when Heinrich was just a babe:

    “Second N/C {numerical control, the original designation for digitally coded and controlled automatic machine tools–SA} 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).” [p.266-267]

    The major problem with Heinrich…. well they are legion, but in the main, his problem is he thinks Marxism is a critique of texts and not a critique of the ongoing, reproducing, social condition of labor we call capital.

  33. allan harris Says:

    The main problem with analyzing the fall in the rate of profit, or assuming there is even a real fall in the rate, is that no one can agree on a definition of what profit is or what the rate of profit is. Basic accounting says that profit = revenues – expenses; or profit = price – costs . Then, the rate of profit would be profit/profit + costs (or expenses.)

    If Marxists (and I am an enthusiastic one) continue to define profit as s/c+v or s/s+v/c+v/s+v, etc. etc. then no one is going to be convinced of the fall in the rate of profit except the obscure Marxist economist.

    Marxists apparently can’t even agree if the capitalist rate of profit has fallen since 1825, or since 1929, or 1960. The entire subject is on the verge of becoming pedantic, stale and irrelevant. But then, the point, as someone once said, is not to understand the economy, but to change it.

    • Andrew Kliman Says:

      For a contrary view, please see pp. 94-97 of my book, The Failure of Capitalist Production. I argue that there is no such thing as “the” rate of profit, and no such thing as “the Marxian” rate of profit.

      The problem is thus not failure to agree about “the” right measures. It is much worse. It is unwillingness to discuss a variety of measures in order to understand (1) what is responsible for the differences in their movements and (2) what can and cannot be inferred from each. People latch onto their pet “the” rate of profit, which is their pet one because its movements are the movements they want to see IN ORDER TO TELL THEIR STORIES. And then they tell their stories, blithely ignoring the question of whether the story is compatible with the actual cause(s) of the fact that their pet “the” rate of profit rises while others fall, or vice-versa. This is not scientifically acceptable.

      For example:

      a. Physicalists claim that “the” rate of profit rose in the US after the early 1980s until the recession, and they tell a story about this being due to neoliberalism and heightened exploitation. However, the rise in their particular “the” rates of profit is due to their use of the current cost of assets in the denominator rather than actual accumulated investment. When the latter is used, there’s no rise in “the” rate of profit. Hence, the rise in their “the” rates of profit is not due to neoliberalism and increased exploitation, but to rapid disinflation of fixed assets, which reduced the gap between the current cost of assets and actual accumulated investment.

      b. Michael Roberts produces a “historical-cost” rate of profit for US corporations that rises from the early 1980s to the late 1990s, and tells a story about recurrent boom phases about 17 years long. However, this particular rate of profit measures profit net of current-cost depreciation. When profit is measured net of historical-cost depreciation, the rise in “the” rate of profit disappears. Hence, once again, rapid disinflation of fixed assets is the actual cause of the rise.

      BOTTOM LINE: It is possible to understand what’s going on–and for people to cooperate in order to understand what’s going on– *without* having to agree on “the” definition of profit or “the” definition of the rate of profit. What is required is willingness to cooperate with others and a determination to use data to get at the truth rather than than as ornamentation to adorn the story one wants to tell. The problem is that such willingness and such determination are all too rare.

      • allan harris Says:

        Well, if there is no single measure of profit, or if there are several measures, all equally valid, then it is futile to even debate whether there is a tendential fall in the rate of profit. It would be like debating whether there is a constant speed of light or whether it varies with time and place, or whether the speed of light could be used to measure energy if no one could even agree that light moves at some measurable speed.

        I could not get to your previous link. However, here is my pet theory of the rate of profit.

        http://marxisteconomictheory.blogspot.com/

        The rate of profit is: Rate of Profit = Profit / Costs I just now made up that blog name.

      • Andrew Kliman Says:

        But who said anything about “several measures, all equally valid”? Not I.

        One measure will be useful to help answer one question; another will be useful to measure a different one. The purpose of debate is then to disclose instances in which a measure is being used to answer a question it cannot, or in which it is is construed to mean something that it doesn’t mean, etc.

        The analogy to light is inappropriate because there exists a unique “thing” outside us, light. But “rate of profit” isn’t a “thing”; it’s a concept. There is a correct measure of the speed of light, but there is such thing as a correct or incorrect concept (as distinct from *conceptions of things*). There are only more and less useful ones, more and less meaningful ones, etc. All this should be tested in debate.

        Please see The Failure of Capitalist Production to see how this methodology is put into practice.

  34. John. D. Says:

    Few will probably know this,but a scientific solution/proof regarding the problem of the logical consistency of Marx’s law of the tendency of the general rate of profit to fall has been achieved since 1976 in an article published in PROKLA,No. 25,with the title “Zum Beweis der Konsistenz des Marxschen Gesetzes vom tendenziellen Fall der allgemeinen Profitrate” by Georgios Stamatis which is now available online (read pages 105-116 [107-118 in pdf form]): http://www.prokla.de/wp/wp-content/uploads/1976/Prokla25.pdf

  35. H. A. Cox Says:

    Andrew,

    So there is no Marxian rate of profit. Let us ask Karl what he thinks of your propostion:

    {Incidentally, when speaking of the law of the falling rate of profit in the course of the development of capitalist production, we mean by profit, the total sum of surplus-value which is seized in the first place by industrial capitalist, [irrespective of] how he may have to share this later with the money-lending capitalist (in the form of interest) and the landlord (in the form of rent). Thus here the rate of profit is equal to surplus-value divided by the capital outlay. |688||Marx’s CW 32, p94
    Do you not think it strange to be defending something you state does not exist?

    • Andrew Kliman Says:

      Please read my book–and my comment. I didn’t say “there is no Marxian rate of profit”; I said “there is no such thing as … ‘the Marxian’ rate of profit.”

      Any response to my actual arguments to this effect?

      The passage from Marx supports my view, in that he feels compelled to specify exactly what he means and does not mean by “rate of profit” in this particular context. He wouldn’t have to do so if the term referred to one thing rather than multiple things.

    • allan harris Says:

      Capitalists may be surprised to learn there is no rate of profit. Although they usually call it ROI, Return on Investment.

      In your post, what exactly is “surplus-value,” and what exactly is “capital outlay?” For 2012, what is the total surplus-value and capital outlay? If we have those numbers for each year since 1929 it would be relatively easy to graph any change in the rate of profit.

      Marxists generally understand what surplus-value is but nobody else does.

      • Flora Says:

        I think Harris & Cox are trivializing and diverting from Kliman’s obviously correct point about the rate of profit, both in Marx and in daily life. It seems that some people, when the holes in their own theories start to show through the discussion, turn to diverting from the topic and to derogating Kliman’s contributions. I wish people would take these discussions seriously and respond to others’ remarks with courtesy and respect.

  36. H. A. Cox Says:

    I read your book. You need to read Marx’s book with a little more attention to methodology. HIs “‘the’ rate of profit is equal to surplus-value divided by the capital outlay’ before distribution.” Thus ‘the’ Marxian rate of profit is ‘the’ rate of profit you need to determine in order answer whether the ROP-‘the Marxian one, is falling or not. This Marxian rate of profit is masked, hidden on the surface of society by these other, non-Marxian rate’s of profit. These other rate’s of profit then need to be explained in relation to ‘the’ marxian one. If you talk about the US rate of profit you are not talking about the total amount of capital advanced world wide in relation to the total sv, and the US rate of profit can mask or not reflect what is going on in the world capitalist economy since it can capture sv from other sectors of the world economy. Your book, because it focuses on US rate of profit-not the Marxian one- is inadequate to explain what is going on to Capitalism, whereas John Smith’s thesis ‘Imperialism and the Globalization of Production’ gives us much more insight into what is happening worldwide and in the US. In the US the rate of exploitation has not grown significantly, whereas it has exploded world wide. This is not just because the value of labor power is significantly lower there, but absolute sv has also increased because of the much longer working day.

    • Andrew Kliman Says:

      I wrote: “I argue that there is no such thing as ‘the’ rate of profit, and no such thing as ‘the Marxian’ rate of profit.”

      HA Cox replied: “Marx’s … ‘”the” rate of profit is equal to surplus-value divided by the capital outlay” before distribution.’ Thus “the” Marxian rate of profit is “the” rate of profit you need to determine in order answer whether the ROP-“the Marxian one, is falling or not.”

      This is simply incorrect. If I were as bossy as some others, I would say that you “need to read” Marx’s book with a little more attention to its complexity. For instance, he wrote:

      “But it cannot by any means be said that if for individual short periods (such as 1797–1813) the descending line clearly predominates, that because of this, THE rate of profit must fall (in so far, that is, as the latter is determined by the rate of surplus-value). Rather I believe that during that period, THE rate of profit in England rose by way of exception, despite the greatly increased prices of wheat and agricultural produce generally. I do not know of any English statistician who does not share this view on the rise in THE rate of profit during that period.” (CAPS added) http://marxists.org/archive/marx/works/1863/theories-surplus-value/ch16.htm#s2

      What “the” rate of profit is depends on the specific context and the specific question at hand.

      My book is also inadequate as a screwdriver. But so what? The only important issue is the degree to which it does what it tries to do, i.e., account for the underlying causes of the Great Recession. (And by the way, I point I made to John Smith in Sheffield, which he understood: ALL events EVERYWHERE in the world that affect the profitability of U.S. domestic corporations are reflected in my data; nothing is ignored.)

      On changes in the degree of exploitation in different countries, see the important thesis by Albin Soderqvist: http://www.lunduniversity.lu.se/o.o.i.s?id=24965&postid=2861473

  37. allan harris Says:

    A capitalist advances $10 in wages and $10 in material, machines, rent, interest, depreciation, etc.. The capitalist then appropriates a product produced by the wage-worker. The capitalist then sells the product, AT ITS TRUE VALUE, for $30. The extra dollar value, surplus value, added by the worker during the process of production is profit, unpaid labor. In this case the profit is $10 and the rate of profit is 10/20 or a 50% rate of profit.

    One of the great discoveries of Marx was of the nature and origin of profit. Smith and Ricardo both understood that labor is the source of all wealth (even Lincoln was aware of the problem, see his first inaugural address.) Marx went further and showed how labor actually produced and capital appropriated this additional value which added to total social wealth.

    This process can easily be understood by seeing that profit is (on average) surplus-value. Marx himself, of course, attacked Ricardo for confusing surplus-value with profit. This was one of Marx’s great mistakes. It is far past time to abandon the categorical concept of “surplus-value” and replace it with what it actually is: profit.

    I sound like a pedantic, dogmatic college sophomore; however, Marxist economics seems unable to understand, or even to demonstrate, the falling rate of profit, which must be done if there is ever to be a theoretical attack on modern capitalist economic theory.

  38. Edgar Says:

    Allan Harris,

    I am prepared to believe that every capitalist is a natural born mercantilist, buy low, sell high and this is how he thinks. But I think for Marx surplus or profit comes from unpaid labour.

    So the product costs $20 and the capitalist sells it for $20. The profit comes from the fact that during the unpaid hours the worker produces extra products for free that the capitalist then sells. Over time this process produces accumulated wealth.

    So the $10 material is the equivalent of say15 widgets but the wages paid to labour is the equivalent of 10 widgets.

  39. allan harris Says:

    The product may cost $20, but that does not mean the capitalist pays the full $20 cost. The cost in wages is $10, the cost in unpaid labor and value created by the worker costs the worker $10, but the capitalist does not pay this part of the costs. The capitalist, however, sells the product at its full value, $20, and pockets the unpaid labor as profit. The capitalist only realizes the profit at the time of the sale of the product which is why he thinks profit arises as a result of his genius at negotiating the market.

    By the way, the mercantilist makes a profit by buying low and selling high because he cheats his suppliers and customers. Marx says that this is what Benjamin Franklin meant when he said that commerce is generally cheating.

    The capitalist makes a profit by not paying the worker the full value of the worker’s product.

    • Choppa Morph Says:

      What the mercantilist does to “cheat” is to take his commodity outside the bounds of his local market – the place where labour and means of production are fused into products and commodities can be priced by the workings of the law of value. This sets aside the workings of the law to a larger or smaller extent. If the new market is very different from the original market the differences in price and (original market) value can be extreme. Add to this the fact that successful merchants use extra-economic (state-like = violent) methods of persuasion to bring home the bacon. Monopolistic coercive distortion of the mechanical operations of the laws of economics as they function within an “ideal” system of production and circulation.

  40. Edgar Says:

    Choppa, I think we are aware we are dealing with theory here and not exact reality. I mean when does the product cost 20 and the capitalist sells it for 20!

    Allan,

    I was simply responding to your belief that the product sells for $30. Now you seem to be agreeing with my response to your comment.

    here is what you said:

    “The capitalist then sells the product, AT ITS TRUE VALUE, for $30.”

    I have to say I am now confused.

    • allan harris Says:

      I think we are confused by the numbers, not the theory. If the capitalist spends 10 on wages and 10 on material (rent, interest, etc.) he is able to sell the product for its real value, $30 (more or less). This is because the worker has added a surplus-value of $10 which the capitalist has not paid for. The product doesn’t come off the assembly line with a tag saying: 10-wages, 10-materials, and 10-profit. It is only after the capitalist has sold the product, for its real value, when the profit appears. That is why the capitalist thinks he is responsible for the profit.

      However, the capitalist can usually make a good estimate of the real value before the product even gets to the market: that is why you see the MSRPs on the windows of new cars.

      However, this is not to say that the “real value” of the product is fixed at the time of production. If the product can be produced more cheaply at a later time (say next week, next month) the value immediately is reduced regardless of the time and labor it cost to originally produce (thus, the concept of socially necessary labor time.) I think this is why capitalists are forced to reduce prices when they want to clear the shelves of cars, etc. The value of the old inventory has actually been reduced, thus the price has to be reduced.

    • allan harris Says:

      But to summarize what I meant earlier (and this is only an abstraction of what happens over the entire process of value production) : Capitalist pays 10 for wages, 10 for material, worker adds 10 as surplus value, which surplus the capitalist does not pay for. The real value of the product is therefore 30 and the capitalist has only paid 20. Capitalist congratulates himself on creating wealth. Marx explains this clearly in Chapter 7, Section 2, of Capital, Vol I.

      Marx was an incredible genius.

      • Edgar Says:

        Imagine the worker works 10 hours a day and within 5 hours he produces all he needs to live on. In the next 5 hours he is busy producing products that he doesn’t personally need, and which the capitalist appropriates.

        I think my problem with you is with the statement that the capitalist sells the product for $30. In this logical, theoretical world we are discussing I think the capitalist sells the product for $20 but has more product to sell at $20. Therefore profit arises because worker produces, say 20 widgets and capitalist sells 20 widgets but the worker was paid only for producing 10 widgets. Over time this process produces accumulated wealth for the capitalist, which appears as value and not product.

  41. sartesian Says:

    FWIW, I think the discussion has pretty much gone from the sublime to the ridiculous. I have no idea what a “Marxian rate of profit” is, and although that may be personal problem, I’d like to know how a Marxian rate of profit differs from the actual rate of profit.

    Now we’re getting the abcs of value expropriation with the discussion of the capitalist selling the product at its value, except the abcs we’re getting are not exactly a, nor b, nor c.

    We know that the individual capitalist may or may not sell the product at its value, but the value realized is not “its” nor is it his– it’s the proportion of the total profit the capitalist can claim based on the size of the capitals, their relative efficiencies, etc.– in short the price may coincide with the value, but it need not, and the value obtained may coincide with the value embedded in the commodity but it need not because the commodity is not just a commodity but a representative, a embodiment of capitals.

    “The capitalist sells the product at its true value….” is an abstraction, a reduction, a distillation based on the condition of labor that permits, facilitates exchange to occur in the first place. Now the mediation of that condition– the markets, price– is something else again and it is in the mediation that the underlying laws of accumulation work themselves out.

    Those of us who read Marx more closely, closely enough so that we feel somewhat comfortable making certain determinations, extrapolations, interpretations without having to claim Marx said this, and Marx said that, might be more inclined to say– whatever value the capitalist realizes in the sale of the commodity is based on the organization of labor power as wage-labor, as a value creating commodity, where the labor power is compensated not for the value it creates, but rather for the value required for its own reproduction.

    BTW, never tried Kliman’s books as a screwdriver; but they work pretty well as a hammer– as long as you hit the nail on the head.

  42. Boffy Says:

    A final comment on this. What I find interesting is that in Marx’s main analysis of capitalist crises, contained in Book 2 of Theories of Surplus Value, in almost 50 pages of analysis, Marx does not mention the Falling Rate of profit once as a cause of crises, let alone the main or only cause!

    In fact, he says pretty much the opposite. In a note he writes,

    “A distinction must he made here. When Adam Smith explains the fall in the rate of profit from an over-abundance of capital, an accumulation of capital, he is speaking of a permanent effect and this is wrong. As against this, the transitory over-abundance of capital, over-production and crises are something different. Permanent crises do not exist.”

    • pebird Says:

      What about the following?

      Chapter XVII. Ricardo’s Theory of Accumulation and a Critique of it. (The Very Nature of Capital Leads to Crises), Section 11. On the Forms of Crisis:

      “The rate of profit falls because the value of constant capital has risen as against that of variable capital and less variable capital is employed. The fixed charges—interest, rent—which were based on the anticipation of a constant rate of profit and exploitation of labour, remain the same and in part cannot be paid. Hence crisis.”

  43. H. A. Cox Says:

    FWIW, I think the discussion has pretty much gone from the sublime to the ridiculous. I have no idea what a “Marxian rate of profit” is, and although that may be personal problem, I’d like to know how a Marxian rate of profit differs from the actual rate of profit.

    Sartesian:
    Why did Marx spend so much time studying political economy? Here was a man who turned down the possibility of being a professor living comfortably in Germany with his brilliant wife. But he acquired a hatred of capitalism and confidence that working people could make a revolution and abolish it. He was an active revolutionist his whole life. Why on earth would he spend so much time studying something he hated so much. Well, from experience he learned that making a revolution is not a road human beings take lightly, as it means enormous suffering and sacrifice, especially if the revolutionists fail. So, Marx learned that it takes extraordinary, objective circumstances to force working people to take the path of revolution. So, he painstakingly studied political economy to try to confirm that capitalism would push working people on to the path of revolution. (An interesting question would be: what if he discovered capitalism had no limits, in spite of exploitation and oppression; that it could continue on trucking?) He did not write capital to create a bunch of Marxist economist who could tell workers how bad capitalism is nor did he write capital to train Marxist economist to become economic weatherman, who can tell us what the economic weather is outside; he wrote capital as a guide for building a revolutionary movement in the working class, based on the idea in Capital, that capitalism was an historically limited mode of production that will force working people to make such a revolution. It is a scientific work, and, as with any scientific work can provoke many controversies as to what that work says about capitalism.
    Some, such as Harvey, Sweezy, Heinrich, Laibman think Capital was a good attempt, but needs improvement. But the debates on Roberts’ (and Sam Williams blog) are an in house debate about what Marx’s theory of limits of capitalism are. It is unfortunate, but given the development of capitalism since WWII, was probably going to lead to the various interpretations of what Marx actually said in Capital and what it actually implies.
    These debates are annoying and frustrating, and they are repetitive because each generation come into the halls of academia and it takes time to discover how repetitive these debates are. Heinrich has a ‘new’ interpretation of Marx, one that is not new. Heinrich thinks that Marx secretly abandoned the falling rate of profit, so did Simon Clarke 20 years ago. Weeks thought that Marx’s theory did not imply an eventual collapse of capitalism 30 years ago, so now do Kliman and Freeman. With the stock market crash of 1987, great interest in Marxian economics was created, so much that Anwar Shaikh was asked to express his opinion in the NY Times; with the recent crisis, we again see great interest in Marxian economics.

    The cause of these frustrating debates and nasty polemics, is two different interpretations of whether the limit for capitalist development is: recurrent crisis or eventual collapse. Before the advent of Stalinism, most of the revolutionary movement-including Engels, Lenin, Luxemburg organized their behavior around the idea that capitalism was moving toward economic collapse and that it was necessary to build a revolutionary movement to speed up that process by building a revolutionary. tendency within the working class to assure that that collapse was to be turned into socialism. Those who argued against collapse were mostly the revisionist such as Hilferding, Bernstein, and even Kautsky.
    There is agreement that there will be substantial crisis; the difference is over whether these crisis will become more severe because of the process of eliminating labor from the production process and why.

    • michael roberts Says:

      Sartesian seems to have summed up the implications of the debate very well.

    • allan harris Says:

      “To explain, therefore, the general nature of profits, you must start from the theorem that, on an average, commodities are sold at their real values, and that profits are derived from selling them at their values, that is, in proportion to the quantity of labour realized in them. If you cannot explain profit upon this supposition, you cannot explain it at all…

      “I repeat, therefore, that normal and average profits are made by selling commodities not above, but at their real values…(Marx, Wages, Price and Profits.)

    • allan harris Says:

      “he wrote capital as a guide for building a revolutionary movement in the working class, based on the idea in Capital…”

      If you want to create a revolutionary working class you should explain clearly to them how profit is created. Workers get paid wages, workers produce value over and above their wages, the capitalist pockets the extra value as profit.

      A worker or employee knows exactly what his or her wage per hour is. If you ask workers whether they produce more, less, or equal value for the wages they receive, every single one will tell you they produce more. Their employers, professional economists, the media, of course, say that the workers get paid for their “marginal” product, meaning wages, and no more or less.

      Employees instinctively know they are being exploited, they don’t know exactly how it works.

    • sartesian Says:

      I said the debate had gone from the sublime to the ridiculous; I also wrote earlier, during the first “round” regarding Michael’s review of Kliman’s Freeman’s et al’s critique of Heinrich, that I though the discussion had been excellent, not in spite of disagreements but because the disagreement were IMO productive, and not just over semantics.

      I least of all people I know have no problem with polemics, harsh language, bad attitudes, abrasive personalities.

      I think FWIW– the discussion of “inevitability” was important, worthwhile. I don’t think the discussion about the “Marxian” rate of profit, as opposed to what? the “non-Marxian” rate of profit has distinguished itself from being trivial. Marxian, non-Marxian? What? Does this mean capital exists in both a “Marxian” form (or better, relation) and a non-Marxian ‘state’?

      So comrade Cox– I don’t know why Marx “chose” the life he did as opposed to being a comfortable professor. And I’m not concerned with the reasons he did what he did. The issue is capital, and the abolition of capital.

      Marx studied political economy in order to expose, demolish it– it being the ideology of the “eternal nature” of capitalism. His critique of capital illuminates those forces, those relations that are the identity of capital, that make its abolition necessary.

      Whether or not Luxemburg, Trotsky, or whoever believed in the inevitability of the collapse of capitalism, and whether or not Kautsky, Hilferding, Bernstein argued the other side is fundamentally immaterial.

      What counts is the social necessity for revolution; for the emancipation of social labor. That necessity exists independently of theories of “permanent crisis” “inevitable collapse” “ultra-imperialism” or “evolutionary transition.”

      The issue is not whether there is a substantial crisis, except I guess for those who think what occurred in 2008-2009 and beyond can be attributed to “fictitious capital,” “financial crisis,” “excessive exuberance” with capitalism actually existing in a state of relative upturn– but whether or not crisis is catastrophic for capitalism, and if indeed catastrophe is something other than capitalism at its most acute, at its “highest stage.”

      • GrahamB Says:

        The discussion around ‘inevitability’, etc. could have been productive and a real debate. I don’t think it was and there are limits to righteousness, even in the polemics of the Left.

        Not to cover old ground, but I would call 2008-09 a financial crisis if I had to sum it up in a term. This certainly doesn’t make it less than substantial – quite the opposite – and the global economy is in a transitory period.

      • sartesian Says:

        GrahamB– Can you give an example of a systemic financial crisis in capitalism, since say 1968 that doesn’t have its roots in overproduction, overaccumulation, and/or the tendency of the rate of profit to decline?

        I’m getting older so maybe it’s just me and my failing memory, but I’ve been following this stuff pretty closely and damned if I recall a systemic financial crisis that was not rooted in………capitalist accumulation.

      • GrahamB Says:

        This crisis – not previous ones – and of course it’s rooted in capitalist accumulation in that this is part of the defining dynamic of capitalism. But global overaccumulation or overproduction? Even in the US with all that overcapacity in the auto industry, the fall in the rate of profit prior to 2007 was within a longer period of a rising rate of profit.

      • sartesian Says:

        Graham,

        No over-accumulation, or overproduction? Of course there was– hence the decline in profitability after 2006– hence the “program” of recovery in the US auto industry– reducing capacity, reducing employment, “tiering” wages with “new workers” worker 50% of previous hourly rates, hence shedding any responsibility for health benefits through the establishment and expansion of VEBA and funding it with “new” stock…. which will probably be as valuable as the old stock in a few more years. Probably, but not inevitably BTW.

        If this crisis is rooted in the dynamic of capitalist accumulation how can it be a “financial crisis” and not the dynamic of overaccumulation, expansion of the means of production beyond the ability of wage-labor to valorize the already accumulated values? THAT is, after all, what the “dynamic” of the capitalist system amounts to.

        I think Kliman makes a critical point in accepting the terms of debate re Marx’s proof the LTFROP as Heinrich posits them, and showing where Heinrich’s use and understanding of Marx is completely inaccurate.

        I also think we cannot characterize Michael’s arguments as providing fuel to Heinrich, in that Michael’s arguments are not made separate and apart from his concrete demonstration of the TFROP in this, and other, specific historical circumstances.

        Believe me, no one’s more uncomfortable with taking a “middle position” than I am. Being reasonable is more or less anathema to me. And I certainly have strong disagreements with Michael in various matters, but I think the concrete demonstrations he has provided count for a lot.

      • GrahamB Says:

        @sartesian

        I mentioned the US auto industry as it is often brought up as evidence of over-accumulation, except the rate of profit was historically high in 2006 despite the long-term decline in the industry. Perhaps it’s about business cycles vs periodisation?

        Accumulation of capital is a necessary but not sufficient defining dynamic of capitalism (and the term is banded around without clear definition at times by others) and it’s not the same as *over* accumulation.

        I tend to agree with you on the Heinrich-Kliman-Roberts affair and you’ll just have to live with being reasonable.😉

    • Andrew Kliman Says:

      I don’t accept the Cox characterization of the debate. My co-authors and I–and Heinrich–are discussing Marx’s OWN law of the tendential fall in the rate of profit (MOLTFRP). Others are discussing something else, their own thoughts that, they think, “aren’t inconsistent” with it, or the CRPSFRP (Carchedi-Roberts prediction of a secular fall in the rate of profit).

      As far as MOLTFRP is concerned, I think the judgment of Henryk Grossmann in his 1929 book is definitive and should settle the matter once and for all:

      “If one then reads in the third book of Capital the relevant chapter of the third section on the ‘Law of the Falling Tendency of the Rate of Profit’—and this chapter is most closely linked to the exposition of the process of accumulation—one’s initial response is one of deep disappointment. The same factors that drive accumulation
      are also responsible for the falling rate of profit. But is the falling profit rate a symptom of the tendency toward breakdown? How is this tendency effectuated? This would be the logical place to demonstrate this tendency toward breakdown. BUT THIS DOES NOT HAPPEN. Not that some tentative starts in this direction are
      not made: but you think that now the decisive answer is coming. BUT IT DOES NOT COME.” (caps added)

      • sartesian Says:

        Andrew,

        Yes, your debate with Heinrich is over Marx’s “own law of the tendential fall in the rate of profit.” But there’s more to it than that for Heinrich. He is convinced that capital contains, imposes, poses, possesses no inherent limit in its very make-up to continuous valorization. He says as much.

        That’s his argument and represents a complete repudiation, not simply a misunderstanding of Marx’s critique, of what Marx means by “immanent critique” and of historical materialism.

        Clearly, the three volumes of Capital, as well as his Grundrisse, and the other Economic Manuscripts 1857-1864 are Marx’s critical explorations and explanations of the multitudinous obstacles capital places in the way of valorization and revalorization in and by the very condition of its accumulation.

        In this regard, while I have disagreements with Roberts and Carchedi about “inevitability”– in that I think there is no place for inevitability in what Marx explicates as the determinants and negations of accumulation– I do not think that Roberts and/or Carchedi are in danger of giving “weapons” to Heinrich to attack Marx’s exploration of the ROP.

        The issue is not simply the theoretical content of the TFROP or “MOLTFROP” but the practical demonstration of that content; its manifestations. Michael and Carchedi have done that. As have Alan and yourself.

        And that practical demonstration, warts and all, is what’s at stake in this debate.

      • Andrew Kliman Says:

        sartesian: I don’t have reason to doubt that Heinrich is convinced of what you say he’s convinced of, but he DOESN’T say this in his MR article. The article is strictly on MOLTFRP and Marx’s own crisis theory or lack thereof.

        This matters greatly, because the author’s motives are irrelevant to the truth-value of his/her claims (I know this comes as a surprise to the interneterati, including the Marxist interneterati, but it’s true nonetheless). Any critique that merits not being dismissed and ridiculed needs to deal with the actual evidence and arguments brought forward in support of the claim.

        Our paper takes great care to do this. A “reply” to Heinrich that just argues that capital confronts inherent limits does not. One that argues that this was Marx’s view hardly does better.

        Marx said that he proved MOLTFRP. Heinrich said that he didn’t, and that it can’t be proved. Since predictions of future events have not been proved, when Carchedi and Roberts scrap MOLTFRP and replace it with the CRPSFRP–BUT AT THE SAME TIME CALL THE LATTER “Marx’s” law–it follows that they are siding with Heinrich against Marx. All that MR and Heinrich need to do is point that out. Game, set, match.

        If anyone has an honest-to-good argument against the claims in the preceding paragraph, I’ve yet to see it.

        I don’t just agree that what’s at stake is only whether capitalism has inherent limits or whatever. The Marxists without Marx are trying to make Marx himself disappear, so that they can turn “Marx”ism into whatever they choose. Our paper opposes this throughout, from the title through the last sentence. In contrast, Carchedi and Roberts are implicitly endorsing it, because they’re doing the same thing–saying “Marx” when they mean themselves, replacing MOLTFRP with the CRPSFRP. “Every man his own Marxist.” So there’s a real danger that Marx himself will disappear.

        I realize that most people don’t care about this. The discussion here testifies to the fact that some people who consider themselves his staunchest supporters don’t care. For them, it’s really all about them and what they think. But for reasons I’ll be overjoyed to have a serous discussion about, I do care–a lot. (For one thing, the efforts to make Marx disappear make it almost impossible to do theoretical and empirical research that’s grounded in Marx’s own work.) I’ve fought the efforts to make Marx himself disappear for more than a quarter-century, and I DON’T intend to stop now.

        MR and Heinrich are more than happy to say that Carchedi is entitled to his views, Roberts is entitled to his views, Cox is entitled to his views, you’re entitled to your views, etc. It’s MARX–himself–who is not entitled to his views (he’s internally inconsistent, he had no crisis theory, he claimed to prove MOLTFRP but failed, his stuff is pre-monopoly, etc., etc.). And those of us who fight this are unpersons, while those who go along with it and take part in it are okay, since everyone’s entitled to their views … except Marx himself.

        I think it’s important to ask why this is the case, and whose interests are served, among other questions.

      • sartesian Says:

        Re Heinrich: The points you establish in your (collective) paper are fundamentally correct. Marx’s analysis of the law is the explanation of the tendency for the rate of profit to decline in specific, and in the general circumstances of the accumulation of capital– which is specifically and generally the accumulation of the means of production as capital, as values expanded by the labor organized as wage-labor.

        The other failures of Heinrich’s critique all flow from this fundamental failure to apprehend what Marx has analyzed and what Marx has claimed for his analysis.

        As has been already established, IMO, “immanence” is not inevitability, inherent tendency is not permanent manifestation.

        That’s really all that needs to be said about this paper of Heinrich’s, other than the ridiculous speculating that he attempts to present as “evidence.”. But Heinrich is more than just this paper. This paper is but one element of his distortion of Marx’s critique of capitalism– of which Marx’s explanation for the tendency of the rate of profit to fall is but the most concise, concentrated expression.

        Heinrich’s on a mission, and that mission is to divest Marx’s work of its link to…..historical materialism, to class struggle. Heinrich means to strip Marx of the fundamental demonstration that capital is historically determined by its organization of labor, and that the conflict between labor and the conditions of labor, the expression and mediation of labor by this very same social relation, limits capital and obstructs its valorization.

        The significance of this, IMO, is that Heinrich et al can deny the significance of profitability to the reproduction of capital; and having denied that, Heinrich et al are free to discard class action as essential, necessary, to the overthrow of capital, clearing the way for endorsement of any number of “agents” of “revolution.”

        You can regard Mao as a great “anti-capitalist” revolutionary; Fidel; Mandela; the ANC; ZANU-PF; Morales, etc etc ad infinitum ad nauseum.

        The truth of the TFROP is in the actions of the bourgeoisie against the proletariat.

        To maintain the argument on a level of interpretation of theory, or of abstraction undermines the very import of what Marx presented.

        The real insidious dimension of Heinrich’s work is that it demands “proof” as a way to avoid the practical demonstration of the law which capital provides us acutely, chronically, but not necessarily permanently or inevitably.

      • Andrew Kliman Says:

        Sartesian: I agree with much of what you say in response to me. We certainly don’t want to “maintain the argument [only] on a level of interpretation of theory, or of abstraction,” and I think we make that clear in the paper and in other things some of us have written that we cite.

        But the problem is that this is the only terrain on which Monthly Review will do battle. It wants to avoid a discussion of different empirical accounts of the underlying causes of the Great Recession, etc. So it publishes an article of Heinrich’s that is narrowly focused on the two things that MR wants: MOLTFRP is a crock and (especially) Marx had no crisis theory. And people wanted a response to *that*, so we responded.

        We did so in the only way we could do so without changing the subject to the empirical strength of Marx’s theory or the political implications at stake. Under the circumstances, focusing on such things would be an obvious smokescreen, so it wouldn’t be at all effective. It would be a surrender. If Heinrich had to say anything in response, saying that our response is non-responsive would be sufficient. Of course we could also challenge MR to engage in a debate about the concrete economic issues at stake, and make our position clear. And I think we did so more or less. My point is that we couldn’t *focus* on such things.

        On the issue of proof, the problem is that Heinrich says that Marx repeatedly said that he proved MOLTFRP, and he’s right: Marx did say this. So it is no “refutation” of Heinrich at all to say that MOLTFRP can’t be proved deductively and that we need to turn to the evidence to decide! That too would be surrender. The only actual refutation I can think of is to show that MOLTFRP is not what Heinrich claims it is and that the real law was proved by Marx.

      • sartesian Says:

        “On the issue of proof, the problem is that Heinrich says that Marx repeatedly said that he proved MOLTFRP, and he’s right: Marx did say this. So it is no “refutation” of Heinrich at all to say that MOLTFRP can’t be proved deductively and that we need to turn to the evidence to decide! That too would be surrender. The only actual refutation I can think of is to show that MOLTFRP is not what Heinrich claims it is and that the real law was proved by Marx.”

        Very good point.

  44. H. A. Cox Says:

    Allan says:
    If one asks why the rate of profit rose despite the rising corn prices, this is to be explained from the following circumstances: Prolongation of the working-day, the direct consequence of the newly introduced machinery; depreciation of the manufactured goods and colonial commodities which enter into the consumption of the workers; reduction of wages (although the nominal wage rose) below their traditional average level ; finally, the rise in the rate of profit was due to rising nominal prices of commodities, because loans and government expenditure increased the demand for capital even more rapidly than its supply, and this enabled the manufacturers to retrieve part of the product paid to the landowning rentiers and other persons who have a fixed income in the form of rent etc. ‘

    Allan: As a retired lathe operator, I have found that working people have diverse opinions about whether they are paid for what they contribute to production. But even if you carefully explain how it works, they are not going to join a movement to overthrow capitalism-with all the bloodshed that entails, unless their condition as workers becomes intolerable. Even then, they will try to reform capitalism before they take a revolutionary path. That is why Engels had this to say about Marx’s theory of revolution:

    ‘According to the laws of bourgeois economics, the greatest part of the product does not belong to the workers who have produced it. If we now say: that is unjust, that ought not to be so, then that has nothing immediately to do with economics. We are merely saying that this economic fact is in contradiction to our sense of morality. Marx, therefore, never based his communist demands upon this, but upon the inevitable collapse of the capitalist mode of production which is daily taking place before our eyes to an ever greater degree [My emphasis] (Engels, 1975: 11)’

  45. H. A. Cox Says:

    Allan,
    I apologize for attributing to you a quote that I copied from Marx and forgot to highlight and copy your statement, before I pasted it: this is the quote from your comment that I made my comment to:
    If you want to create a revolutionary working class you should explain clearly to them how profit is created. Workers get paid wages, workers produce value over and above their wages, the capitalist pockets the extra value as profit.

    A worker or employee knows exactly what his or her wage per hour is. If you ask workers whether they produce more, less, or equal value for the wages they receive, every single one will tell you they produce more. Their employers, professional economists, the media, of course, say that the workers get paid for their “marginal” product, meaning wages, and no more or less.

    Employees instinctively know they are being exploited, they don’t know exactly how it works.

  46. Choppa Morph Says:

    Andrew Kliman claims he is dealing with Marx’s own theory, while Mike R and Carchedi aren’t. He also claims Heinrich is dealing with Marx’s own theory so he needs to be refuted on this ground. This is terribly disingenuous. It’s letting the enemy set your agenda. Letting slugs set the agenda for the gardener.
    He writes: “But the problem is that this is the only terrain on which Monthly Review will do battle. It wants to avoid a discussion of different empirical accounts of the underlying causes of the Great Recession, etc. So it publishes an article of Heinrich’s that is narrowly focused on the two things that MR wants: MOLTFRP is a crock and (especially) Marx had no crisis theory. And people wanted a response to *that*, so we responded.

    We did so in the only way we could do so without changing the subject to the empirical strength of Marx’s theory or the political implications at stake. Under the circumstances, focusing on such things would be an obvious smokescreen, so it wouldn’t be at all effective. It would be a surrender.”

    As if the empirical strength of Marx’s theory has nothing to do with its scientific validity, and as if the political implications are irrelevant to the development of economics theory. And worst of all, as if “changing the subject” were a scientific/scholarly crime! It can be clearly shown (as Andrew K does) that Heinrich is a million miles away from Marx in many important respects, scientifically and economically speaking. This by itself is justification enough for “changing the subject” ie adjusting the discourse to reality so the discussion can be furthered. Andrew refuses stubbornly to do this, whereas Mike R and Carchedi most sensibly grasp the bull by the horns and set the agenda more the way Marx would have intended.

    Marx was ferociously thorough-going and consistent in his logic, but in common with Hegel (and even god help us all, Kant!!) he shared a world-historically iconoclastic approach that was as far from pedantry and academic ritual as Punk. Andrew et al demonstrate to say the least an exaggerated respect for pedantry and academic ritual when they restrict their refutation of Heinrich to the field chosen and staked out by Heinrich himself.

    Which is why I have been insisting on the more general methodological and scientific elements in the debate, since the whole pedantic ritualized mindset epitomized by Kliman et al in this self-flagellation is rooted in a purportedly “Kantian” and explicitly anti-dialectical institutional orthodoxy promoted and defended by guardians of Capital. Kant was extremely serious, and as such both extremely unorthodox and extremely revolutionary. Kliman et al. are more serious than MR and Heinrich, not to mention overtly bourgeois economists, but not serious enough to leave the intellectual sewers these people splash around in. They need to ponder Kant’s iconoclasm and his unorthodox and revolutionary drive to get some historical perspective on the war of ideas we are fighting here. If you catch up with Kant and Hegel, chances are Marx (the real, “own” Marx, ditto Kant and Hegel) will resonate better – not just tactically (the Kliman et al. paper is tactically brilliant, no doubt about it) but strategically, in a social-cultural-economical-historical perspective.

    The thing is that capital and its processes are mechanical and dead and their law-observing movement is subject to strict socio-economic conditions being met – the formal and real subordination of the actions of people in society to the needs of a capitalist class. Whereas capitalism is a social-historical system within which these capital processes take place with great regularity. The two are not the same. Capital is not capitalism. The final “collapse” of capital will take place when capitalism finally collapses. Any “collapse” of capital is metaphorical, since capital is dead. The collapse of capitalism as a social system is not metaphorical, although history has already shown us that there will be many partial collapses en route to its final disappearance. What Heinrich, Andrew K and many others do is to conflate capital and capitalism, and imagine that speaking of a collapse of capital due to the LFROP is the same as speaking of the collapse of capitalism. The Law demonstrates the weakness of capital in its process of accumulation (and Marx demonstrates the way accumulation *must* take place and affect the system), barriers to its own development within its own framework. Marx saw the “the abolition of capital as private property within the framework of capitalist production itself”, and he saw it as an inevitable effect of the development of the productive forces (ever more socialized and collectivized and on an ever-increasing scale, regardless of the forms of ownership imposed by the relations of production). What he didn’t do was give a time or place for the collapse of the capitalist mode of production (‘the framework of capitalist production itself’). He saw the fate of modes of production as a working out of the interactions between “purely” economic laws inherent in and developing within particular economic systems (especially capitalism, which is the only mode of production where a “purely” economic set of laws can really be said to operate – if the condition of subordination to the needs of capital is fulfilled) and the social and historical laws underlying the behaviour of human beings in society.

    Building on Hegel’s comment that freedom is the recognition of necessity, Marx promotes our ability to free ourselves by showing us as clearly as possible (ie far more clearly than even the most serious and radical bourgeois classical economists) the laws operating in relation to the processes of capitalist production and circulation, that is to say, by showing us the necessity by which we are constrained in a society subordinated to the needs of capital.

    Which is what I think this discussion of ours is all about.

    • Andrew Kliman Says:

      Morph, do you know what disingenuous even means? It means dishonest. I’m not dishonest and I don’t appreciate being called dishonest.

      “Andrew Kliman claims he is dealing with Marx’s own theory, while Mike R and Carchedi aren’t. He also claims Heinrich is dealing with Marx’s own theory”

      Are these claims correct or not?

      “so he needs to be refuted on this ground. This is terribly disingenuous.”

      No, it’s not. You may THINK that you disagree with it. That doesn’t make it dishonest.

      Let me know that you have also decided to response directly to what I wrote. If it’s so unconscionable when we respond directly, why isn’t it unconscionable when you do?

      “It’s letting the enemy set your agenda.:

      Nope. It follows from the very meaning of the word “refute.”

      http://www.merriam-webster.com/dictionary/refute

      “Letting slugs set the agenda for the gardener.”

      No, it’s stomping directly on the slugs instead of gingerly sidestepping them and playing to the rafters of gardening buffs. Or the quarter-rafter that the gardening buffs can maybe fill if they sit far apart enough. What’s at issue here is class struggle, not self-expression. And I don’t mean *discourse* about class struggle; I mean class struggle. As Gramsci said, an intellectual battle is the opposite of a military battle in that you want to attack the enemy at it’s strongest point rather than its weakest point. This isn’t *taking* the opponent’s terrain; it’s an *incursion* on their terrain. If the quarter-rafter of gardening buffs back home don’t like it, SO BE IT. IT’S NOT ABOUT THEM. And it’s not about *discourse* on class struggle.

      You then quote me: “He writes: ‘But the problem is that this is the only terrain on which Monthly Review will do battle. It wants to avoid a discussion of different empirical accounts of the underlying causes of the Great Recession, etc. So it publishes an article of Heinrich’s that is narrowly focused on the two things that MR wants: MOLTFRP is a crock and (especially) Marx had no crisis theory. And people wanted a response to *that*, so we responded.

      “We did so in the only way we could do so without changing the subject to the empirical strength of Marx’s theory or the political implications at stake. Under the circumstances, focusing on such things would be an obvious smokescreen, so it wouldn’t be at all effective. It would be a surrender.”

      You then say: “As if the empirical strength of Marx’s theory has nothing to do with its scientific validity,”

      This is ridiculous. The point is simple and obvious. Discussing the empirical strength of Marx’s they is not a response to Heinrich’s arguments or purported evidence.

      “and as if the political implications are irrelevant to the development of economics theory.”

      Also ridiculous, for the same reason.

      “And worst of all, as if “changing the subject” were a scientific/scholarly crime!”

      It’s a crime against reason. It’s an insult to every thinking person, and no thinking person will be persuaded by it, if s/he is thinking rationally. It is a logically fallacious tactic known as smokescreen, red herring, diversion.

      Don’t lecture me about dialectic. Sublation isn’t changing the subject. The “method of absolute cognition” is analytic and not synthetic in the normal sense (of “finite cognition). As Hegel writes in § 1790 of the larger Logic:

      “The method of absolute cognition is to this extent analytic. That it finds the further determination of its initial universal simply and solely in that universal, is the absolute objectivity of the Notion, of which objectivity the method is the certainty. But the method is no less synthetic, since its subject matter, determined immediately as a simple universal, by virtue of the determinateness which it possesses in its very immediacy and universality, exhibits itself as an other. This relation of differential elements which the subject matter thus is within itself, is however no longer the same thing as is meant by synthesis in finite cognition; the mere fact of the subject matter’s no less analytic determination in general, that the relation is relation within the Notion, completely distinguishes it from the latter synthesis.”

      Moreover, changing the subject doesn’t attack the enemy at its strongest point. All it does is play to the quarter-rafter of gardening buffs. They might like that, but this is not about them.

      “It can be clearly shown (as Andrew K does) that Heinrich is a million miles away from Marx in many important respects, scientifically and economically speaking. This by itself is justification enough for “changing the subject” ie adjusting the discourse to reality so the discussion can be furthered.”

      No, it’s no justification at all. It’s a crime against reason, etc.

      “Andrew refuses stubbornly to do this, whereas Mike R and Carchedi most sensibly grasp the bull by the horns and set the agenda more the way Marx would have intended.”

      Is this the sensible Marx who wrote “Capital: A Diversionary Non-Critique of Political Economy”? Or the actual Marx who the anti-Semites call “Talmudic” because he ANALYZED others actual arguments minutely, at length, and with exceeding care (see, e.g., “Theories of Surplus-Value”). Of course, he did more than that–and so do we. But he DID NOT just change the subject. Sublation isn’t diversion.

      Moreover, in this particular case, diversion, far from grasping the bull by the horns, turns the controversy into a relativist swap, “your view,” “my view,” etc. That’s the game that the Marxist economists, and the Monthly Reviewites, etc. have always wanted us to play–in order to make Marx himself disappear. Carchedi and Roberts are willing to play that game. I’m not. And that’s why the Marxist economists, the Monthly Reviewites, etc. hate my guts but not theirs.

      “Marx was ferociously thorough-going and consistent in his logic, but in common with Hegel (and even god help us all, Kant!!) he shared a world-historically iconoclastic approach that was as far from pedantry and academic ritual as Punk. Andrew et al demonstrate to say the least an exaggerated respect for pedantry and academic ritual when they restrict their refutation of Heinrich to the field chosen and staked out by Heinrich himself.”

      Hogwash. This misuses the term “refutation” again. And we don’t restrict ourselves to this. We have ALREADY written a huge amount of stuff on the empirical relevance of MOLTFRP, we refer to this repeatedly in our paper, we provide many citations to it, and we challenge MR to engage in a debate about the concrete economic issues at stake. And cut the pop psychology. My reasons for dealing with the people’s actual arguments and evidence are explained above and they have nothing whatever to do with “respect for pedantry and academic ritual.” One there’s another reason, too, which also has nothing to do with that: my arguments and evidence have again and again been dealt with by throwing up smokescreens and diverting, and I know from this personal experience how disgusting that is, and I’m not going to descend to that level.

      “Which is why I have been insisting on the more general methodological and scientific elements in the debate,”

      WHICH debate, exactly? If you mean to insist that Heinrich can be *refuted* by avoiding his actual arguments and purported evidence, you’re simply wrong. Of course, you can refuse to *analyze* “the debate,” take it as the chaotic whole it appears as to common sense, but that’s not methodological or scientific in my book.

      “since the whole pedantic ritualized mindset epitomized by Kliman et al in this self-flagellation is rooted in a purportedly “Kantian” and explicitly anti-dialectical institutional orthodoxy promoted and defended by guardians of Capital.”

      Hogwash. More pop psychology lacking in evidence as well as insight. As Hegel said (against Kant), you can’t know before you know–and you don’t know.

      “Kant was extremely serious, and as such both extremely unorthodox and extremely revolutionary. Kliman et al. are more serious than MR and Heinrich, not to mention overtly bourgeois economists, but not serious enough to leave the intellectual sewers these people splash around in. They need to ponder Kant’s iconoclasm and his unorthodox and revolutionary drive to get some historical perspective on the war of ideas we are fighting here. If you catch up with Kant and Hegel, chances are Marx (the real, “own” Marx, ditto Kant and Hegel) will resonate better – not just tactically (the Kliman et al. paper is tactically brilliant, no doubt about it) but strategically, in a social-cultural-economical-historical perspective.”

      The “not just tactically … but strategically” sounds good, but it’s a dodge. What you’re actually proposing is either strategic victory by means of tactical defeats or abandoning reason and winning by means of sophistry. The latter might work, in some sense, but I won’t be party to it. If people “agree” with what I say because they like it, or if they just like it, period, nohing has been achieved.

      ” … Which is what I think this discussion of ours is all about.”

      WHICH discussion, exactly?

      • Choppa Morph Says:

        Kliman, I do know what disingenuous means, thank you very much. I also know what I want it to mean in this context, which is “less than frank, less than straightforward”. Weasling out of the broader issues, basically. Should be pretty obvious from the context and the rest of what I write?
        As to “refute” (“To prove to be false or erroneous; overthrow by argument or proof, to deny the accuracy or truth of”) there are quite evidently elements in the definition of it that permit me to speak of “restricting” a refutation to a limited field. Andrew K acts as if there is merely one narrow meaning to the word (“prove formally wrong”), and as if there is merely one aspect of Heinrich to be refuted. Heinrich says A, Kliman shows not A, end of story.
        But there is much much more to Heinrich and the MR Marxists-without-Marx agenda, as Andrew K very well knows but chooses (disingenuously?😉 ) to ignore (except when he brings in all the context for the trivial purpose of stomping on me😉 ). The context to their agenda is the class struggle, not just Marx’s text and its origins and development. And it is of course up to each and every one of us to stake out our chosen field of battle within the context as we see it, and set our own agenda in relation to it.

        As for smokescreens the Hegel quote is a beaut.
        Prof K writes as if first Mike R and Carchedi and then me were busy “changing the subject” (set by Andrew as part of his agenda nota bene) in some completely unreflected and unqualified way, with no relationship whatever to broader context or agenda-setting. This is crap and textually incompetent, since I deliberately qualified and reflected Andrew’s “changing the subject” with the words “ie adjusting the discourse to reality so the discussion can be furthered”. Which seems to me to take us a whole lot closer to “sublation” than an ingenuous reader might imagine. Andrew is a dab hand at rhetoric and setting agendas!

        Anyhow, what Hegel says about method is heavy stuff towards the end of the Logic where he’s showing how everything fits together and is preparing to tap the hat and produce the rabbit. What Andrew says about analytic and synthetic in relation to absolute cognition is completely pointless as far as our present discussion is concerned, since he merely writes “Don’t lecture me about dialectic. Sublation isn’t changing the subject. The “method of absolute cognition” is analytic and not synthetic in the normal sense (of “finite cognition”)”, and gives no analysis or explanation or commentary on what Hegel says. Chucking a chunk of Hegel into the discussion in this way is pure professorial ex cathedra stuff. Sweep on to the podium in cap and gown and lecture away. After acting as if lecturing an interlocutor on the dialectic is a most heinous act. Pot kettle black, yer honour, except that I’m not the one who’s lecturing, but you.

        In a previous comment I brought up induction and deduction, and it was precisely with passages like this one in mind that I did so. What Hegel is saying is that in “absolute cognition” the deductive (fundamentally analytical) approach is king, whereas in “finite cognition” it’s inductive (synthetic) adding what appear to be discrete bits together to (re)create a whole. The appearance of discrete bits being due to the immediacy and universality of a first determination as an Other. It’s a matter of the relationship of “differential elements” (give me German any day!! :-D) of the subject matter as on the one hand outside and external to thought/mind (“finite cognition”) and on the other as within it and internal to it – “within the Notion” – the Notion being the active intellectual spiritual whole informing reality.

        On this basis, ie letting the 2-by-4 swung at me and other “subject changers” by Andrew K follow through and clout him on the back of his own head, we can note that for Hegel, as a fine representative of dialectical thought, there seems to be a clear understanding that there are different levels of subject matter depending on the perspective used, and that it is important to any discussion of the subject matter (in our case Heinrich’s take on Marx’s Law) that you specify the level and method involved. Andrew chooses the narrow, Heinrichian (vulgar-Kantian) perspective. Good for him. We don’t. So much the better for us. But by now it’s evident that there are all sorts of factors at work underlying this different choice of perspective and agenda, and it seems to me to be clearer and clearer that Andrew K’s line is overly exclusive and restrictive and authoritarian as he defends his cabbage patch against various slugs. Territorialism and prestige isn’t the most useful way to develop the revolutionary intellectual energy we need to fire up and direct the emancipation of the working class and with it humanity.

    • H. A. Cox Says:

      Choppa Morphy
      I do not think Kliman is disingenuous; that we mean that he understands what our arguments are. Instead, he considers he is the great defender of Marx, and will (vainly) seek out debaters tricks that will refute our arguments. I do not think it useful to call him a liar; it is just better to point out that he will do anything to win the debate, even if it is to grossly misrepresent what others are saying. You are right that he is evading the question of whether capitalism has historical limits, but he is not evading it out of conscious lying; rather he is doing it to win the debate. In the meantime, those poor young people who read this blog and the various assertions, end up more confused about what Marx said and thought about capitalism. Kliman, and Freeman may think they have got Mark and the TFROP down pat, but Roberts and Carchedi also think their interpretation is correct. Two things may be possible here, one or the other is wrong, or both are wrong.. However it was Freeman and Kliman who came out swinging, talking about Roberts and Carchedi being irresponsible and bringing millenarianism into the conversation and thus damaging the legacy of Marx.
      The biggest problem I have is that the revolutionary Marxist movement in large part say exactly what Roberts and Cachedi do say now before WWI and up to Stalin’s terror. And they were not sitting around and waiting for that millennium because they knew that the working class needed revolutionary organizations capable to overthrow capitalism. Instead Stalinism in Germany and Spain were able to lead the working class to disaster following the breakdown of capitalism that was the Great Depression. They were no fatalist: it was the Social Democrats such as Bernsein, Kautsky and Hilferding who disagreed that capitalism would economically breakdown. The period from 1945 was the greatest DIS-accumulation humanity had ever experienced-that is what Marx’s theory predicted. During the 30s Marx looked like a genius.
      Like Bernstein, Kautsky, and Hilferding, Freeman and Kliman deny what Carchedi and Roberts assert, and they charged into this blog like the know-it-alls they think they are. Instead of being the pluralists they always demanded of the Srafffians, they came into this blogs as the saviours of the ‘true Marxism.

      • sartesian Says:

        I have no idea what the relevance is of any of the above to this discussion.

        The issues are quite simple:

        1)what does Heinrich claim Marx presents as Marx’s LTFROP.
        2)iare Heinrich’s claims regarding Marx an accurate representation.
        3)Are Marx’s claims regarding the LTFROP accurate?
        4)Are Michael’s presentation of Marx’s LTFROP in accordance with Marx’s own presentation.

        Regarding the historical limits– first and foremost it is Heinrich’s claim that capitalism has no historical limits, not Kliman’s. To quote Heinrich:

        “Capital, self-valorizing value, has no intrinsic limits to valorization, and for that reason no rate of valorization, once reached, is sufficient.”

        The issue is not if capitalism has historical limits, but rather what capitalism does, must do, when it runs up the inside of the cage of its own making, when it runs into the limits of its own organization of labor– and what the proletariat must do.

        The historical limits exist but historical limits are not deadlines… “you have until 1600 hours on September 23, 2035.” Capital creates its own barriers to accumulation in overcoming previous barriers to accumulation. Does that mean that there is some point beyond or below which capital can no longer accumulate? Where supposedly capital can “no longer expand the means of production”? Beyond which capital sustains itself as “fictitious capital”? Or through “looting”?

        Not hardly. It certainly means that capital, which accumulates through a process of devaluation finds the “normal” paths of devaluation– crisis, layoffs, recession, depression, bankruptcy, etc– inadequate to the need for devaluation. The physical destruction of the accumulated values requires something more. And capital finds a way to accomplish that– until it is overthrown.

        You claim: “The biggest problem I have is that the revolutionary Marxist movement in large part say exactly what Roberts and Cachedi do say now before WWI and up to Stalin’s terror”.

        And then you follow it up with this: “Like Bernstein, Kautsky, and Hilferding, Freeman and Kliman deny what Carchedi and Roberts assert, and they charged into this blog like the know-it-alls they think they are”

        These two claims are really meaningless, besides not being accurate. I don’t recall in my readings of the Marxists of the 2nd Intl very much of a discussion at all concerning the rate of profit.

        The major issues concerning the nature of capitalist overthrow were not framed in terms of overproduction of capital, over-accumulation, and declining profitability. The issues were often posed as competition for external markets, disproportion, looting of colonies, monopoly, finance capital etc.

        Discussions of the capitalist cycle, in what I have read, did not focus on the rate of profit– but rather on the relations between fixed and circulating capital; depts 1 & 2, etc.

        As for the second claim– that’s nonsense. It might be helpful if you could point out where and what Bernstein, Kautsky, Hilferding wrote about the LTFROP and how that compares to what Kliman and Freeman have written in their critique of Heinrich. Then you need to show how Bernstein et al responded to arguments equivalent to those made by Michael and Carchedi about the rate of profit. Then you need to show how those comments made by Berstein et al are actually, concretely equivalent to what Kliman, Freeman et al have written.

      • H. A. Cox Says:

        Sartesian says: I have no idea what the relevance is of any of the above to this discussion.
        The issues are quite simple.
        Well, the relevance is because the intervention of Kliman and Freeman changed the issues and they are not simple:
        Kliman and Freeman changed the issue from a criticism of Heinrich to a debate about what is Marx’s theory of the rate of profit, does the ROP fall in the long run, and did Marx think that the fall in the rate of profit would lead to a collapse of capitalism, and does this interpretation lead to fatalism, millenarianism, and passivity. What provked this change was the asttempt to cut off discussion on these issues by attacking Roberts and Carchedi, labeling them as irresposible and fatalist. In other, these clamorers for pluralism tried to intimidate them into not putting forth their views, instead of pointing out, in a comradely way, the ‘error’ of their ways. They have annointed themselves the praetorian guard of Marx’s legacy. The problem is that Roberts and Carchedi are much closer to Marx’s legacy.
        First of all, the question of whether the fall in the rate of profit is unidirectional and inevitable. This has been identified unfortunatelywith that fall being continuos. As I pointed out to Roberts and Carchedi they did not quote the adecuate quote from Jim Miller where he says that the fall is not continuous, it can have minor pauses and upward movements. Behind Jim’s assumption is that if accumulation stake place and that accumulation becomes increasingly necessary to preserve capital on the part of individual capitalist, the fall in the rate of profit will be the dominant trend. This has been true once fixed capital, especially in machinery, took real subsumption of capitalist production in tthe 1820s. However, I agree with with Grossman that the collapse of capitalism that Marx suggested has to do with the mass of profits, not the rate of profit:
        ‘Rate of profit’ and ‘mass of profit’ have entirely different meanings for theory, despite the close connection between them. Several writers like Charasoff, Boudin and others felt that the central point of Marx’s theory was contained here. But they could not demonstrate the necessary breakdown of capitalism because they confined their attention to the fall in the rate of profit. Breakdown cannot be derived from this. How could a percentage, a pure number such as the rate of profit produce the breakdown of a real system? Table 2 showed that the capitalist system can survive despite the fall in the rate of profit and that the final breakdown in year 35 has nothing to do with the falling rate of profit as such. We cannot explain why in year 34, with a rate of profit of 9.7 per cent, the system survives and why in the next year, with a rate of profit of 9.3 per cent, it breaks down. An explanation is only possible when we relate the breakdown not to the rate of profit, but to its mass: ‘accumulation depends not only on the rate of profit but on the amount of profit’ (Marx, 1969, p. 536).
        What is ironic in this whole debate is that there is no THE Marxan rate of profit for Kliman:
        I have also made no attempt to construct “the Marxian” rate of profit. One reason why I have not done so is that there is no such animal. Marx employed several different rates of profit in his economic writings.P95
        He sure did, but when he was referring to the fall in the rate of profit he meant this one:
        {Incidentally, when speaking of the law of the falling rate of profit in the course of the development of capitalist production, we mean by profit, the total sum of surplus-value which is seized in the first place by industrial capitalist, [irrespective of] how he may have to share this later with the money-lending capitalist (in the form of interest) and the landlord (in the form of rent). Thus here the rate of profit is equal to surplus-value divided by the capital outlay. |688||Marx’s CW 32, p94
        III. The tendency of the rate of profit to fall as society progresses. This already follows from what was developed in Book I on the change in the composition of capital with the development of the social productive power. This is one of the greatest triumphs over the pons asini of all previous political economy.
        IV. Until now we have only dealt with productive capital. Letter to Engels,April 30, 1868
        So Sartesian, do you still think the issues are simple. From the above, who is right about THE Marxian fall in the rate of profit that is being measured? Is it not the total sv produced in capitalist against total social capital advanced in production before it is distributed in circulation? That Andrew confuses the issue is obvious from the following quote he takes from Marx :
        “But it cannot by any means be said that if for individual short periods (such as 1797–1813) the descending line clearly predominates, that because of this, THE rate of profit must fall (in so far, that is, as the latter is determined by the rate of surplus-value). Rather I believe that during that period, THE rate of profit in England rose by way of exception, despite the greatly increased prices of wheat and agricultural produce generally. I do not know of any English statistician who does not share this view on the rise in THE rate of profit during that period.” (CAPS added) http://marxists.org/archive/marx/works/1863/theories-surplus-value/ch16.htm#s2: [MY large letters-hac]
        Boy he really got me this time. This is the rate of profit derived from THE marxian rate of profit. Of course it is important for understanding where Britan was economically at that time. If kliman had a little further he would have read this:
        If one asks why the rate of profit rose despite the rising corn prices, this is to be explained from the following circumstances: [1]Prolongation of the working-day, the direct consequence of the newly introduced machinery; [2]depreciation of the manufactured goods and colonial commodities which enter into the consumption of the workers; [3]reduction of wages (although the nominal wage rose) below their traditional average level ; [4] finally, the rise in the rate of profit was due to rising nominal prices of commodities, because loans and government expenditure increased the demand for capital even more rapidly than its supply, and this enabled the manufacturers to retrieve part of the product paid to the landowning rentiers and other persons who have a fixed income in the form of rent etc.
        [1]Prolongation of the working-day abstracted from the fact that the lenghth of the work day could be lengthened: They constantly try to do this in the developed economies, but would create a revolutionary situation if the tried to extend the working day to that of China, Cambodia, etc.. The period Marx is dealing with is before the real subsumption of capital was very advanced and millions of peasants and artisans were driven into poverty and force to work in the manufacturing. Long hours were the corrollary of this condition and caused the fight for a shorter work day. So yes, you can raise THE marxian rate of profit in this manner. When capitalism suffers a crisis, there is rise in the rate of profit that bucks the general trend caused by changing the OCC. In our times, the Imperialist powers avoided a direct onfrontation with their working class by moving production to the south. This was facilitated by the incredible capacity of modern trasportation. And they mostly moved production with the latest technology, so this ‘primitive’ accumulation is not so primitive. Again, on a world scale, this increase in absolute and relative surplus value gave a respite for the world capitalis economy by temproarily countering the effect of the fall in the rate of profit.
        [2]depreciation of the manufactured goods and colonial commodities which enter into the consumption of the workers. This a rise in the rate of s/v. As Marx points out this has a contradictory effect:
        But since the same influences which raise the rate of surplus-value (even a lengthening of the working-time is a result of large-scale industry) tend to decrease the labour-power employed by a certain capital, it follows that they also tend to reduce the rate of profit and to retard this reduction. vol3 p342
        So, this is also is also a means that for a given capital, less labor power is applied-unless accumulation accelerates.
        [3]reduction of wages-This is a means of increaing surplus value by depressing wages below the current value of labor. It can temproarily take place under primitive accumulation and in the advanced capitalist countries suffering crisis conditions.
        [4 finally, the rise in the rate of profit was due to rising nominal prices of commodities, because loans and government expenditure increased the demand for capital even more rapidly than its supply. This is a transfer of sv from one class of exploiters to another. It is one of the means of one sector gaining at the troth of sv and has nothing directly to do with THE Marxian rate of profit.
        What is important here is that all these means of increasing the rate of profit are temproary, under certain conditions, that can even increase THE Marxia rate of profit temporarily.But as accumulation takes place the general trend of the rate of profit is down and even the ‘mass’ of profit is threatened. Since capitalist accumulation take place even for social reproduction, the movement is increasingly headed towards a collapse.
        So take a stand Sartesian: does Kliman do the following:
        Kliman: I don’t accept the Cox characterization of the debate. My co-authors and I–and Heinrich–are discussing Marx’s OWN law of the tendential fall in the rate of profit (MOLTFRP). Others are discussing something else, their own thoughts.
        Is the rate of profit Andrew uses the one Marx’based his TFROP on?
        On Marx and whether he thought there was a point where Marx thought that capitalism would stop accumulating?
        Thus, while the rate of profit will be inversely related to the value of the capital, the sum of profit will be directly related to it. However, even this statement is true only for a restricted stage of the development of the productive power of capital or of labour. … Beyond a certain point, the development of the powers of production becomes a barrier for capital; hence the capital relation a barrier for the development of the productive powers of labour. When it has reached this point, capital, i.e. wage labour, enters into the same relation towards the development of social wealth and of the forces of production as the guild system, serfdom, slavery, and is necessarily stripped off as a fetter.grundrisse, 742-52
        [the] proposition that devaluation of capital neutralizes the tendency to break down, necessarily entails the proposition that there is no development of an ever higher organic composition of capital in contemporary capitalist society! Grossman answer to Elena bauer

        It would be denying the meaning of words to not take this as a projected collapse of capitalism. Freeman and Kliman deny Marx says what he says here. Above all, Mar argued that capitalism would generate crisis on an incresing scale. That scale is caused by the rise of the OCC as capitalism accumulates.
        The shortening of the periods between the great crises is truly remarkable. I have always considered the periods not to be of a constant length, but of a diminishing one: …that is a bad omen for the longevity of the capitalist world. Letter to Lavrov, 1875, [so much for Heinrich’s claim that Marx had abandoned his theory of crises and the falling rate of profit]
        Ricardo himself, of course, has a suspicion that the exchange value of a commodity is not a value apart from exchange, and that it proves itself as a value only in exchange; but he regards the barriers which production thereby encounters as accidental, as barriers which are overcome. He therefore conceives the overcoming of such barriers as being in the essence of capital, although he often becomes absurd in the exposition of that view; while Sismondi, by contrast, emphasizes not only the encounter with the barriers, but their creation by capital itself, and has a vague intuition that they must lead to its breakdown. He therefore wants to put up barriers to production, from the outside, through custom, law etc., which of course, as merely external and artificial barriers, would necessarily be demolished by capital. On the other side, Ricardo and his entire school never understood the really modern crises, in which this contradiction of capital discharges itself in great thunderstorms which increasingly threaten it as the foundation of society and of production itself. P411, GRUNDRISSE [Grossman never had access to the Grundrisse, so he is quite a perceptive man. Not really, Most of the revolutionary marxist interpreted Marx this way
        Here is Lenin:
        At the beginning of the war the traitor socialists and opportunists boasted of the tenacity of capitalism and derided the “fanatics or semi-anarchists”, as they called us. “Look,” they said, “these predictions have not come true. Events have shown that they were true only of a very small number of countries and for a very short period of time!” And now, not only in Russia and not only in Germany, but even in the victor countries, a gigantic collapse of modern capitalism is beginning, a collapse, so gigantic that it frequently removes this artificial apparatus and restores the old capitalism.p165, Lenin, Collected Works vol29
        ‘The position of revisionism was even worse as regards the theory of crises and the theory of collapse. Only for a very short time could people, and then only the most short-sighted, think of refashioning the foundations of Marx’s theory under the influence of a few years of industrial boom and prosperity. CW 15, pp29 39

        Well Sartesian, looks like Marx thought that Capitalism would breakdown and he also thoughtthere would be increasingly threatening crisis along the way. Does not sound like recurring crisis, but increasingly bad ones. And nowhere did he say we should should passively sit back and wait for it.
        But that is what Freeman and Kliman say a theory of collapse would do: I suggest that people think twice before treating us to hand-waving and hollow, unproved, fatalistic, and quasi-religious assertions of inevitability that just end up heaping a lot of debris on Marx’s legacy and giving ammunition to the opponents of his LTFRP and theory of capitalist crisis.
        Do you believe the canard they put forth? They can not point out any significant Marxist who interpreted Marx as saying Capitalism would eventually break down and who thought the working class could not bother to organize itself for the increasing battles that would be unleased. Otherwise, the coming crisis will lead to barbarism.

      • sartesian Says:

        I think you have avoided answering the questions I put to you about the previous post.

        One example, you’ve provided exactly no evidence that in the period say from WW1 to Stalinism– the “debate” was carried out along the lines as argued by Roberts-Cachedi vs. Kliman, Freeman… that debate being about the inevitability of the LTFROP and its impact on the future of capitalism.

        Another.. the issue of historical limits and the lack thereof which is the claim not of Kliman, but of Heinrich. In addition, historical limits has nothing, necessarily, to do with “inevitability.” Historical limits are the limits contained, and defined by the mode of production, the social organization of labor. You seem to be identifying and confusing the immanent limits of capital with some telos of history. This is but another expression of misapprehension, alienation, if you will of Marx’s subject, which is the labor process. The labor process has a purpose– the creation, development, satisfaction of the “species.” “History” as such has no such purpose. That by the way comrade Morph is one of the critical transitions, transformation, extractions that distinguish Marx’s “dialectic” from Hegel. (I’ve read Hegel, too). although with hardly the enthusiasm I

        What’s hilarious, almost, here is that Kliman gets pilloried by some, or many, for showing, demonstrating 1) that the identifying characteristics of the current period are actually in place before the so-called “neoliberal” revolution (one thing I agree with) 2) for demonstrating that the rate of profit in the US was NOT restored by the “neoliberal policies” (another thing I agree with) 3) that the so-called Clinton years did not amount to a real, even if modest recovery in that rate (one thing I disagree with), but now because Kliman argues against the so-called “inevitability” at any given point in capitalism’s reproduction, he has taken a place alongside Bernstein, Kautsky, Hilferding in the pantheon of “social-traitors.”

        We can find any number of indicators in Marx’s writings where he spoke of the inevitable overthrow and replacement of capitalism. That’s not the issue. The issue is if in his elaboration of the LTFROP does he develop an argument of inevitability?

        I would recommend that everyone take a look at the Grundrisse pages 745-748 (Penguin Classics edition)– where first Marx talks about a subject near and dear to my heart– the recapitalization of surplus value (although he does not use the word recapitalization)–IMO makes an argument for the “immanence” the “inherence” of the rate of profit to fall as a tendency of accumulation itself– not an inevitability.

        He says “The rate of profit can rise although real surplus value falls. Indeed, capital can grow and the rate of profit can grow in the same relation if the relaton of the part of capital presupposed as value and existing in the form of raw materials and fixed capital rises at an equal rate relative to the part of the capital exchanged for living labour. But this equality of rate presupposes growth of the capital without the growth and development of the productive power of labor…. This contradicts the law of the development of capital… especially of the development of fixed capital.”

        We have then, again, capital as contradiction in motion; in constant conflict with the own forces that drive its accumulation. That is IMMANENCE; or a chronic condition, sometimes more acute, sometimes manifesting one facet, sometimes the other. What is REAL is the WHOLE, all the expressions.

        The fall in the rate of profit does not signify the collapse of capitalism. It is the product of accumulation. It compels the bourgeoisie to take offsetting measures– ones that reproduce exactly what is supposed to be resolved. That’s the only “inevitability” contained in the dynamics of capitalist accumulation– that the means and relations of production will emerge in conflict because they are at origin, THE conflict.

        As I said, I think the concrete work Michael has produced cannot and should not be discounted by saying “he’s giving ammunition to Heinrich.” At the same time, inevitability is not necessary, is not immanent to Marx’s own critique of capital.

      • H. A. Cox Says:

        ‘What’s hilarious, almost, here is that Kliman gets pilloried by some, or many, for showing, demonstrating’
        Sartesian, It is not my fault that Kliman and Freeman ‘pilloried’ Michael Roberts and Guglielmo Carchedi for daring to argue something about Marx’s theory of the falling rate of profit, accusing
        them of being irresponsible and damaging to the legacy of Marx This ‘error’ on the part of MR and GC would lead to passivity. On the part of whom? and would defame Marx in the eyes of whom? And defame Marx’s legacy for whom: bourgeois economist, MR types, sraffians? Does Andre think that those people think that he can win an argument with them, and not be a subject of the kind of ridicule no matter how well he argues. Fuck them: they all have a quite different theory of capitalist development and reject Marx’s idea of the limit to capitalism. Ironically AK and AF treated MRs comments on Heinrich with the same disdain and disrespect that they would get from the Sraffians and Marxist economist who think Marx was inconsistent.
        So please stop expecting the pilloried AK to be given any other treatment than he dishes out.
        In his recent argument about Population, I thought MR made an error in his discussion on where capitalist would get the sufficient growth of population to be able to valorize. I commented on his blog and pointed out that Marx viewed population was the dependent variable and accumulation factor and accumulation the independent factor. He agreed with this, but even had he not, I would never describe him as irresponsible and a besmircher of Marx’s legacy.
        I am not the only one not answering the others questions: I pointed out that Marx located the basis for the fall in the rate of profit, gave you a quote from Marx that said : ‘ Incidentally, when speaking of the law of the falling rate of profit in the course of the development of capitalist production, we mean by profit, the total sum of surplus-value which is seized in the first place by industrial capitalist.’ Is that clear to you-when speaking of the TFROP he means the quantity of sv produced measured against the total social capital advanced-in production BEFOREcirculation-The rate of profit that Kliman is measuring is:’However, if we are concerned (as I am)to ASSESS HISTORICAL TRENDS, WE SHOULD REFER TO ACTUALLY REALIZED RATES OF PROFIT’. So Marx says his TFROP refers to what is produced in the production process and AK’ refers to actually realized rates of profit. Do you see the difference????
        Do you agree that Andrew diverted the discussion from Heinrich?

        ‘The issue is if in his elaboration of the LTFROP does he develop an argument of inevitability?’ I tried to answer this by saying that both AK and AF want to pose the question this way, and MR and GC both try to answer the wrong question when they try to show that capitalism’s demise is not found in the decline of the rate of profit, but in the threat of a decline in the mass of profit. The fall in the rate is only a rough indicator. Inevitable is not to be considered as continuous process, but one that ‘s direction for the total capital advanced is down and inevitable if capitalism continues to accumulate. That capitalist must continue to accumulate is argued in Vol 1, because, with the advent of fixed capital, not accumulating is not a choice-If capital(s) do not accumulate, this is a breakdown. So from the social theory of capitalist psychology-individual capitalist will try to reduce labor cost and replace it with new technology. Even this process is not continuous for various reasons.

        ‘One example, you’ve provided exactly no evidence that in the period say from WW1 to Stalinism– the “debate” was carried out along the lines as argued by Roberts-Cachedi vs. Kliman, Freeman… that debate being about the inevitability of the LTFROP and its impact on the future of capitalism’
        For my purpose, which was to show that holding a theory of capitalist collapse was supported by numerous Marxist, and whatever their justification for arguing so-a good reading of capitalist accumulation-did not turn them into passive waiters for the fall of capitalism. There explanation was not based upon TFROP, but on a careful reading of Marx’s theory of capitalist accumulation. If they did not spend a lot of time asking whether the fall in the rate of profit would continuously fall was because the world they were experienced was looking so much like ‘the collapse they were expecting.

        You seem to be identifying and confusing the immanent limits of capital with some telos of history.
        This is silly. My argument is based on the idea that individual capitalist will be driven to cut cost and increase their rate of profit even though this will tend to reduce the average rate of profit This compulsion will become more intense the higher the OCC, and as it becomes more intense, capitalism will increasingly attack the working class and create an objective situation that someday working people will be organized well enough to be able to overthrow it. If not, capitalist will take on the ultimate form of collapse-the dis-accumulation of capital through preparation for and participation in wars. In theory, capitalist accumulation leads to collapse because accumulation throws out the capitalist form of wealth production-exploited labor. That old OCC grows as long as capitalism accumulates.
        So, I answered your question. How about you answering mine about Marx’s rate of profit sv/total social capital in contrast to the ROP claims is the one to REFER TO ACTUALLY REALIZED RATES OF PROFIT” In otherwords, even before we can talk about whether TFROP’s fall is inevitable, continuos, we need to know what rate of profit MARX IS REFERRING TO. That is pretty straight forward question, Don’t ya think?

      • sartesian Says:

        No, I don’t think you’ve answered the basic questions that have been raised. Not even close. You’ve danced around the issues pretty extensively, but you have failed to show where Marx’s analysis of the TFROP entails “inevitability,” where it signals the collapse, the end of capitalism (which Michael claims in this post).

        You want to “modify” Michael’s remarks– but the fact that you want to do so indicates that you essentially think Michael’s theory of the TFROP is NOT Marx’s theory.

        Here’s a simple issue for you:

        Several times you have made the assertion that Kliman has accused those of the “inevitability” school of being passive, of using their “inevitable crisis” theory to NOT actively opposed capitalism, to not actively engage in revolutionary work.

        I’ve gone through the comments on this thread several times, and damned if I can find Kliman saying anything that even comes close to that assertion. Maybe it’s me… and maybe it’s just you making something up.

        As Marx points out in his Grundrisse, the rate of profit can even rise under certain conditions, even though that rise violates another “law”– another TENDENCY of capital accumulation. That simple FACT, of what Marx did indeed write, should have put an end to this argument about inevitability a long long time ago.

        You can persist if you want. You can even provide your own “proof” for inevitability, (despite the fact that “proof of inevitability” is pretty much as irrational a sentence, and a ‘logic’ as I’ve ever come across). But what you will be proving is not what Marx developed in his critique of capital.

      • Andrew Kliman Says:

        Thank you sartesian (August 11, 2013 at 12:57 am)! Finally, finally, someone who insists on using the name “Marx” to refer to Marx, and insists that claims about what people say not be made up. Maybe there’s hope yet.

      • sartesian Says:

        There’s always hope. But let me try and answer another of Mr. Cox’s over-inflated, under-clarified claims. He says, quoting Marx, and then going on quite dramatically:

        ” Incidentally, when speaking of the law of the falling rate of profit in the course of the development of capitalist production, we mean by profit, the total sum of surplus-value which is seized in the first place by industrial capitalist.’ Is that clear to you-when speaking of the TFROP he means the quantity of sv produced measured against the total social capital advanced-in production BEFOREcirculation-The rate of profit that Kliman is measuring is:’However, if we are concerned (as I am)to ASSESS HISTORICAL TRENDS, WE SHOULD REFER TO ACTUALLY REALIZED RATES OF PROFIT’. So Marx says his TFROP refers to what is produced in the production process and AK’ refers to actually realized rates of profit. Do you see the difference????
        Do you agree that Andrew diverted the discussion from Heinrich?”

        Well clearly when Marx in his comment re the meaning of profit is explicitly rejecting any notion that says the surplus value consumed by landlords or banks should be deducted from profit. As is clear in the entire discussion above this comment of Marx’s which appears in the footnotes, the surplus value extracted in industrial production is the only source of surplus value and is presumed to be completely realized. No Marx IS NOT stating for purposes of calculation his TFROP is based on the surplus value seized, expropriated in production, regardless of its realization in the markets through the exchange of commodities. To argue that Marx is so claiming is to argue that Marx is assigning an immediate identity between surplus value and profit, MAKING in effect, PRIVATE PROPETY immediate and direct social value, and socially valued, thus eliminating the very RELATION essential to capital, and capital accumulation– EXCHANGE.

        Marx is making an abstraction in order to avoid the nonsense about interest and rent as somehow having an origin outside the value relation of capital. That’s his point.

        Mr. Cox’s argument would have Marx assigning PROFIT where in fact there is NO PROFIT, where there is loss. Now believe me, I’m sure the bourgeoisie would love to figure out how to do that, but they CANNOT.

        So Mr. Cox, I do see the difference, but it’s not the difference you would like it to be. It’s the difference between one relation of surplus value to its DISTRIBUTION among various elements of the ruling classes, and the REALIZATION of surplus value in the markets, which is the sole means for materializing that value as profit.

        So no, I don’t see how Kliman diverted the discussion from Heinrich. Rather, he defended HIS critique of Heinrich for other critiques that utilize and interpretation of the LTFROP which, IMO, cannot be supported by Marx’s critique of capital.

      • Andrew Kliman Says:

        sartesian: Cox’s comment/critique is just nonsensical. Here’s the sentence from p. 94 of The Failure of Capitalist Production that he quoted, together with the sentence that precedes it, which he omitted:

        “If we are concerned with companies’ investment behavior, we should look at measures of profitability that they know and care about, not ‘underlying’ ones, and we should ideally look at anticipated rates of profit rather than actually realized rates. However, if we are concerned (as I am here) to assess historical trends in profitability, we should refer to actually realized rates of profit.”

        He obviously has no clue about the meaning of this, and what it has to do with Marx or Heinrich, only he “knows.”

      • sartesian Says:

        Indeed. That was my point. Cox makes a non-sensical comment.

      • Andrew Kliman Says:

        sartesian: yes, but from what I can tell, Cox thought (or pretended to thing) that my phrase “actually realized rates of profit” has to do with the realization of profit vs. the production of surplus-value, and your response to him seemed to take that for granted. But if one reads the sentence he chose to quote together with the one preceding it that he chose not to quote, it is clear that the opposites aren’t realized/produced but realized/anticipated:

        “If we are concerned with companies’ investment behavior, we should look at measures of profitability that they know and care about, not ‘underlying’ ones, and we should ideally look at anticipated rates of profit rather than actually realized rates. However, if we are concerned (as I am here) to assess historical trends in profitability, we should refer to actually realized rates of profit.”

        So his stuff is more nonsensical than you seemed to think it is.

        As we wrote in relation to Heinrich: “Someone who can’t interpret what Kliman wrote—–in a published book—even remotely correctly has no business trying to interpret what a more subtle thinker like Marx wrote in unpublished draft manuscripts.”

  47. allan harris Says:

    To Professor Kliman: You said in an earlier post that people have their own pet theories of what profit and the fall in the rate of profit are. And that all such theories should be used to examine the different aspects of capitalist profit and the fall in the rate of profit, if there is such a fall.

    Through this discussion I have seen three theories of the rate of profit:

    1. This is the traditional one: the rate of profit is Profit/Costs.
    2. The next one is using Marxist terminology: variable capital/constant capital, i.e. labor costs/non-labor costs, or wages/capital costs.
    3. And wages/capital investment, which is a variant on (2.)

    I think the values of most of these factors can be found in the BEA, St. Louis Federal Reserve (FRED) statistics, BLS, and the OECD.

    Could you give me a link where I might be able to find a number of competing formulae for the Rate of Profit?

    • Andrew Kliman Says:

      I would distinguish between measures and theories.

      The FRED database only uses stuff from other ones, as far as I know.

      The OECD statistics are very inadequate if one wants to compare different measures in order to see why they differ from one another (and therefore why one rises when another falls, etc.)–instead of just selecting a measure and telling a story about it that may not be compatible what a a comparison of different measures would reveal about why the measure moved the way it did.

      Other international data sources are limited in the same way, which means that one pretty well has to stick with U.S. data, from the BEA and the Flow of Funds Accounts at federalreserve.gov. The BEA just changed its definition of investment and thus its definitions of GDP significantly, BTW, and the effect of this is something I haven’t looked at yet. (The fact that this can be and has been done at will underscores the points that there is no “the” anything here, and that we need to match measures to specific questions and understand movements in different measures partly in terms of how they differ from other measures.)

      The BEA/FFA categories aren’t Marx’s, so the BEA/FFA data are proxies, at best. And they’re only for the US, while Marx’s concepts often refer to the total social capital. So one simply cannot measure “the Marxian” rate of profit. But one doesn’t need to do so either. One can see whether and to what extent his theory helps to explain movements in other rates of profit.

      Every measure of a rate of profit is basically profit/capital. The problem is that there are “m” different ways to measure profit and “n” different ways to measure capital, so there are m x n different measures of the rate of profit. I know of a study that looked at 16 of them, if I remember. This was about 30 years ago.

      There are also measures such as profit/prime costs and profit/sales, which are sometimes called “profit margins.”

      Except for one rate of profit measure that is or was published in the BEA’s Survey of Current Business, I don’t think any statistical agencies provide rate of profit data as such, i.e. ratios of profit/capital.

      The procedure I’d recommend is to ask a specific question (that doesn’t employ the term “rate of profit”) and see if you can put together a measure or more than one that helps answer the question.

      What is needed above all is (1) much more clarification from people about EXACTLY what they mean by “rate of profit” in a certain context, (2) much more attention to whether the measure of the rate of profit they use corresponds to particular rate-of-profit concept they are invoking, and (3) care not to use “rate of profit” to mean different things in the same argument. Most work in the area is woefully inadequate in these respects.

  48. H. A. Cox Says:

    Thank you sartesian (August 11, 2013 at 12:57 am)! Finally, finally, someone who insists on using the name “Marx” to refer to Marx, and INSISTS THAT CLAIMS ABOUT PEOPLE SAY NOT BE MADE UP. Maybe there’s hope yet.
    Sartesian and AK: It appears that you two are locked into your position so much, that it has clouded your ability to even read what Marx says. Let me parse the sentence for you:
    Incidentally, when speaking of the law of the falling rate of profit in the course of the development of capitalist production, we mean by profit, the total sum of surplus-value which is seized in the first place by industrial capitalist.’
    Incidentally=o by the way
    when=any time, if
    Speaking of: talking about, describing
    the law of the falling rate of profit: what we are talking about-I’m sorry, what Marx is talking about.
    in the course of the development of capitalist production-the results of changes to the technical composition on the social composition of capital-the effect of accumulation of capital on the average rate of profit IN PRODUCTION: a rise in the organic composition of capital. He is talking about capitalist production BEFORE circulation.
    we mean by profit: One of the many rates of profit, THE Marxain one that does not exist for AK
    the total amount of surplus value: In this context-in production, as AK likes to say: the total sv before it is distributed.
    which is seized: appropriated (in production)
    in the first place: before circulation,
    by -who the first appropriators are
    the industrial capitalist: all the ones who first appropriate the sv, no matter how it is redistributed in circulation-the ones who actually produce the commodities that are circulated. This is Volume I of capital and is the whole basis of Marx’ theory of capitalist accumulation and the focus is on total amount of surplus value from which capitalist accumulation takes place.
    Marx’s theory of accumulation says that technical changes inevitably lead to a rise in the OCC, and a decline in the amount (mass) of sv unless accumulation increases as fast as or faster than the rise in the OCC. Accumulation increasingly becomes a necessity as the OCC rises, and the ROP declines and is compensated by a rise in the mass of sv caused by accumulation-up to a certain point -as Marx frequently points out.
    So Marx’s theory of capitalist development is his theory of capitalist accumulation.
    a rise in the OCC in PRODUCTION, implies an increase in total social capital relative to the amount labor technically necessary valorize that total social capital. With the real subsumption of labor by the use of fixed capital, especially machinery, accumulation becomes a necessity just to preserve their existing capital and not a choice for most industrial capitalist-especially for the ones with high OCC or mucho fixed capital.
    What has happened here is that AK (and now Sartesian) is locked into a preconceived notion of what Marx’s TFROP is. They desperately try to twist the meaning of Marx’s words, and then accuse me of making things up.
    I did not really need to have that quote: Marx’s whole methodology is based on how capitalism get sv from production and then showing how technological change affects the development of capitalism causing capital in general to accumulate just to preserve itself. If vol 3 had not been written, we would be able to derive the falling rate and increase in mass of profit from Volume I.
    This debate has become sterile: both AK and I think we know what the legacy of Marx is and for those who are still asking the question- what is the historical limit of capitalism: read very carefully Marx’s chapters on the law of capitalist accumulation. Then ask yourself which interpretation fits what Marx is saying fits. Do note that I quote from Marx and do not make things up. Andrew misinterprets what the quote says and then accuses me of making things up
    I see no point and continuing this debate on Michael’s blog, as no matter how much we quote from Marx, AK and Sartesian will continue to argue that it does not say what it says. l therefore bid everyone adieu and only ask that whatever nfortunate readers of this debate are left, do not determine or make up your mine from either what I or AK write-read Capital, especially Volume I and then ask if either one or none at all have captured what Marx argued.

  49. sartesian Says:

    Adieu, to you too dude. Go with god and all that jazz. Good on you– getting out without having to back up any your assertions about “catastrophe theory” and Kliman’s accusation of passivity.

    Oh yeah, you quote from Marx. Whether you understand what you are quoting, whether you are taking it completely out of context, and using the quote to support something quite different than what Marx was addressing– those are the issues.

    Marx’s “total sv before it is distributed”– is as pointed out before Marx’s abstraction, his immediate identification of surplus value with profit to finesse the baloney about interest and rent having some other source. Look at what he’s addressing in the body of the text from which you excise a footnote.

    This might come as a shock to you, but there’s a certain linkage in Marx’s work between surplus value as DISTRIBUTED SOCIALLY– that is to say as it is realized, and the LTFROP– but that’s for those who actually read what is being said rather than simply look for a quote to obscure the actual subject under discussion.

    Chip-makers, semiconductor manufacturers extract masses and masses of surplus value while racking up real and greater losses; so do maritime freight shippers; shipbuilding enterprises; steel mills, solar panel manufacturers, flat-screen producers, etc. etc.

    What counts in determining the rate of profit? The losses or the surplus value extracted.

  50. sartesian Says:

    And, just one more thing, even when profits are rising, often manufacturers extract way more surplus value than is realized as profit. As a matter of fact, they HAVE to extract more surplus value in order to realize any portion of it as profit.

  51. sartesian Says:

    Rereading Michael’s post here, I think I much of the disagreement really comes down to or originates in this: “IN A WORLD ECONOMY, where capitalism is exhausting all sources of value creation, “…

    Yes, it’s a world economy, in fact it has been a world economy of greater or lesser development ever since…….well for a long time.

    The boundaries of such a world economy are not set in stone, even for capitalism. Which means in my opinion we are not reaching some sort of permanent fixed point beyond which capital will have exhausted all sources of value creation… no more than that point was reach during the long deflation 1873-1898; no more than that point of final, utter exhaustion of value sources was reached in 1914, 1930, 1959, 1968 etc. etc. etc.

    Are we going to say that, because in 1980, 80% of China’s population was involved int he rural economy, and today only 45% is so tethered… capitalism has exhausted all sources of value? or India? Thailand? Bolivia? or the Ukraine? Estonia? Germany?

    Why after all could Germany go from being a “sick economy” in the 1990s to the leader of the EU in the last decade? Were new value sources exhausted in the 1990s but not in 2006? And what exactly were the new value sources tapped into in Germany. Personally I think it has to do a lot with Schroeders Agenda 2010.

    I think the issue is not “fixed boundaries” or sources of value creation, but the relation between the current sources of value creation and the already accumulated value in the means of production.

    Certainly those engaged in rural production in China and India represent potential sources for new value extraction. However to access those sources take a fundamental, yes–revolution, in the relations of agricultural production; a fundamental revolution in the property relations that circumscribe agriculture. Those relations, those conditions, that property is part and parcel of capital itself and cannot be overturned without the threat to all of accumulated capital, to all of private property.

    This conflict propels the emergence of a revolutionary struggle– no less than the need for devaluation of the means and materials of production and the labor power used to animate them propels the emergence of class struggle.

    However, revolution doesn’t appear as an inevitability– appears as a tendency, an inherent condition, made manifest in the moment(s). If we lose that moment(s), capitalism will reconfigure itself on a foundation of bones and ashes.

  52. Joakim B Says:

    I haven’t mustered the energy yet to read all of the comments, but judging from the first half or so I must conclude that what IS inevitable is the sectarianism that seems to have plagued the radical left for decades. The energy used to actively misinterpret each other, to blow up differences out of proportion, references to Marx as some kind of semi-God and the propensity to attack and ridicule, instead of trying to see the others point of view and not dismiss them out of hand, is mindboggling. Conservatives and Liberals alike must find this enormously amusing and encouraging, since it makes it quite clear that there is no serious threat to the current capitalist system, and no one likely to develop, since “marxists” seem to preoccupied with arguing with each other ad infinity. I’m also sad to see that there is a Kindergarten quality to many of the exchanges. Apparently not even otherwise brilliant thinkers grow up…

    • Andrew Kliman Says:

      In response to this and some other comments people have made, I want to say that I think the standards by which to judge intellectual discourse differ greatly from the standards by which people tend to judge social conversation. (Which isn’t to imply that the discussion here met standards of intellectual discourse.) I’m thinking of things like assessing the quality of evidence and arguments, whether responses correctly characterize others’ statements, whether they respond to them directly, etc.

      I wish there were much more focus on these things.

      On specific points:

      I don’t deny that there’s been misinterpretation. If a misinterpretation on my part is pointed out, I’ll correct it immediately.

      I don’t think anyone here has referred “to Marx as some kind of semi-God”; I know that I haven’t. Claims about what people said or wrote are not claims that what was said or written is true.

      As for “blow up differences out of proportion,” this is the main thing that prompted me to make the distinction in my first paragraph. Clarification of the *implications of statements* will look like blowing up differences out of proportion if one focuses on *people* and on their *getting along* and on what *they think* or *mean*.

    • Choppa Morph Says:

      Joakim B obviously doesn’t care a hoot about the content of what’s being said. And he doesn’t realize that this is exactly the way significant scientific and intellectual issues are thrashed out *in reality*. He should read about the discussions involving “translating the Bible into the vernacular”, or “whether the earth revolves around the sun or vice versa” or “is humankind a unique creation of God” before he starts demanding some kind of utopian dream seminar where everyone is a servant of reason and light.
      Human knowledge advances socially, borne along by institutions, both formal and informal. It develops in accordance with real needs and the imperative of finding solutions for them. And it’s usually done in the teeth of bitter opposition from institutionalized vested interests with lots to lose from new ideas and new solutions. It doesn’t advance by the best ideas winning out in an impartial blind tasting a la Coke and Pepsi. Intellectual debate is vicious close combat with cut-throat razors and motorbike chains at the very least. (And if you doubt that, read the collected bloggings of noted intellectual debater Louis Proyect😉 )
      The original and subsequent reception of Marx’s economic theories illustrates this perfectly. And the Lord only knows why Joakim thinks that the “radical Left” should be less institutionalized and riven by contradictory interests (material as well as theoretical) than any Conservatives or Liberals.
      This kind of discussion is as good as it gets. The better it is, the better for all of us, but we can’t get rid of infighting, prestige, party loyalties, sabotage or plain stupidity just by hoping and wishing and praying that it will happen. We don’t all “just get along’. Live with it.

      Better still clarify the subject under discussion and show the rest of us dumb-fucks how to do it properly.

  53. Joakim B Says:

    Fair enough, I’ll just stay out of it and leave the fighting to the close combat guys.

    • Choppa Morph Says:

      Fair enough, you stay out of it, it’s your choice.
      Buddhists, quietists, pacifists, trimmers, and even militant Epicureans would agree:
      “Suave, mari magno turbantibus aequora ventis
      e terra magnum alterius spectare laborem;
      non quia vexari quemquamst iucunda voluptas,
      sed quibus ipse malis careas quia cernere suavest.”
      (” ‘Tis sweet, when, down the mighty main, the winds
      Roll up its waste of waters, from the land
      To watch another’s labouring anguish far,
      Not that we joyously delight that man
      Should thus be smitten, but because ’tis sweet
      To mark what evils we ourselves be spared;”
      But only gods live in eternal bliss far from our sordid gouging:
      “Omnis enim per se divum natura necesse est
      immortale aevo summa cum pace fruare,
      semota ab nostris rebus, seiunctaque longe.”
      (Lucretius, De rerum natura (On the Nature of Things) eg http://www.perseus.tufts.edu/hopper/text?doc=Lucr.+2.1&fromdoc=Perseus%3Atext%3A1999.02.0130 )

      (Marx did his doctoral thesis on Epicurean vs Democritean atomic theory by the way, if anyone should wonder about the relevance of Lucretius here😉 )

      But while you’re watching the scrap, or not, you’d better keep your fingers crossed and hope that your team wins, cos otherwise not even the remotest bleachers will be safe for you to lurk in.

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