Heinrich responds

Last April, Michael Heinrich, a renowned Marxist scholar, published an article in the US publication, Monthly Review (http://monthlyreview.org/commentary/critique-heinrichs-crisis-theory-law-tendency-profit-rate-fall-marxs-studies-1870s), in which he argued that Marx’s law of the tendency of the rate of profit to fall (LTRPF) made no contribution to the Marxist theory of capitalist crises.  In particular, Heinrich said that the law was ‘indeterminate’, so that its premises did not lead to any precise conclusions.  In that sense, it was no law at all.  Also, it cannot be empirically justified in any scientific way.  Moreover, Marx’s view on the relevance of the law was distorted by Engels’ editing of Capital and indeed in his later years, Marx probably dropped the law altogether as an explanation of crises because it was ‘indeterminate’.  

Heinrich’s article provoked considerable discussion and debate among Marxist economists.  Some of that debate took place on my blog.  And my contributions have been neatly compiled here (mrhtprof).  

Guglielmo Carchedi and I submitted a joint critical comment on Heinrich’s article to Monthly Review (MR) along with others

In its December issue, the MR published these comments  with a reply by Heinrich

What follows is our (Carchedi-Roberts) reply to Heinrich’s response to our critique of his article (we are not saying anything about the other comments in MR).

The tendency and the counteracting tendencies

Heinrich says that a reading of Marx’s Capital Volume 3 in chapters 13 and 14 shows that Marx included a rising s/v in his law and not just as a counteracting factor.  Heinrich says that a rising s/v is only regarded as a counteracting factor in chapter 14 as a ‘second case’, namely with an extended working day.  So increased productivity as a reason for a rising s/v is part of the ‘law as such’ and not a counteracting factor and is dealt with in chapter 13 in that way.

He says: “When you want to prove anything about the consequences of  capitalist development of productivity for the profit rate you have to consider both factors… If one considers only the effect of the rising c/v assuming a constant rate of surplus value, you tear apart two always connected consequences of the same cause.     By this one reduces the “law” to a mathematical banality (unchanged numerator and increasing denominator leads always to a decreasing magnitude of the fraction) without any real meaning (the same cause which changes the denominator also changes the numerator which is excluded from the “law”).  This seems the way in which Carchedi/Roberts consider the law…Using simple arithmetic even the dialectical minds of Carchedi and Roberts should recognize that an increasing organic composition as such is not enough to prove a falling rate of profit”.

But Marx’s ‘law as such’, namely that a rising organic composition of capital will tend to lower the average rate of profit in a capitalist economy, is not a ‘mathematical banality’.  The ‘law as such’ is based on two key premises that are drawn from reality.  The first is that all value in capitalist production is created by the exertion of living labour and second, that under capitalist accumulation, the organic composition of capital will rise.  The maths flow from the realistic assumptions.

The ‘law as such’, as outlined Capital Volume 3 Chapter 13, isolates the effect of a rising organic composition on the rate of profit and then identifies the counteracting factors in Chapter 14 that check, delay or even reverse for a time the effects of the law.  Marx separates the law from the counteracting factors precisely to reveal that ‘the law as such’ will eventually override any counteracting factors.   So it is not indeterminate.  It is only by wiping out the distinction between the tendency and the countertendency (implied in the incorporation of the countertendency within the law on the same foot as the tendency) that Heinrich can claim that the law is indeterminate.

Heinrich provides a numerical example designed to show that Marx’s law is indeterminate, based on Marx’s own (extreme) example of 24 workers being replaced by two workers when new technology is introduced.  In his example, Heinrich shows that there must be a very large rise in c/v (from 25% to 3025%) to overcome the rise in s/v engendered by the new technology and the reduced number of workers before the ROP will fall.  He adds that, unless we know the exact quantity of c being used, we don’t know whether the ROP will fall.  So the law is indeterminate and our ‘dialectical minds’ are let down by the maths.

But in his example, Heinrich does not also consider what the increase in s/v was.  In the first case with 24 workers, the rate of s/v was 48/240, or just 20%.  In the second case, with two workers, it was 20/4 or 500%!  So for the ROP not to fall, it will also require a very large rise in the s/v ratio. Marx’s purpose in his example was to show that eventually the rate of s/v would reach a physical limit (i.e. workers living on air), while there was no limit to the rise in c and thus c/v.  So it does not matter how large the increase in c/v is but it does matter how large the increase in s/v is. Actually, in Heinrich’s version, the absolute amount of constant capital only has to double from 60 to just more than 120 to cause a fall in the ROP.  So capitalists would only have to double their investment in labour-saving technology, while reducing the workforce to 2 from 24, to find a fall in ROP.  The rate of s/v would have to rise 25 times to stop the ROP from falling!

Heinrich says that our ‘pretty example’ in our comment is based on the limitations of lengthening the working day, while he reckons the real issue is relative surplus value or increased productivity with the working day fixed.  It’s true that our example in our comment does show a lengthening working day and not one with a constant or even decreasing working day.  But our example is actually explaining that there are limits on a rising s/v even if the working day is extended.  Indeed, given a fixed working day, a rising s/v will be limited even more quickly.

As we say in our comment: “it is not necessary to hypothesize such an extreme example. Given a working day of 8 hours, in the example above, even a rise in the organic composition from 2 to 3 requires a likely socially unsustainable increase in the working day from 8 hours to 9.3 hours. And even if this longer working day can be imposed on labour, the next wave of technological innovations will require a yet further lengthening of the working day. Of course, the above is only an example. As such, it is an illustration, not a proof.”

Heinrich says that “With a constant or even decreasing working day, s/v can rise through rising productivity, ignored in the argumentation of Carchedi/Roberts. And there is no visible limit for the rise of s/v as long as productivity can be increased (our emphasis)”.  But there is a limit.  This is Marx’s point.  Let’s assume for the sake of simplicity, a constant working day.  Recall that productivity is measured by output per unit of capital invested.  If productivity increases, a greater share of the surplus product must go to capital and a smaller one to labour for s/v to rise.

For example, suppose output is made up of 80c+20v+20s = 120V.  Output = 120. Thus the ROP = 20% and s/v = 100%.  Now suppose productivity rises and the value composition of capital (VCC) rises to 81c/19v.  If, as in Heinrich’s example, the working day (and thus the new value) remains the same at 40, then s = 21.  The total value now rises to 121V and the ROP rises to 21%.  The VCC rises from 80/20 (a ratio of 4) to 81/19 (a ratio of 4.26) by 0.26/4, a rise of 6.5%.  The s/v rises from 20/20, (100%) to 21/19 (105.2%), a rise of 5.2%.

Now suppose that, following the increase in productivity, output rises to 160V.  The % value of the means of production (MP) is 81/121 = 66.95%; the % value of labour’s means of consumption = 19/121 = 15.7% and the % value of capital means of consumption = 21/121 = 17.35%.  If the 160 output is distributed according to the value of the three components in percentage terms, the ROP does not change.  The 160 use values are distributed as follows: the MP needed for their reproduction 160×66.95/100 = 107.12; the labour needed for its reproduction 160×15.7/100= 25.12; and the capital needed for its reproduction 160×17.35/100 = 27.76.  The total is 160 and the ROP is 27.76/132.24, or still at 21%.

The ROP will only rise if the distribution of 160 use values is skewed towards capital, e.g. the MP needed for their reproduction is still 107.12 use values (the same as above) but now the labour needed for its reproduction is not 25.12 but 25.12-5.00 or 20.12 and the capital needed for its reproduction is not 27.76 but 27.76+5.00 or 32.76.  Now the ROP is 32.76/127.24, or 25.74%, up from 21%. The ROP has risen. But in terms of use values, wages have now fallen from 25.12 to 20.12.

In short, if the rising productivity is due to technological improvements and thus to a rising value composition of capital (VCC), if we consider a unit of capital (because productivity is output per unit of capital), and if the output is redistributed to the advantage of capital, rising productivity results in (1) a rising ROP and in (2) falling wages.  Heinrich stresses only (1) but overlooks (2).  But it is (2) that sets the limit to (1).  It does not matter by how much productivity rises. Productivity could have risen from 120 to 240, instead of 160, and the results would have been the same.  If the output is distributed according to the value of the three components in percentage terms, the ROP does not change. What matters is not by how much the productivity increases, but the redistribution of the greater output.  Given the terms of the problem, wages must fall for the ROP to rise. And, like the limits on a fall in variable capital (labour force, the length of the day), there are social limits (class struggle) on lowering wages but none on raising constant capital.

Is the law a law?

Heinrich quotes from our comment: “Past developments can be predicted to recur in the future if we can argue that the same factors that determined the course of events in the past will keep operating in the future.” And he goes on: “I agree. But the determining factors must keep operating in the future really in the same quantitative relation. When in the past an increase of productivity resulted in an increase of the value composition c/v which was bigger than the increase in the rate of surplus value s/v, it must be demonstrated that the same must happen in the future. But where is the argument for that?”

Well, in our original critique, we explained that Marx’s law says that when the c/v rises more than s/v, the ROP falls and vice versa. The law predicts that when the c/v rises, over time, the ROP will fall.  This prediction depends on the effects of rising productivity under the conditions of a rising c/v.  As we have shown above, rising productivity leads to a rise in the ROP only if there is a fall in wages.  And such an increase in the ROP due to a pro-capital redistribution made possible by productivity gains will eventually meet an obstacle, after which the ROP will start descending.

In our comment, we likened Marx’s law to Newton’s law of gravity.  Heinrich rejected our analogy.  Actually, Marx also used the law of gravity as an analogy in substantiating his law of value.  The law of value makes itself felt “in the same way (that) the law of gravity asserts itself when a person’s house collapses on top of him” (Capital Vol 1 1976, p168.).  All objects of mass on earth have a tendency to fall and will eventually do so from a height if counteracting forces (a ledge, a tree, bricks and mortar etc) no longer operate.

Heinrich retorts that Newton’s law of gravity has a precise numerical content and Marx’s law does not and cannot.  He says: “does Marx’s law say that there is precise quantitative connection between any rise in c/v and any rise in s/v?”  Well, yes it does.  Marx’s law does say in what direction both ratios will go and also it says that if c/v rises more than s/v, then (ceteris paribus) the ROP will fall.  Also, if we give c/v and s/v a precise measure, then we can give the ROP a precise measure.  If a quantitative dimension is necessary to qualify as a law, then Marx’s law meets it.

Heinrich goes on to say that we (Carchedi/Roberts) don’t realise that Newton’s law of gravity was eventually ‘overthrown’ by Einstein’s general relativity theory.  But of course we know the history of physics.  The point of our analogy was to show Marx’s law has predictive value in the same way as Newton’s law of gravity.  We could have used Einstein’s law for the analogy as well to show the same. Yes, science makes progress and one law may be found wanting (under particular circumstances) compared to another.  Newton’s law has less predictive value when dealing with astronomical entities with huge mass or moving with the speed of light.  But it is still pretty good for predicting what happens down here on terra firma.

Empirical verification

In his original article Heinrich stated that “With this law, Marx formulates a very far-reaching existential proposition which cannot be empirically proved or refuted.”  In our view, contrary to Heinrich, Marx’s law is not a ‘far reaching existential proposition’ but a law like any scientific law, namely it has premises (realistic, we think) that lead to conclusions and/or predictions that can then be tested using whatever experiments or data are available.

In his response to our comments, Heinrich modified his argument about the law not being empirically verifiable “I do not say that it is impossible to get the information from statistical data, but it is not so easy and unambiguous as it sounds in the text of Carchedi/Roberts.” Sure, it is much more difficult to substantiate a theory or law in social organisation than with physical phenomena partly because humans are conscious beings that can react and change social forces and partly because there are usually way less data points to ensure some degree of statistical significance.  But we never said that measuring value data on the basis of official data is easy and unambiguous.  Nevertheless, we, as well as an increasing number of other authors, can still attempt to work out some indication as to the height and movement of the ROP.

Heinrich now seems to have stepped back from his original assertion.  He now reckons that in principle Marx’s law can be empirically substantiated or not, as we do.  And in our comment (and elsewhere) we present data to suggest just that, namely that, in the US and the UK, the trend of the ROP falls secularly through a zig zag movement.  This explains the cycle of boom and slump under capitalism. Our and other people’s data can be rejected, but denying that empirical research is possible will not do.  As we said in our comment, “there is a body of evidence to support the view that Marx’s law does operate in capitalist economies and that it is the key (underlying) factor in booms and busts. If Heinrich disagrees, then what is his evidence to the contrary and what alternative explanation does he offer that can be empirically analysed?”

Finally Heinrich defends his position that Marx ‘might’ have changed his mind about the law.  His arguments are no stronger than before, except to say that in the 1870s Marx talked about crises, but never mentioned the law in relation to crises.  Hmmm.

39 thoughts on “Heinrich responds

  1. Hello. Thank you for this very informative text. I agree with you on all counts, but I have one question: could you please elaborate on your last paragraph. Is it true what Heinrich is saying here? If so, why did Marx not mention the law when discussing crises? I would be interested to know this. Best regards, Will Denayer

    1. I think my retort to Heinrich on this would be: if Marx rejected his law in his later years, why does he not mention that he has decided to drop what he had previously considered the most important law of political economy and tell somebody, at least, Engels? According to Heinrich, he said never mentioned the law in his later years in any writings, but then he never rejected it either in his later writings.

      1. Surely its possible for Marx to continue to believe that the Law exists as a “law” – and I would agree with him – but not to consider it a cause, and certainly not a primary cause of crises! That would then put it on a par with the Law of Gravity, i.e. we recognise it exists, but we don’t let it stop us from taking thousands of flights a day, nor do we cite it as the cause of plane crashes. Instead we say this or that crash was caused by an engine failure, crash with birds, pilot error and so on.

        Marx and Engels only reference to a profits crisis in relation to overproduction, is not in relation to the Law, but in relation to a profit squeeze, where a boom has caused the market prices of inputs to rise – which as Marx sets out in Chapter 6 cannot then be passed on, so have to be funded out of produced surplus value – and where the elasticity of demand for the end products is high preventing prices from rising. They describe it as a sharp fall in the rate of profit, not the kind of gradual fall in the rate which the Law describes.

        If we are relating the Law not to a crisis of overproduction, but to a period of stagnation i.e. not where capital is overproduced, but where on the contrary, its accumulation is sluggish, I would have more sympathy with the idea that the Law has a role here, but the underlying cause of such stagnation is not the Law itself, but the lack of sufficient opportunities for the investment of capital in new areas, where the rate of produced surplus value will be high, and where the market for such new commodities means that the elasticity of demand will be low, so that the potential for realised profits is greater.

        In other words, this is a function of the Long Wave cycle, not of the Law. That is why Marx never cites the Law as a cause of crises of overproduction, in fact in Theories of Surplus Value 2, criticising Smith and Ricardo he says the exact opposite:

        “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.”


        But, in explaining crises of overproduction, he does repeatedly cite throughout Capital and Theories of Surplus Value, the effect of a boom in causing input prices to rise sharply. The boom has been caused not by falling rates of profit, but by rising rates of profit! The crisis arises not in accordance with the Law, but as a sudden shock. It corrects the temporary contradictions that have built up to a crisis, and result in disproportions.

  2. “Marx’s purpose in his example was to show that eventually the rate of s/v would reach a physical limit (i.e. workers living on air), while there was no limit to the rise in c and thus c/v.”

    But, as Marx demonstrates its not at all necessary to theorise that workers “live on air”. If productivity rises so dramatically as such a rise in c/v would suggest, then its quite likely that workers real living standards will rise, because they will acquire more use values with a massively reduced exchange value as wage goods.

    But, also as Marx points out, within the rise in c/v both the quantity as well as the value of fixed capital, whilst increasingly absolutely is declining relatively. Marx sets out two reasons for that. Firstly, technological development means new fixed capital is superior so one machine replaces several older types of machines. Secondly, fixed capital is produced by industry, so improvements in productivity lead to a more rapid fall in its value, than occurs for circulating constant capital, much of which is from primary production.

    According to Marx, c/v rises because the quantity of material processed increases, whilst its value does not decline so rapidly. But, he makes clear that over time the value of the circulating constant capital is reduced by the same kinds of means.

    So, its not just that s/v is rising, at the same time as real wages rise, but the same causes also means that the rise in c/v can be checked and reversed too. A look at a lot of modern production suggests that is the case creating not a falling but rising rate of profit.

    But, in any case, as Marx makes clear the Law can only apply to particular spheres of production at any one time. There is no reason just because c/v is high in steel production, it has to be high in some other new sphere of production, such as gene therapy, production of graphene, e.g. Moreover, as Marx sets out, if steel production increasingly accounts for less and less of social production, but gene therapy, graphene production etc., account for an increasingly large share, then even as the rate of profit in these latter decline from very high levels, the consequence may be to cause the rate of profit for capital as a whole to rise.

    If steel production accounts for 90% of social production and graphene production only 10%, and the rate of profit in the former is only 10%, but in the latter is 90%, then the average will be mostly influenced by steel production. But, if steel production declines, and graphene production rises so that they account for 50% each, then even if the rate of profit in graphene production falls to 60%, the consequence will be that the average rate of profit in the economy will rise.

    You can only arrive at the conclusion of some kind of linear progression if you assume that Capitalism is a closed system in which no new forms of capital are created. It requires an analysis based on the syllogism not the dialectic.

  3. “In short, if the rising productivity is due to technological improvements and thus to a rising value composition of capital (VCC), if we consider a unit of capital (because productivity is output per unit of capital), and if the output is redistributed to the advantage of capital, rising productivity results in (1) a rising ROP and in (2) falling wages.”

    That isn’t true as I describe here – http://boffyblog.blogspot.co.uk/2013/12/marx-and-engels-theories-of-crisis-part_6.html.

    Increasing relative surplus value arising from rising productivity can lead to both a relative decline in increase in c/v, with a rise in s/v, and at the same time with an increase in real wages, an increase in the nominal and actual level of surplus value, and accumulation.

  4. The other thing you fail to take into account is that whilst rising productivity can reduce the value of labour power, whilst both real wages and profits rise, similar changes can affect the value of the product of an hour of concrete labour. Over time, we would expect that as there is an increase in skill and education, a greater proportion of concrete labour would take the form of more complex, higher value labour.

    There may be 24 hours of any concrete labour in an hour, but for any particular concrete labour, this may amount to many more hours of abstract labour. Marx was wrong in his suggestion that the length of the working day is limited, and that therefore there is a limit to how much surplus value can be extracted within it, for that very reason.

    If, for example, there are 72 hours of abstract labour in the normal 8 hour day of a brain surgeon, the surgeon could in fact be paid the equivalent of 16 hours of labour, and yet still produce 56 hours of surplus labour. If, within an economy an increasing proportion of output is comprised of the output of such complex concrete labours, and this increase in skill etc. is witnessed to go along with economies becoming more technologically developed, creating welfare states etc. then not only will this act to reduce c/v, but it will undermine the limits you refer to of the extent to which surplus value can be extracted in any day.

  5. From the analysis I have seen, the calculation based on the extraction of data from National Income and Expenditure accounts is only a measure of s/v not s/c+v. At best it seems to be a measure of s/ v plus fixed capital stock. That seems to repeat the mistake made by Adam Smith criticised by Marx in Vol II, where he equates the Value of National Income with the value of national output in the so called Trinity Formula.

    It misses out all of the constant capital, or at least the circulating constant capital that was produced and bought in previous years, and so does not appear as income to anyone in the current national income data, but whose value does form part of the value of this year’s output.

    In addition, you fail to take account of the very important point Marx and Engels made about the role of the Rate of Turnover of Capital. If we take the average rate of productivity growth as a proxy for increases in the rate of turnover of capital, then an average 2% p.a. rate of growth means that since 1950, the rate of turnover of capital will have trebled with an equivalent effect on the annual rate of profit.

    Doug Henwood calculated the rate of profit in 1950, to be around 7%, and has a similar figure for today. But, if we multiply today’s rate of profit by 3 to take account of the rise in the rate of turnover we arrive at an annual rate of profit today of 21%, calculated on the basis that Marx did, at least in that respect.

    But, perhaps the most important point is that whatever the nature of the Falling Rate of profit, the reality is that Marx never proposed it as the only, main or even any cause of capitalist crises. In Capital III, when he speaks about crises in the context of a profit crisis, it is a profit crisis that arises suddenly as a consequence not of the long run tendency, but as a consequence of sharply rising demand for inputs pushing up their prices, at a time when the rise in costs cannot be passed on to market prices.

    Where he deals with his theory of capitalist crises in Part 2 of Theories of Surplus Value, where he spends nearly 50 pages analysing the causes of crisis and criticising Say’s Law and underconsumption, he says not one single word, not one syllable to suggest that these crises are caused by the falling rate of profit.

    By contrast he repeats on page after page that the cause of crises is the fact that capital expands production (supply) faster than the market for any particular commodity (demand) expands, so that market prices fall beneath market values, so that produced surplus value increasingly cannot be realised.

    As he says,

    “ It is quite unintelligible why I should buy six knives because I can get them for the same price that I previously paid for one.”
    (Theories of Surplus Value 3)

    And, as he points out this is exacerbated by the fact that different industries have different levels of productivity so that even as the value of output of two industries rises by the same amount, the fact that this results in very different percentage increases in the quantity of use values produced by them, means that it is almost impossible for one to find a market in the other on this basis at their exchange value.

    “By the way, in the various branches of industry in which the same accumulation of capital takes place (and this too is an unfortunate assumption that capital is accumulated at an equal rate in different spheres), the amount of products corresponding to the increased capital employed may vary greatly, since the productive forces in the different industries or the total use-values produced in relation to the labour employed differ considerably. The same value is produced in both cases, but the quantity of commodities in which it is represented is very different. It is quite incomprehensible, therefore, why industry A, because the value of its output has increased by 1 per cent while the mass of its products has grown by 20 per cent, must find a market in B where the value has likewise increased by 1 per cent, but the quantity of its output only by 5 per cent. Here, the author has failed to take into consideration the difference between use-value and exchange-value.

    Theories of Surplus Value 3

    Unfortunately, much of the discussion is conducted on the same false basis as that of Ricardo, Mill and Say, of assuming demand away as a consideration, and assuming that simply because equal exchange values are produced, the use values in which it is embodied are either demanded, or demanded in corresponding proportions. But, as Marx says elaborating upon this,

    “It is true that the man who buys has in his possession merely the converted form of a commodity—money—i.e., the commodity in the form of exchange-value, and he can act as a buyer only because he or others have earlier acted as sellers of commodities which now exist in the form of money. This, however, is no reason why he should reconvert his money into my commodity or why his need for my commodity should be determined by the quantity of it that I have produced. Insofar as he wants to buy my commodity, he may want either a smaller quantity than I supply, or the entire quantity, but below its value. His demand does not have to correspond to my supply any more than the quantity I supply and the value at which I supply it are identical.”

    (Theories of Surplus Value 3)

    If we are to believe that the Tendency For the Rate of Profit to Fall is the motive force behind Marx’s theory of crises, let alone to believe that it is the ONLY cause of capitalist crises, then those who put forward that argument have to explain why it is that in the main part of his work where he deals with the issue of crises he does not mention it once. In fifty pages, not one page, not one sentence, not one word, not one syllable. What are we supposed to believe? That Marx simply forget to mention it????

  6. Heinrich shows no interest whatsoever in understanding economic reality, in this instance, slumps with all the distress they bring to millions of people, recurring ever since industrial capitalism got underway about 200 years ago.

    If Heinrich had a better explanation than Marx’s work, he could present it and show by comparison where Marx was wrong or incomplete. But almost certainly Heinrich would have to acknowledge and use Marx’s labor theory of value, even if modified. In other words, a scientist would make progress in understanding reality, sorting out the concepts and theory of predecessors along the way.

    Instead, Heinrich deems that “the construction of Capital as a whole is called into question.” I have disposed of that rabble rouser – just like ten thousand commentators before me.

    Despicable stuff.

  7. I think this should be a philosophical discussion as much as anything, which says much in itself.

    Economic laws are not natural laws. Economics is not natural philosophy.

    I think in economics you have different levels/kinds of laws in operation. I think you could probably categorise these in rank, though I am not attempting that task!

    However, I will initially name 2 important levels of laws which I think make a point, before going onto the TFRPTF.

    Level 1 – Economic laws which are directly related to natural philosophy.

    These laws make themselves felt no matter what the mode of production. For example, humans must transform nature in order to create wealth. Humans must eat in order to sustain themselves.

    Level 2 – Economics laws which are pre conditions of a given mode of production.

    These laws are specific to a mode of production and disappear once the mode of production disappears. For example, for capitalism to exist there must be a class of people who own effectively nothing but their labour power.

    As you can imagine there are then a multitude of laws that exist outside these levels, around markets, demand and supply, competition, distribution etc etc etc and categorising them is beyond my imagination! But where does the TFRPTF sit? Clearly not in level 1 or 2.

    It should be noted that all economic laws not in level 1 are bound to leave the stage of history at some point.

    For Marx the TFRPTF was an observable development during the 19th century, in volume 3 he claims that there was a relative increase in Constant compared to variable capital. The law was in operation. It had an effect, which Marx describes in Theories of Surplus value and kicks off his remarks about crises with a point about the expansion of capital and how demand for labour decreases relatively!

    However, being a law not belonging to level 1, it is possible that the law of the TFRPTF no longer operates or is at least being subjected to significant countervailing tendencies, or operates differently under modern capitalism, with its IMF and the like.

    But so what? It is my contention that for Marx the TFRPTF was NOT linked to scientific socialism, which is based on the inevitable demise of capitalism. The basis of scientific socialism is historical materialism and the class struggle, this is where the inevitability of capitalisms demise can be found.

    Whatever, we must admit that scientific socialism stands on very shaky grounds!

    1. The law of value, as Marx sets out in his Letter to Kugelmann is a Law of the first kind, i.e. a natural law, whose form is merely different in different modes of production. In fact, you can see it in Nature generally. Cows, and other grazing animals, do not go to graze the easiest parts of a field with the most nutritious grass by accident. They allocate their available “labour-time” to be able to acquire the greatest amount of use value with the least amount of time.

      But, I disagree the the LTPRF is not a Law of the second kind. I think it is. The fact that this Law requires a series of assumptions to be held does not change it from being a Law. I can say that it is a natural Law that water boils at 100 degrees centigrade, but implicit in the Law is that the water is at a particular level of pressure, for example.

      In Theories of Surplus Value, Marx makes a similar point, in respect of the Law as against Ricardo. Ricardo, rather like those proposing the Law as a cause of crisis today rejected the idea that there could be a crisis of overproduction arising simply from production growing faster than the market. But, he also saw the Law of the Falling Rate of profit as a natural law. Marx makes clear that both these positions are wrong.

      Production can be expanded without regard to the market because the driving force behind production/supply is Exchange Value. But, just because this production creates an amount of value, and the producers of this value (workers) and the sharers in this value (capitalists, landlords etc) then have it in money form to use to buy other commodities, there is absolutely no compelling reason why they will do so, why they will buy all that others have produced, or why they will be prepared to buy it at the market value those other producers require in order to reproduce their capital. That is because as buyers, their motivating factor is not value, but use value. If their use value is satisfied there is no reason to buy more.

      Ricardo, Mill and Say argued this could not happen because the producers of commodities did so, in order to be able to buy the commodities they needed, and would not produce commodities themselves that could not be exchanged for that purpose – Say’s Law, that supply creates its own demand. Marx demonstrates that this is a view not of Capitalism but of barter. Unfortunately, in order to oppose “under consumptionism” there are many today who fall into the same trap of ignoring the question of demand.

      But, Marx similarly demonstrates in the same place that the tendency for the rate of profit to fall as theorised by Ricardo, is also not a natural law. It is only a Law under Capitalism.

      1. It is not a law of level 2 (in my cod philosophical example above) because the TFRPTF is a feature of capitalism, maybe even an inevitable feature but it is not a pre condition of capitalism. For example, when the rate of profit is increasing we still have a capitalist system!

        Scientific socialism is standing on shaky grounds because in the most developed nations socialism seem further away than ever! I am not doubting Marx’s general method just prefixing it with the word ‘socialism’ may have been a step too far!

      2. Simply not so. The law of value is not a “natural law.” The need for society to distribute, organize the total available time of production is that “natural law.” The law of value is but one, historically specific, expression of that need– based on the certain development of the means of production and the organization of labor.

        Marx says in volume 1 that the law of value only achieves its full expression with capitalism. Indeed. There is commodity production before capitalism but there is no organization of society of, by, for, and around value production, for the accumulation of value, before capitalism.

        Yes, as Marx points out, all economy is the economy of time. No, not all economy of time is the economy of value.

      3. As Engels points out, with Capitalism it is no longer Value which is the basis upon which Exchange takes place, for the simple reason that once producers seek to maximise profits, they exchange commodities on the basis of prices of production not values. Even non-capitalist producers Exchange commodities based on market prices that diverge from values, because the input costs of these non-capitalist producers are themselves increasingly prices of production of inputs produced by capitalist producers.

        Marx makes clear in his letter to Kugelmann that it is the Law of Value, which is a natural law, and only the manifestation of that law assumes different forms, in different types of society.

        he begins by making clear that what he is speaking of is Value and his theory of Value.

        “As for the Centralblatt, the man is making the greatest concession possible by admitting that, if value means anything at all, then my conclusions must be conceded. The unfortunate fellow does not see that, even if there were no chapter on ‘value’ at all in my book, the analysis I give of the real relations would contain the proof and demonstration of the real value relation.”

        He then sets out what this Value relation is irrespective of the type of production.

        “Every child knows that any nation that stopped working, not for a year, but let us say, just for a few weeks, would perish. And every child knows, too, that the amounts of products corresponding to the differing amounts of needs demand differing and quantitatively determined amounts of society’s aggregate labour. It is self-evident that this necessity of the distribution of social labour in specific proportions is certainly not abolished by the specific form of social production; it can only change its form of manifestation. Natural laws cannot be abolished at all. The only thing that can change, under historically differing conditions, is the form in which those laws assert themselves. And the form in which this proportional distribution of labour asserts itself in a state of society in which the interconnection of social labour expresses itself as the private exchange of the individual products of labour, is precisely the exchange value of these products.”

        In Capital I, Marx sets out his theory of Value, by referring not to Capitalism, but to Robinson Crusoe, to the peasant commune etc., where the distraction of commodity fetishism from these real value relations is removed. He uncovers both in Vol I and in Vol III, where he analyses the historical development of exchange value, and of prices of production, the way in which society goes from producing “products”, which have value because they are use values that require definite amounts of labour-time to produce, to the at first accidental exchange of these products, to the regularisation of such exchanges, which leads to the development of commodity exchange, such that as products become commodities, so Value becomes social value, exchange value.

      4. Engels makes this point clearly in “Anti-Duhring”. he writes, that it is precisely this allocation of use values according to the labour-time required for their production, which will be the only element of the concept of Value left in a communist society.

      5. “Scientific socialism is standing on shaky grounds because in the most developed nations socialism seem further away than ever!”

        That depends on your view of Socialism and socialist transformation. If you believe that Socialism will only be possible on the back of some catastrophic collapse of Capitalism then that may be right, but Marx never premised his view of Socialist transformation on any such development. On the contrary, the reason he believed Socialism would arise first in the UK was because it was the most developed.

        Capitalism is even more developed today, and on that basis Socialism is closer at hand. As Trotsky points out the more developed Capitalism becomes the easier socialist construction becomes. If you beleive that Socialism can only arise on the back of some 1917 style Revolution, then it may be not only some distance away, but a forlorn hope.

        But, social revolutions in the past have always been about the transformation of the productive forces, and the relations of production prior to any such political revolution. The transformation of the productive forces continues apace, and despite the fact that “rrevolutionaries” waste their time in frantic activities to “build the party” in the hope of some repetition of 1917, the fact is that workes throughout the globe are busy with the job of transforming social relations without waiting for them. That is why in Britain, a new worker owned co-op is created every day, its why the Mondragon Co-ops continue to grow and have now established an alliance with the US steelworkers union to establish worker owned co-ops across North America.

        Of course, Marxists do not beleive that workers will be allowed to simply keep developing such co-ops without opposition from Capital. That was precisely Marx’s point about why the development of such a worker owned sector of the economy has to be built on the basis of class struggle, on the basis of an industrial and political struggle alongside it.

      6. “As long ago as 1844 I stated that the above-mentioned balancing of useful effects and expenditure of labour on making decisions concerning production was all that would be left, in a communist society, of the politico-economic concept of value. (Deutsch-Französische Jahrbücher, p. 95) The scientific justification for this statement, however, as can be seen, was made possible only by Marx’s Capital.”

        Engels Anti-Duhring

      7. Nonsense. Marx never says the law of value is a natural law. His entire work centers around the social organization of labor. The law of value is an expression of the relations between classes. The underlying question that Marx takes the political economists to task for is the questions is that how does labor come to be expressed as a commodity, as both value and value producing?

        There is nothing “natural” about that, but historical, just as other social organizations of labor are just– specific social arrangements.

        To confuse the need for society to organize and distribute the total available labor time with the “moment,” the expression of that need as value is to miss the entire point of Marx’s critique of capital as historically specific, and…limited.

        The distribution of labor or labor time through use values is NOT the same as the law of value, Engels, Kautsky and whomever else you want to throw in there to the contrary not withstanding.

        To argue that way– that the law of value is “natural,” or eternal, or ahistorical is to argue that the law of value operates, regulates society without labor being organized as a commodity, as abstract labor, as in fact wage-labor.

      8. The natural law is the fact that humans need to transform nature in order to satisfy their needs. I.e. they need to perform labour. But it is not a natural law that this labour becomes value and then surplus value. In many societies you don’t have surplus value but a surplus of products.

        Engels made the point that exchange value first developed on the boundaries of society, and communities would exchange based on labour hours. He claims there was anthropological evidence for this.

        Value, based on labour time, is an historical development but it’s genesis wasn’t based on class exploitation but was a logical expression of valuing products.

      9. “Value, based on labour time, is an historical development but it’s genesis wasn’t based on class exploitation but was a logical expression of valuing products.”

        Of course it is based on class exploitation– in the broad picture, I think that’s kind of what Marx and Engels meant when they wrote that all hitherto history is the history of class struggle; in the narrow one, there is no production for value, of objects as values separate and apart from class exploitation.

        All economy is the economy of time. Not all economy of time is economy of value. There is no such thing as “a logical expression of valuing products” that exists when such expressions are not of things or logic but of relations, of the conflict, connection, antagonism whatever between labor and the condition of labor.

      10. “The law of value is an expression of the relations between classes.”

        Nonsense, Marx’s main analysis of Value as Exchange Value is conducted on the basis of the exchanges of commodities between individual commodity producers, who by definition belong to the same class!

        Marx is quite clear in his letter to Kugelmann that the natural law he is describing is the Law of Value. In Capital, he describes the Law of Value by divesting it of all the mystifying factors of commodity fetishism by looking at Value in relation to the productions of Robinson Crusoe. He concludes,

        “All the relations between Robinson and the objects that form this wealth of his own creation, are here so simple and clear as to be intelligible without exertion, even to Mr. Sedley Taylor. And yet those relations contain all that is essential to the determination of value.”

        Clearly, they require more exertion for Artesian to make them clear.

        Marx proof read Anti-Duhring so its hard to see why he would not have challenged Engels description of Value stripped likewise of the mysticism of commodity fetishism.

        In Capital I, Marx says, that philosophers have been trying to understand the nature of Value for 2,000 years, which clearly goes back long before Capitalism. Marx also analyses the payments of peasants to landlords, and makes the point that these payments are payments of Value i.e. they are merely the money equivalent of an amount of labour-time. Yet, the relations between the two are not even those of buyer and seller of commodities – they are a purely feudal relation!

        But, as Marx puts it, this feudal relation does not change the fact of the underlying human relation, the underlying value relation.

        “Here the particular and natural form of labour, and not, as in a society based on production of commodities, its general abstract form is the immediate social form of labour. Compulsory labour is just as properly measured by time, as commodity-producing labour; but every serf knows that what he expends in the service of his lord, is a definite quantity of his own personal labour power. The tithe to be rendered to the priest is more matter of fact than his blessing. No matter, then, what we may think of the parts played by the different classes of people themselves in this society, the social relations between individuals in the performance of their labour, appear at all events as their own mutual personal relations, and are not disguised under the shape of social relations between the products of labour.”

        And this law of value is precisely the Law of Nature he was speaking of in his letter to Kugelmann, because he spells it out once more in this section of Capital writing,

        “Because, in the midst of all the accidental and ever fluctuating exchange relations between the products, the labour time socially necessary for their production forcibly asserts itself like an over-riding law of Nature. The law of gravity thus asserts itself when a house falls about our ears.[29] The determination of the magnitude of value by labour time is therefore a secret, hidden under the apparent fluctuations in the relative values of commodities. Its discovery, while removing all appearance of mere accidentality from the determination of the magnitude of the values of products, yet in no way alters the mode in which that determination takes place.”

        Note also that Marx here speaks of the Value of “products”, and not of the exchange value of commodities, because Marx’s analysis of the development of exchange value from individual value, is inseparable from his analysis of the evolution of products into commodities.

        Marx’s examples here of Robinson, of the peasant producer, and of the commune of free producers are designed to illustrate that commodity fetishism hides the true value relations that exist within each, based on the expenditure of labour-time. The different social/class relations that exist in these different cases likewise are merely a reflection of the point he makes in the letter to Kugelmann that all that can change in this natural law is its manifestation. It merely assumes the manifestation under commodity exchange of exchange value. In other types of society it assumes the form of value i.e. the direct performance of labour-time on a personal basis.

      11. “labor being organized as a commodity”.

        What does “organised as a commodity” mean???

        Labour is not a commodity under Capitalism!!!! That is a basic premise of Marx’s analysis. Its precisely where he is distinguished from Smith, Ricardo etc.The fact you posit it as such demonstrates you do not understand even the basics of Marx’s analysis.

        “Marx says in volume 1 that the law of value only achieves its full expression with capitalism.”

        In that case, you seem to have defeated yourself. If it only achieves its full expression under Capitalism it must have existed prior to Capitalism mustn’t it???

        “in the narrow one, there is no production for value, of objects as values separate and apart from class exploitation.”

        Nonsense. Marx’s analysis demonstrates how social value first arises from the accidental, occasional exchanges of “products” not commodities, between groups of nomads, particular arising from wedding ceremonies, and how as these exchanges increased, they were led to determine the value of these products on the basis of the labour-time required for their production.

        “There is commodity production before capitalism but there is no organization of society of, by, for, and around value production, for the accumulation of value, before capitalism.”

        Utter rubbish! Of course, producers organised their production around Value, and of course, various ruling groups sought to accumulate Value. Marx speaks at length, for example, about the accumulation of Value by various potentates in the form of gold. Without the organisation of commodity production around Value, and the accumulation of Value, there could have been no evolution of Capitalism! I’d suggest you read lenin’s “The Development of Capitalism in Russia”, for a detailed analysis of how this process unfolds.

        “there is no production for value, of objects as values separate and apart from class exploitation.”

        Nonsense again. If you shoe my horse, and it takes you 6 hours, and I work on your field during that 6 hours, you have produced 6 hours of value, and I have exchanged 6 hours of Value with you for it. There is no exploitation on either side here. That is precisely the relation of Value that Marx describes of pre-capitalist commodity production, and Mandel in “Marxist Economic Theory” gives many real life examples provided by anthropology of such exchanges as the basis of the Labour Theory of Value.

      12. “This agrees also with the view we expressed previously that the evolution of products into commodities arises through exchange between different communities, not between the members of the same community. It holds not only for this primitive condition, but also for subsequent conditions, based on slavery and serfdom, and for the guild organisation of handicrafts, so long as the means of production involved in each branch of production can be transferred from one sphere to another only with difficulty and therefore the various spheres of production are related to one another, within certain limits, as foreign countries or communist communities.”

        (Capital III, Chapter 10)

        As soon as we move towards simple commodity production and exchange, it becomes necessary to determine a single market value for each commodity, as opposed to the range of individual values of products that precedes it. The means of achieving this, is of course, competition. Each individual producer is led to produce under the most efficient conditions, because the market value of their commodity is determined as stated at the beginning by the average conditions of production. Even if production remains in the hands of a multitude of small producers this is the case, because the output of these producers is brought together in large masses by merchants.

        “Looking closer, we find that the conditions applicable to the value of an individual commodity are here reproduced as conditions governing the value of the aggregate of a certain kind of commodity. Capitalist production is mass production from the very outset. But even in other, less developed, modes of production that which is produced in relatively small quantities as a common product by small-scale, even if numerous, producers, is concentrated in large quantities — at least in the case of the vital commodities — in the hands of relatively few merchants. The latter accumulate them and sell them as the common product of an entire branch of production, or of a more or less considerable contingent of it.)


      13. In his supplementary remarks in Volume 3 of capital, Engels defends the labour theory of value on the grounds that it was an historic development, a development not based on exploitation but based on logical and conscious human thinking, here is the direct quote from Engels:

        “The little that such a family had to obtain by barter or buy from outside, even up to the beginning of the 19th century in Germany, consisted principally of the objects of handicraft production — that is, such things the nature of whose manufacture was by no means unknown to the peasant, and which he did not produce himself only because he lacked the raw material or because the purchased article was much better or very much cheaper. Hence, the peasant of the Middle Ages knew fairly accurately the labor-time required for the manufacture of the articles obtained by him in barter. The smith and the cartwright of the village worked under his eyes; likewise, the tailor and shoemaker — who in my youth still paid their visits to our Rhine peasants, one after another, turning home-made materials into shoes and clothing. The peasants, as well as the people from whom they bought, were themselves workers; the exchanged articles were each one’s own products. What had they expended in making these products? Labor and labor alone: to replace tools, to produce raw material, and to process it, they spent nothing but their own labor-power; how then could they exchange these products of theirs for those of other laboring producers otherwise than in the ratio of labor expended on them? Not only was the labor-time spent on these products the only suitable measure for the quantitative determination of the values to be exchanged: no other way was at all possible. Or is it believed that the peasant and the artisan were so stupid as to give up the product of 10 hours’ labor of one person for that of a single hours’ labor of another? No other exchange is possible in the whole period of peasant natural economy than that in which the exchanged quantities of commodities tend to be measured more and more according to the amounts of labor embodied in them. From the moment money penetrates into this mode of economy, the tendency towards adaptation to the law of value (in the Marxian formulation, nota bene!) grows more pronounced on the one hand, while on the other it is already interrupted by the interference of usurers’ capital and fleecing by taxation; the periods for which prices, on average, approach to within a negligible margin of values, begin to grow longer.”


      14. One mo’ time: Commodity production predates capitalist commodity production. Commodity production is not capitalism; commodities do not yet function as capital– able to command the labor of others in exchange, mediated by the organization of labor as value and value producing. That’s one.

        And as for 2– Engels is wrong, as Marx makes abundantly clear in his own expositions in the Grundrisse, in the volumes of Capital, and in his Economic Manuscripts. and in his ethnographical notebooks.

      15. The question that is the backstory to Capital is the question Marx chides the political economists for never asking, much less answering and he asks and answers it:

        “Every product of labour is, in all states of society, a use-value; but it is only at a definite historical epoch in a society’s development that such a product becomes a commodity, viz. at the epoch when the labour spent on production of a useful article becomes expressed as one of the objective qualities of that article, i.e. as its value. It therefore follows that the elementary value form is also the primitive form under which a product of labour appears historically as a commodity…”

        and later in Capital:

        ” The recent scientific discovery that the products of labour, so far as they are values, are but material expressions of the human labour spent in their production marks, indeed, an epoch in the history of the development of the human race, but by no means dissipates the mist through which the social character of labour appears to us to be an objective character of the products themselves. ”

        And further:

        “The determination of the magnitude of value by labour-time is therefore a secret hidden under the apparent fluctuations in the relative values of commodities. Its discovery while removing all appearance of mere accidentally from the determination of the magnitude of the values of the products, yet in no way alters the mode in which that determination takes place.”

        And then we get Marx nailing it:

        “Political Economy has indeed analyzed, however incompletely, value and its magnitude, and has discovered what lies beneath these forms. But it has never once asked the question why labour is represented by the value of its product and labour-time by the magnitude of that value.”

        Short-version? Never asked how labor and the conditions of labor where its ability to reproduce itself depends on its inability to produce for itself comes about.

        According to Boffy, the law of value exists beyond any definite historical epoch in society’s development. The law of value must apply to feudal societies as a law of value; it must apply to tax farming representatives of the Sublime Porte, it must apply to the mameluke rule of Egypt.

        Boffy is a genius at quoting Marx to prove exactly the opposite of Marx’s object, and his critique. The story about Robinson Crusoe is not spun to show a “law of value” at work. How could there be when no exchange is taking place; where in the portion Marx refers to there is no command over the labor of others? It is to show that behind the specific “appearance” of value stands the essential quality of human time– of labor power; of the distribution of labor-time. That is what is common to all epochs and all societies. Production of value is precisely not common to all epochs and societies.

        Now the law of value, as a regulating force of production does not exist on the Mr. Crusoe’s island. The law of value as a regulating force, distributing socially available labor time did not exist in Mameluke Egypt, or for the Porte’s tax farmers, nor in feudal England.

        Wealth is not value. Not all aggrandizement of wealth is the accumulation of value.

        Read the opening paragraph of the letter to Kugelmann again:

        “Every child knows a nation which ceased to work, I will not say for a year, but even for a few weeks, would perish. Every child knows, too, that the masses of products corresponding to the different needs required different and quantitatively determined masses of the total labor of society. That this necessity of the distribution of social labor in definite proportions cannot possibly be done away with by a particular form of social production but can only change the mode of its appearance , is self-evident. No natural laws can be done away with. What can change in historically different circumstances is only the form in which these laws assert themselves. And the form in which this proportional distribution of labor asserts itself, in the state of society where the interconnection of social labor is manifested in the private exchange of the individual products of labor, is precisely the exchange value of these products.”

        The distribution of social labor in definite proportions is the essential human requirement, need, condition.

        What changes historically? The mode, the form in which the need for the distribution of labor-time is expressed. And where this occurs when social labor is only made manifest in private exchange is exchange value, or the VALUE form.

        That form requires that thee ability to labor has no use to its possessor save as its value in exchange for the means of subsistence. That is the basis for the ascendancy, the dominance, the establishment of a law of value– and that is what is specific about the specific historical epoch called capitalism.

        Value is a social relation of production, not a natural one.

      16. As usual, Sartesian provides us with a large jumble of words that fail in any way to back up his repeated assertions. None of the quotes he gives show Marx claiming that Value is something specific to Capitalism as Sartesian needs to prove. And how could Marx argue that way? After all marx in Chapter III of Capital I, analyses the evolution of money as the universal equivalent form of value, but money not only precedes Capitalism it precedes Feudalism too. It has existed for thousands of years.

        If the Universal Equivalent form of Value has existed for thousands of years, it rather undermines Sartesian’s claim that it is specific to Capitalism!

        And if we take the statement about the Value Form if we read what Marx actually says about this, and how it develops historically we arrive at a picture the opposite of the claims of Sartesian once more.

        What is Value as analysed by Marx. It is the labour-time required for the production of some specific product. Marx describes how this proceeds from the individual value of individual products through to the individual value of a class of product.

        How is this Value expressed in the Value Form? It depends on the stage of historical development, and the particular Value form we are talking about! Initially, Marx sets out each product’s value is expressed as a certain quantity of other use values. This does not at all require that there is any social exchange. A peasant producer can assess the Value of potatoes in terms of the labour required for their production, and likewise assess the value of carrots. They can express the Value of Potatoes then in a certain quantity of carrots, and determine on the basis of the use value they obtain from each, how much labour-time to devote to one or the other.

        That is precisely what Marx says they do. It is what his example of Robinson Crusoe is about, and however, Sartesian may wriggle, Marx clearly in that example says that this is all that is necessary to understand “Value”.

        Moreover, as Marx sets out, in order for the Value form to develop from this initial Relative Form of Value through the Equivalent Form of Value, to the Universal Equivalent Form of Value the basic condition is that prior to all this development there must exist Value itself! Value expressed not as an amount of some other Use Value, but Value in its pure form as an amount of labour-time.

      17. “mediated by the organization of labor as value and value producing. That’s one.

        And as for 2– Engels is wrong, as Marx makes abundantly clear in his own expositions in the Grundrisse, in the volumes of Capital, and in his Economic Manuscripts. and in his ethnographical notebooks.”

        The first statement is meaningless. As Marx makes clear several times Labour has no value. Secondly, as Marx again makes clear many times, Labour produced Value as much under peasant production, and slave production as it does under Capitalism. That Value in each of those societies is also represented by the Universal Equivalent Form of Value – Money.

        As for 2, it is only you once more making extravagant claims that Marx disagrees with Engels. Given that in fact, Marx makes all these other statements that concur with Engels, given that Marx co-wrote Anti-Duhring and that in the Critique of the Gotha Programme Marx himself uses a pretty similar formulation to that used by Engels your extravagant claims have little basis.

        In the Critique of the Gotha Programme, describing the situation in a Communist society, Marx states,

        “Here, obviously, the same principle prevails as that which regulates the exchange of commodities, as far as this is exchange of equal values. Content and form are changed, because under the altered circumstances no one can give anything except his labor, and because, on the other hand, nothing can pass to the ownership of individuals, except individual means of consumption. But as far as the distribution of the latter among the individual producers is concerned, the same principle prevails as in the exchange of commodity equivalents: a given amount of labor in one form is exchanged for an equal amount of labor in another form.”

        Oh no, shock horror, here is Marx talking about the production and exchange of equal “Values” in a Communist society. Clearly he must have misunderstood all of his previous writings. He should immediately have consulted Sartesian for some correction of his error.

        In fact, Marx’s statement is perfectly consistent with his analysis of Value and the Law of Value, as I have described it in relation to his letter to Kugelmann etc. That is Value is the expenditure of Labour-time, and that occurs in all societies, because it is the basic requirement for Man producing his requirements. The law of Value dictates that this expenditure of Labour-time has to be done according to certain requirements in order that those needs are produced in the correct proportions. All that changes is “content and form”.

      18. Artesian writes,

        “Commodity production is not capitalism; commodities do not yet function as capital– able to command the labor of others in exchange, ”

        But, of course as Marx describes commodity exchange DOES involve the commanding of the labour of others in exchange. That is precisely the truth of the labour Theory of Value that resides behind the veil of commodity fetishism. When A exchanges 10 lbs of potatoes, for 5 metres of linen off B, they are not really exchanging these commodities, but equal amounts of labour-time. The exchange of 10 lbs of potatoes allows A to command a given amount of B’s labour-time that has been required to produce 5 metres of linen!

        But, its also thoroughly undialectical to say “commodities do not yet function as capital”. For one thing that in itself is to fall prey to a form of fetishism. As Marx says, capital is made up of commodities, but it is not the nature of commodities as commodities that makes them function as Capital, because Capital is a social relation. Under capitalism as in other societies, as Marx sets out commodities also simply function as commodities.

        But, more importantly, under simple commodity production, its clear that commodities also do “function as Capital”. If they did not, then there could be no primary accumulation of Capital, there could be no transformation of simple commodity production into Capitalist production. It is a question of quantity being transformed into quality.

      19. Well, it certainly is good to know that on Planet Boffy, value production is the once,future, and eternal organizing principle of social production; that on Planet Boffy, iltizam, Chinese peasant agriculture in the 15th century Yangtze Deta, and the Inca Empire were all governed by the law of value, where products were exchanged on the basis of the socially necessary labor time necessary for their reproduction.

        And even better to know that the overthrow of capitalism does not involve the overthrow of the value form; that in fact the development of the means of production by capitalism in its need to aggrandize surplus value does not threaten the law of value; nor, apparently the production of objects as values; which means explicitly then, that wage-labor will remain as…. wage-labor on Planet Boffy’s socialist paradise.

        One thing about spaceman Boffy’s rendition of Marxism deserves an additional comment, however. This:

        “But, more importantly, under simple commodity production, its clear that commodities also do “function as Capital”. If they did not, then there could be no primary accumulation of Capital, there could be no transformation of simple commodity production into Capitalist production. It is a question of quantity being transformed into quality.”

        The course of primitive accumulation has/had nothing to do with “simple commodity production.” Compare Boffy’s baloney to Marx’s account of this primary accumulation and it become clear how little Boffy knows of history, capital, Marx, and the origins of the social relation of value production. Primitive accumulation had nothing to do with a transformation of a quantity of “simple commodity” production or producing enterprises into capitalist ones;

        What appalling ignorance.

        Me? I’ve got to get back to planet earth, where the law of value is in fact the expression of a historically specific relation of classes.

    2. “Whatever, we must admit that scientific socialism stands on very shaky grounds!”


      The real basis of scientific socialism is the analysis of the historical laws of social development, which uncovers the way in which technological development occurs as a process behind Man’s back, as he tries to deal with the Law of Value, by continually looking for means of meeting his needs more effectively – just as cows eat the best, most accessible grass first. Those technological changes, lead to different ways of producing, which lead to different ways in which society organises itself.

      It resulted in commodity production, and then capitalist production. For the last 200 years, it has also resulted in an increasing number of instances of co-operative production, as the next stage in that evolution. The number of co-operatives continues to grow by the day, and already more people are employed in Co-operatives around the globe than are employed by multinational corporations.

      I’d say the historical process Marx described on the basis of his scientific theory continues to be verified every day.

  8. To get to a rationality trap, i.e. a contradiction between overall rationality and individual rationality, not just constant capital, but fixed capital is decisive. With this it can be argued that it makes sense for capitalists to accumulate fixed capital to get a competitive advantage, but total the total outcome is a declining average rate of profit. Just to look at circulating capital (Okishio theorem) is not sufficient.

  9. @ Thomas Weiss.

    But, Marx argues clearly that fixed capital is like variable capital in this respect, i.e. both decline relatively in quantity and value!

    Fixed capital declines physically because of technological development – a new machine replaces several older machines, one new large factory replaces several small factories, one microchip replaces several billion electric valves etc. It declines in value, because those same technological changes both devalue existing equipment, and bring about rapid increases in productivity that reduces the value of commodities, including fixed capital.

    The same developments mean that fewer workers are required to operate the newer better machines, and because the more advanced machines take on more and more of the functions of the worker, the remaining workers require less skill. So, the reduction in the number and value of workers goes hand in hand with the decline in the quantity and value of fixed capital.

    But, both the quantity of fixed capital and of workers employed tends to rise, despite this, because as Marx demonstrates the consequence of this process is also a vast increase in the amount of surplus value produced. Capital then expands more rapidly, which means that although the amount of fixed capital and variable capital declines relatively, it increases absolutely.

    What increases both absolutely and relatively is the circulating constant capital. The improvement in technology means more material is processed, and as Marx sets out in Chapter 6 of Vol.III, because raw and auxiliary materials, are frequently the product of primary production, where productivity is slower to rise, the consequence is that the sharply rising demand for this material causes its price to rise, often beyond its market price/price of production, and this is one cause of a profits squeeze resulting in a crisis of overproduction.

    The example of the boom in textile production in Britain causing the price of US cotton to rise is cited by Marx, for example.

    1. That would mean, that some external reason, scarcity of natural resources, is the cause for the fall of the rate of profit. I think, what you describe is useful for the computation of profits. Total income minus constant circulating capital minus variable capital minus depreciation of fixed capital equals profits. But the rate of profit is the relation between profits and the stock of capital. The stock of capital is fixed capital plus the stock of circulating constant capital necessary to keep production going (plus financial assets necessary for keeping business running). All these items can be found in the balance sheets of assets and liabilities of corporations. The rate of profit falls because fixed capital increases faster than realised profits. This makes sense for individual corporations, they keep up with the competition via an ever higher rate of surplus value, but it decreases the overall average rate of profit.

  10. The rapid increase in demand for inputs described by Marx in Chapter 6, Vol III, is not an external event. It is a direct consequence of an increase in productivity. As the supply of inputs fails to rise fast enough, input prices rise, and Marx shows hit a barrier, so that firms have to absorb some of the higher cost out of surplus value, or else see demand fall so that production cannot be continued at efficient levels.

    The Rate of profit is not the relation between profits and the stock of capital. It is as Marx described the relation between profits and the advanced productive-capital. The advanced productive-capital consists of the capital value of the stock of fixed capital, the stock of circulating constant capital, and the circulating constant capital already advanced into the production process. As Marx and Engels describe in the Chapters on the Rate of Turnover, this capital advanced to production is not the same as the capital laid out in production (both constant and variable), because the laid out capital represents the same advanced capital that has been turned over several times.

    As Marx sets out fixed capital far from rising, falls relatively, because technological change means one new machine replaces several older machines, and because rises in productivity reduce the value of fixed capital faster than circulating constant capital.

    1. What might fall relatively is the depreciation of fixed capital (in fact, there is not much empirical evidence for that), but what rises with respect to value production v+s is the stock of fixed capital. Therefore there is a tendency for the rate of profit to fall. – (Besides of that there are conjunctural ups and downs of input prices, which do not affect the long term rate of profit.)

      1. Actually, as Marx states there is considerable evidence, as well as logic, showing that fixed capital falls both physically and in value relative to output. What increases mostly in physical terms, is the amount of circulating constant capital processed. In fact, it is the same causes, which result in a reduction in v, that result in the reduction in fixed capital, the two things rate inextricably linked.

    1. As the explanation of CFC – https://en.wikipedia.org/wiki/Consumption_of_fixed_capital – sets out, this is a measure not of the physical quantity or value of fixed capital employed in production, but of the depreciation of the fixed capital. In other words, it is a measure not of the INCREASE in the value of Fixed Capital employed, but of the REDUCTION in the value of the fixed Capital employed.

      It makes exactly the point I put forward that the Value of the fixed Capital has been falling compared to the Value of Output. It is one of the bases Marx sets out as to why the Rate of Profit rises. In fact, one reason that the value of the existing fixed capital has been depreciated more rapidly during that period is because of moral depreciation, as existing plant and technology was depreciated by the introduction of more effective plant and technology.

      You only have to think of the fact that a microchip replaces literally billions of electric valves in a computer, or in a control mechanism for a lathe or other machine; or think that a single current mammoth bulk freight carrier replaces several smaller ships from 20-30 years ago to see how the quantity and value of fixed capital declines relative to output.

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