A critical day

I’ve just got back from presenting a paper jointly with G Carchedi at a seminar on “Imperialism and war” organised by the Critique journal.  Critique is a long-standing theoretical journal of Marxism (http://www.critiquejournal.net/) and it recently published a joint paper by Carchedi and me called “Marx’s law: answering old and new misconceptions” (http://www.tandfonline.com/doi/full/10.1080/03017605.2013.876811#.U0k3frQXJGU).  Much of the arguments in that paper concerned answering the critique of Marx’s law of the tendency of the rate of profit to fall recently renewed by Michael Heinrich, a prominent Marxist scholar, in the US journal, Monthly Review.  You can get the gist of that debate here (http://gesd.free.fr/mrhtprof.pdf).

The Critique editorial board kindly invited us to speak on how Marx’s law related to the cause of capitalist crisis at their seminar in London, among other speakers.  The first speaker was Bob Brenner, Distinguished Professor of of History at the University of California Los Angeles (UCLA) and director of the Center for Social Theory and Comparative History at UCLA, editor of the socialist journal Against the Current, and editorial committee member of New Left Review.  Brenner authored the highly influential book, The Economics of Global Turbulence in 2006, one of the first to argue that the source of crises in capitalism could be found in falling profitability and moreover providing empirical evidence of this.  Also, see his article of 2009, What is good for Goldman Sachs is good for America (http://escholarship.org/uc/item/0sg0782h).

Brenner delivered a paper similar to the article above that provided compelling empirical evidence that the root cause of the Great Recession lay in the secular decline of the US rate of profit and the attempt to overcome that with a series of ‘asset price’ credit-fuelled bubbles in stock markets (1990s) and residential property (2000s).

Carchedi and I presented two separate papers in our session.  Carchedi’s was called “The law of the tendential fall in the rate of profit as a theory of crises: twelve reasons to stick to it”.  In it, Carchedi carefully examines the 12 major arguments against Marx’s law of profitability and provides clear refutations of each, using both theoretical points and empirical evidence.  In summary, Carchedi concludes: “it is better to stick to the original Law. It works and it works well.”

My paper was called: “Marx’s law of the tendency of the rate of profit to fall and the theory of crises: does it fit the facts?”.  In it, I set out to show that there is plenty of empirical evidence to support Marx’s view that the rate of profit in a capitalist economy will tend to fall as the accumulation of capital takes place because the organic composition of capital will rise, as a rule.  The rate of profit will only rise if counteracting factors, like a faster rising rate of surplus value, come into play, to delay or curb the law for a while.  Moreover, the movement in the rate and mass of profit is a good leading indicator of whether a crisis or slump in production is about to happen.  I used empirical evidence from the US and UK economies to show this, as well as evidence provided by other scholars.

Although Critique has published our paper on the law and invited us to speak on it in the healthy spirit of debate, the editor of Critique, Hillel Ticktin, disagreed with both Bob Brenner and Carchedi and I on the relevance of Marx’s law of profitability to crises.  Ticktin’s arguments boiled down to the view of Michael Heinrich and the Monthly Review: namely Marx’s law was not a law in the proper sense, indeed there was no such thing as a ‘law of a tendency’, it was either one or the other, but not both.   Anyway, the law of the tendency really included the counter-tendencies and thus made the law ‘indeterminate’ and thus impossible to use in a coherent way.  Moreover, it cannot be empirically verified, at least in statistical terms, because the data from official sources are inadequate and/or not collected to provide clear information on Marxist categories.  So what Brenner, Carchedi and I were doing was a waste of time.  Crises under capitalism clearly reoccur with regularity, but this is more to do with the momentum of the class struggle than with any movement in the rate of profit, which after all did not appear much on any analysis of crises by the great Marxist leaders after Marx.

Readers of this blog will know that all these criticisms of Marx’s law and its relevance to crises under capitalism are not new.  And they have been taken up in a myriad of posts here and in papers by others elsewhere.  Suffice it to say, that we ‘fundamentalists’ and ‘mono-causalists’ that support Marx’s law of profitability as the best explanation of crises under capitalism and specifically, the Great Recession, will continue to plough on in the belief that what we are doing does help to explain the contradiction in capitalist economies better than alternatives.

Critique plans to publish all the papers on its website, but you can find Carchedi’s paper here Carchedi London 11-12 april 2014 and mine Presentation to Critique conference 11 April 2014 here.

42 thoughts on “A critical day

  1. Dear Michael Roberts,

    There is another source of fall of profits here, which is the stagnation in the productivity:


    Moore law is about the price the transistor, not how about increasing the number of it on a chip in terms of area/chip.

    As you can see, a new processor, on a smaller node, is more and more expensive. So, my interpretation is that this is why we see cellphones speeds going too fast while usual computers are just stagnant.: Companies can only profit by doing what was available in bigger and faster chips, in smaller ones, but without increasing much the number of transistors.

    That will lead to both cellphones and desktop having about the same number of transistors, but with a tiny area, due miniaturization. That is, with the number of transistors constant. That is area/(price per chip* number of chips) is constant.

    So, the productivity due computer processing power is stagnant. Large computer centers, which rarely employs as much people in comparison to usual companies, and they also use more and more simpler chips. And they are increasingly used they to try to improve the lack of processing power from other computers, be it desktop or cellphone (cloud computing). But this is not as good as the old increasing of transistors as before…

    Perhaps, this should help explain why investment cannot grow as fast as before. There is not much to invest, since anything new will be to expensive and only huge companies like Google, Facebook or Intel, can sustain that, and even so, with just software optimization.
    Improvements in the means of production, rest of the market, usually relying on computing as it was done before, are not as affordable.

    There’s 3D printing as the next big thing, but this is obviously is a job killer, and it will take some years so that the technology mature.

  2. I summary, serious use of computing to improve industry is no more! At least until something else is figured out…

  3. Have you read anything on Critical Realism or the works of Roy Bhaskar? His ontology of what makes science possible, allows for a perfect fit and defense of Marx’s law/tendency structure as consistent and necessary for social science to occur.

    1. CB Also have a look at Carchedi’s own super work, Frontiers of Political Economy, especially the Appendix from p304 where he deals in detail with how a ‘law of a tendency’ as a law of movement or motion in reality, including social laws like Marx’s law of profitability.

  4. Critical realism of Bashkar is very, very similar to a hegelian-marxist dialectic. To see what I mean just compare Bashkar approaches to “Hegels silogism”, as explained by Tony Smith in “Dialectical social theory and its critics”. The main difference between the critical realism of Bashkar and a marxist dialectic is that the first just speaks of “emancipation” and not “class struggle” (so, it pust less emphasis in the exploited working class)

    Comrade Roberts is a little vague about Brenner’s account of crisis under capitalism. I’m not certain, but I think in the journals “Capital & Class” and “Historical materialism”, he has been criticized for not making a really marxist account of crisis (based on production and in the LTRPF)

    communist greetings from chile,

    1. You are right that Brenners position at least in his book is not to agree with Marx’s cause for the tendency of the rate of profit to fall, namely a rising organic composition of capital. For Brenner, it is intensifying competition between capitals, which was the position of Adam Smith not Marx. But Brenner does seem to think that underlying cause of crises is falling profitability , at least as I interpret his paper.

      1. Thanks for the rapid response. Exactly the same I read some time ago, but I wasnt sure if it was right. Havent read the 1996’s book of Brenner, just articles by him and his classic “The Brenner debate”.

        Eventhough, I have read a lot of critics of Brenner historic account. I think he has it wrong, because he interprets cmp only as relative surplusvalue, real subsumption and “free” wage labour…

        communist greetings,

    2. That’s true in relation to Bhaskar’s more recent work. I am strictly referring to his Realist Theory of Science and his Possibility of Naturalism, everything after that I reject.

  5. I wonder what ‘a law in the proper sense’ is? One of the reasons why it is useful to refer to a “tendency” is that it emphasises a process that happens over time. Something that may not be immediately apparent now, but nevertheless will become so if we observe for an extended period.

    I have seen the second law of thermodynamics described in this way; “a closed system tends to disorder” – this sort of description is not an exact mathematical formulation but is useful because it emphasises that the law takes place over time, that is; we can observe order all around us, we can even observe things becoming more ordered, nevertheless if we take the universe as a whole the second law stands.

    There is also the example of evolution; which could be described as a tendency for organisms to adapt to their environment over time. They do not necessarily always do so (sometimes they don’t change or they die out) yet the tendency exists and is a foundation of evolutionary science.

    This is not to suggest that Marx’s law is like a law of physics or of biology (as he is discussing political economy it should be considered in those terms) but what I think these examples do show is that it is legitimate to consider a tendency as a ‘law’. If I can describe other laws of science as ‘tendencies’ then why would it be unacceptable for Marx describe a law of political economy as a ‘tendency’?

    Marx’s formulation should not be ruled out of order on the basis that a ‘law cannot be a tendency’, but should be judged based on historical experience and empirical evidence.

      1. First, according to Paul Cockshott, the law of value is almost like a law of physics:


        Second, Ticktin, by asserting that a law cant be a tendency is just operating with an anti-marxist and anti-dialectical conception of “law”. And this is a epistemological/ontological issue. For postivists like Durkheim, Comte and Spencer, a law must be verified every single moment and checked in every fact as a “description” of reality (eventhough Durkheim was a neokantian so, to talk about realism here is just to grant to much to him). For positivists, a law is a simple phenomenom; for marxists, a law just just “shows” how reality is a complex and contradictory process.

        Third, eventhough Im not an expert on Ticktin, he isnt really correct in some important issues. For example, for him the law of value started to wither away form 1914 up to our present times. In line with this thesis (thats also somehow shared with the neokantian marxists unoists), he is still affirming that we are in the same capitalist phase that Lenin conceptualize in his time. Accordingly, he interprets imperialism as “a phase” and not “a relation betwen countries”.
        Finally, he conceptualized the mode of production of the ussr as a “non mode of production”. He forgets that a definition is a negation but never only a negation (you must assert something positive), as Spinoza and Cliff stated correctly.

  6. Ticktin is right about the problem of measurement.

    The National Income data provides information on the incomes received as wages, interest, profits (dividends), rent and taxes. But, as Marx sets out, in describing the mistake made by Adam Smith, and subsequent economists, this income, (revenue) only comprises the components v +s, of the total value of production. The total value of production, however, is comprised of c+v+s. (See: Capital II, Chapter 18)

    Speaking of Smith’s mistake, Marx writes,

    “His proof consists simply in the repetition of the same assertion. He admits, for instance, that the price of corn does not only consist of v + s, but also of the price of the means of production consumed in the production of corn, hence of a capital-value not invested in labour-power by the farmer. But, he says, the prices of all these means of production resolve themselves into v + s, the same as the price of corn. He forgets, however, to add: and, moreover, into the prices of the means of production consumed in their own creation. He refers us from one branch of production to another, and from that to a third. The contention that the entire price of commodities resolves itself “immediately” or “ultimately” into v + s would not be a hollow subterfuge only if he were able to demonstrate that the commodities whose price resolves itself immediately into c (price of consumed means of production) + v + s, are ultimately compensated by commodities which completely replace those “consumed means of production,” and which are themselves produced by the mere outlay of variable capital, i.e., by a mere investment of capital in labour-power. The price of these last commodity-products would then be immediately v + s. Consequently the price of the former, c + v + s, where c stands for the constant part of capital, would also be ultimately resolvable into v + s. Adam Smith himself did not believe that he had furnished such a proof by his example of the collectors of Scotch pebbles, who, according to him 1) do not generate surplus-value of any description, but produce only their own wages, and 2) do not employ any means of production (they do, however, employ them, such as baskets, sacks, and other containers for carrying the pebbles)…

    Now Adam Smith’s first mistake consists in equating the value of the annual product to the newly produced annual value. The latter is only the product of labour of the past year, the former includes besides all elements of value consumed in the making of the annual product, but which were produced in the preceding and partly even earlier years: means of production whose value merely re-appears — which, as far as their value is concerned, have been neither produced nor reproduced by the labour expended in the past year. By this confusion Adam Smith spirits away the constant portion of the value of the annual product.”

    The problem cannot be overcome by arguing as Smith and others have done, that c, the materials, machines etc. are themselves the product of labour, which is then broken down into these factor incomes. As Marx demonstrates, the value of those materials, machines etc. itself does not just break down into v +s , but itself comprises constant capital.

    Measurements of the rate of profit, based on this National Income data, must always be wrong, therefore, because they do not include the value of c. They are really just estimates of the rate of surplus value. Sometimes, these estimates also take into account the fixed capital stock, (based either on its historic cost or current reproduction cost) but this does not really improve things, because the fixed capital is only one component of the total constant capital, used in production. As outlined earlier, as a proportion of the laid-out constant capital, the fixed capital continually falls, in relation to the circulating constant capital, because one new machine replaces several older machines, whilst the increase in productivity it brings about, causes the quantity of material processed to rise substantially.

    Again, given that the data for national output is, therefore, for total laid out capital, and not for the advanced capital, this provides a further distortion of the real situation. It will tend to understate the extent to which the value of advanced circulating capital has declined, because it will not take into consideration the increased rate of turnover of that capital, consequent upon the rise in productivity.

    In fact, the rise in the organic composition of capital, because it entails a rise in the fixed capital as a proportion of the advanced constant capital, but a fall in its proportion of the laid out constant capital, MUST result also in an increase in the mass of surplus value, and in the rate of profit, because of that same process, which raises the rate of turnover of capital.

    1. Just to add to this.

      Suppose previously we had:

      9 machines = £9,000.
      Material = £9,000
      9 workers = £9,000
      Surplus Value = £9,000.

      The rate of profit is 9/27 = 33.3%.

      Suppose a new machine is introduced with the same value, that processes nine times as much material. Or put another way, processes the same amount in a ninth of the time, so the turnover period is reduced to a ninth. In that case in one turnover period, the capital advanced for materials remains the same at £9,000, the value of fixed capital advanced remains the same at £9,000, but the amount advanced for labour-power falls to £1,000, and the surplus value produced also falls to £1,000.

      But, the rate of profit is calculated on the basis of the surplus value produced in this turnover period – £1,000- times the number of turnovers in the year, which is now 9, as opposed to 1. So, the rate of profit is then:

      £1,000 x 9 = £9,000 divided by the advanced capital, which is £9,000 fixed capital, £9,000 circulating constant capital (material), and £1,000 variable capital = £19,000. Rate of profit is then
      9/19 = 47.37%, which is a rise in the rate of profit of 42.25%.

      Consistent with this process as described by Marx in Capital II, and III, this rise in the mass of capital, not only results in this increase in the mass of profit and rate of profit arising from the increase in productivity consequent upon the rise in the organic composition of capital, but it also results in a release of capital, equal to £8,000, i.e. the reduction in the capital advanced.

      As Marx sets out in Capital III, this release of capital is the means by which additional accumulation occurs, particularly in those “new lines” of production he described in Chapter 14, which have low organic compositions, and very high rates of profit, which thereby drag up the general rate of profit.

      1. In this case, the market will be bloated with things no one will buy, so overproduction will lead to a crisis. The machine will be paralyzed most of the time and/or unemployment will rise.

      2. I should also have said that this is a worst case scenario, because I have assumed that the rise in productivity brought about by the rise in the organic composition of capital from 2:1 to 18:1, does not result in a fall in prices of the constant capital, or variable capital thereby raising the rate of profit and rate of surplus value, in turn causing a further rise in the rate of profit.

        If we suppose that the prices of commodities composing constant and variable capital falls even just by a half resulting from this nine fold rise in productivity caused by the rise in the occ, then we would have.

        Fixed capital £4,500, Materials £4,500, Variable Capital £500, Surplus Value £1,500. The rate of profit would then be

        £1500 x 9 = 13,500 / £9,500 = 142%, or a 500% increase in the rate of profit resulting from the rise in the organic composition of capital. That is clearly an underestimate as a nine fold increase in productivity would increase the rate of surplus value by much ore than that, and reduce the value of capital by much more, probably more like the nine fold rise in productivity itself.

        In fact, that is what we have seen over the last 30 years as a result of the massive rise in productivity brought about by technological change. A massive rise in productivity a huge fall in the value of commodities that required a consequent printing of money tokens and credit to prevent global deflation, huge accumulation of productive capital in Asia, and in a range of new industries, a massive rise in the range of use values being produced, (which is what Marx predicts in Capital III, Chapter 14, as well as in the Grundrisse, which is why Daniel Rocha’s comment above is so wide of the mark, i.e. Capital does not have to simply keep accumulating more capital in the production of the same commodities, but spins off the released capital into new industries with low organic compositions of capital and very high rates of profit, as Marx sets out in Capital II, and in III, Chapter 14), huge masses of released capital thrown into the money market, which acts to reduce the rate of interest.

        Marx’s theory works to explain precisely what has been seen over the last 30 years, but it does so in almost a 180 degrees opposite direction to what those who argue there has been a falling rate of profit believe.

      3. Profit rates are big in China, and in many places of Asia, for the simple reason that there was not capitalism before, even up to know in many places in China, for example. It was either primitive communism or eastern despotism(analog to feudalism), so there is no reason to apply a capitalist analysis (only class analysis). So, no reason to talk about unemployment or profits.

        The accumulation of capital happens with the migration to cities or extensive use of outdated technology to take advantage of cheap labor. But labor is labor, and extensive use of labor means a lot of exchange value added to commodities.

        But in other places of the world, where capitalism is completely adopted, every major advance in technology means falling profits. This happens because less people is employed and less exchange value is created, that is people lose jobs or exploitation rises(reduced wages), and there is overproduction of commodities. The overproduction of commodities will lead to larger cycles, and/or destruction of capital, until there is a recovery, generally with the rise of commercial market, that is, people who works to sell stuff.

        In advanced capitalist countries, the process may be so advanced, that almost no value of exchange is created, most value is created by unequal exchange (that is, something worth 10 labor hours is imported by a value of 1 labor hour) with countries with poorly developed capitalism, where the creation of value of exchange is intense, like China. Also, this is consistent with the theory of value, since the labour hour to produce such commodities is cheap in advanced capitalist countries, thus, there is no reason to build industries, that is, create value in advanced countries.

        Eventually, the huge populations of Far East may render the West weak, sincemost people there are still peasants. The cities may function as the former advanced countries and the suburbs, country, work as the former (actual) industrial sites. The Chinese policy of improving internal consumption may be one of the reasons that is intesifying crisis in outher countries, since their improvevment in techonology leads to lower and lower production of exchange value and higher and higher overproduction (now, more and more absorbed by the Chinese themselves).

      4. “But in other places of the world, where capitalism is completely adopted, every major advance in technology means falling profits.”

        Really??? I think the experience of Microsoft and many other technology companies would prove otherwise! Marx certainly believed so. As he sets out in Capital I comparing international wages and profits.

        He sets out that it was precisely because British workers were backed by more technology that British profits were higher, British commodity prices were lower on the world market etc., despite European wages being only 50% of those in Britain.

        The same is true with less developed economies like India. Wages and real living standards there were much lower, and yet lower levels of productivity due to low levels of capitalisation meant that the rate of surplus value was much lower than in Britain where wages were higher, as Marx sets out in Capital III. As a consequence, not only was the mass of profit much higher in Britain, but the rate of profit was much higher too.

      5. “This happens because less people is employed and less exchange value is created, that is people lose jobs or exploitation rises(reduced wages), and there is overproduction of commodities.”

        That’s wrong too. Henry Ford, significantly increased the wages of his workers. As a result, he retained workers and raised productivity. The increase in productivity more than covered the rise in wages, more cars were sold because higher productivity led to lower car prices, the capital expanded, and more workers were employed, exactly as marx predicts throughout Capital, i.e. a falling relative quantity of labour, but a rising mass of labour employed as capital expands on the back of a rising mass of surplus value.

        After WWII, this Fordist philosophy was adopted generally. In Britain, “mutuality agreements” signed between unions and management ensured rising real wages each year, in return for rising levels of productivity.

      6. In the case of Microsoft or Intel, where the profits are too high, they are mostly a case of monopoly in many market segments. So, even though they produce not much surplus, they, in the general economy, works as doing a deficit, a negative profit.

      7. Your fourth paragraph makes no sense. Either labour in the advanced countries is so productive that the value of the labour is so low that it produces large amounts of value measured by an international labour hour or it isn’t. The first part of your paragraph suggests it isn’t, and creates no value at all, but the second part argues the exact opposite.

        There is no real evidence that modern industrial capital obtains surplus value by any significant unequal exchange, whose potential for such profits is limited anyway. In fact, despite the arguments of those who in the past have argued this kind of unequal exchange, centre periphery kind of theory, it continues to be the case that the majority of capital invested continues to be invested in developed economies where productivity levels are high based on high levels of capitalisation, and not in low wage periphery economies, where capitalisation rates are low.

      8. The argument for monopoly profits is weak. Firms can dictate either prices or demand but not both at the same time. As Marx sets out in The Poverty of Philosophy against Proudhon, competition begets monopoly, which in turn begets competition.

        If Microsoft’s profits were simply a function of monopoly, then over the last 40 years it has been making them there would have been a huge incentive for other companies around the globe to have entered the space in competition with them. And indeed, such companies do and always have existed, just as they do for Intel.

      9. Regarding England, they could live out of surplus of their colonies. The fight for more surplus, lead to WW1. Their wages, like today, are higher as they are their wages, because of the differential in technology. If a commodity were to be produced in a higher technology place, it would require much few hours, thus, much less exchange value. In a lower technological place, it requires more working hours, thus adding value to the technology.

        The exchange value added is given by the average work done, given that the average is pretty much given by the far larger armies of workers in the poorer places, the exchange value is pretty much set by the poorer place, which yields more hours.

        Britain had more colonies and exploited them, in an industrial sense, far more than any other country. Thus they could bribe, or, easy the workers conditions far more than anyone else. Not counting that British workers were more organized than most in their struggle.

        Getting rid of of colonies worked like freeing slaves, instead of being owned by a person, now their owner is a abstract entity, the capital. The exploitation now is nameless and more efficient. Workers do not fight against the system, which they cannot see well anymore. They won’t revolt daily, like the slaves did. Slavery is not good for the more advanced capitalism.

      10. What leads competition is the lowering profits, which is why Microsoft products are horrible and Intel is better when it comes to their miniaturization process. Monopoly excludes competition, by buying and throwing tech into the dust bin, or setting up prices that kills the competition. Only when there is a barrier to technological advance, is when it is broken (or it must be broken by a government action, to stabilize the total economy). The barrier to both microsoft and intel is what I pointed out in my first post.

        No one dictates demand, the demand is automatic, set up by commodity fetishism, and this is why that even in monopolies there are ads. What may happen is overproduction of something, due the unplanned nature of capitalism.

      11. BTW, not all is done on underdeloped countries. The cutting edge is done on developed countries. Without that part, the use of value of a product is null. So, only a small part, which is the less profitable, but which requires mores skill, is done in developed countries.

        Also, this is a kind of black mail, which makes easier to make sure the periphery stay obedient..

      12. “Regarding England, they could live out of surplus of their colonies.”

        Sorry, but this and much of what follows is anti-marxist, third-worldist nonsense. The massive wealth of Britain in the 19th century was built as Marx sets out in Capital on the back of British Capital and the exploitation of British workers by it. As he sets out the rate of exploitation in Britain was much higher than in other countries, including its colonies because of the higher level of productivity, and the higher level of productivity was a result of the higher level of technological development and capitalisation.

      13. By the way, this is also nonsense.

        “No one dictates demand, the demand is automatic, set up by commodity fetishism, and this is why that even in monopolies there are ads. ”

        There is no such thing as demand being automatic. Ask the producer of DeLorean cars, or Clive Sinclair who could not sell his C5’s. This has nothing to do with Marx’s analysis. Marx argues clearly that demand is a function of use value.

        Commodity fetishism is used here in a context that has nothing to do with what it means.

      14. Exploitation is measured not by productivity, but by the ratio of ones wage (measured in hours need to be translated in money) to the yielded surplus. Productivity, decreases wages when measured in this way, though the magnitude of money increases, because of the technology reasons I explained.

        This leads to the alienation of the proletariat in the long run, which makes revolutions much more likely to happen in periphery countries or countries ruined by wars (in fact, there is no exception to this). This is because only those who have nothing to lose, can make a revolution, since this is only way to win.

      15. Marx take into consideration competent capitalists, which are the only ones that counts.

    2. “Exploitation is measured not by productivity, but by the ratio of ones wage (measured in hours need to be translated in money) to the yielded surplus.”

      But, for the reasons Marx sets out in Capital I that is a function of productivity!!!! Higher productivity means that the means of subsistence are produced in a smaller portion of the working day, so the value of labour-power falls, and the ratio of surplus value rises. That is true even if real wages rise, because higher productivity means that the workers are able to consume a greater quantity of use values for any given sum of money. That is why higher productivity in developed economies means that workers both have higher real wages, and standards of living, and yet suffer higher rates of exploitation, produce more surplus value and a higher rate of profit than workers in developing economies!

      “This is because only those who have nothing to lose, can make a revolution, since this is only way to win.”

      Again this is anti-Marxist nonsense. Marx believed the revolution would occur first in Britain precisely because it was the most developed economy with the most developed working-class. Marx believed that the process he describes as the “Civilising Mission of Capital”, whereby the living standards of the workers is raised, and with it their cultural and educational level, was vital for the workers being able to construct Socialism.

      1. “Marx believed the revolution would occur first in Britain precisely because it was the most developed economy with the most developed working-class”

        Marx got at least that thing wrong in the long run. But that was not a bad mistake, since there was not enough data for that and that he, for abstracting complexity, considered only one country. Since the unequal exchange happens among pretty much isolated systems (that is, considering a country an isolated place), the unequal exchange could be ignored, even when discussing importing and exporting. But the consequences of this are significant.
        Marx is like Newton’s theory, he came up with the correct theory, but there were more people that came up with more precise data, which added more to his theory. Like the corpuscular theory of light, it was needed a theory of electromagnetism and quantum mechanics and for movement, it required relativity.
        If one considers the whole world, as an integrated system, for example, productivity may yields stuff with cheaper working-time/profit, but it decreases the overall wealth of the nation. Meaning, less commodities storing dead work, so, the need of stuff made in the periphery is needed, to compensate the lost man hours. Also, it means that the international proletariat are completely divided and alienated because of the international division of labor. Also, this theory is still incomplete, since especially larger countries have degrees of unequal exchange between regions , even within large cities, or even by crossing a street, since in countries with extremely large inequalities, slums are packed together with high income neighborhoods, and products of varying quality or price are clearly organized to show such relations. There are also unequal exchanges between stores in slums “owned “informally and large companies.
        To explain neo colonialism and center periphery theory, you need the theory of Imperialism, as inaugurated by Lenin, and developed by many others. If you don’t do that, Marx most precious discovery, that exchange value that is given by the average work done, falls apart on Global scale, which leads to the zero chance of a global transition to capitalism.
        The consequence of all this, it is that only the workers which really gives away the greatest of mass of hours from their lives into dead labor, materialized into commodities, live in the periphery of capitalism, or in the isolated industries of war ridden countries, like in 1917 Russia or in Spain in 1932, are capable of carrying any kind of socialist revolution.

  7. I’m not an expert on the theory of value, but what Boffy saids makes sense (seems coherent). Nevertheless, Rochas answer is equally compelling. I would like that comrade Roberts step in and clarifies a bit things.

    For my part, I can say that: a) Boffys argument is questioning LTRPF, so from a marxist point of view it must be delt with; b) Boffy seems to adopt the position of Ben Fine (1978), an author that didnt consider the sphere of circulation and the market prices….

    Another thing: about measurement, didnt Anwar Shaik “solve” these issues in “Cuentas de ingreso nacional y categorías marxistas” and “measuring the wealth of nations”?

    1. My argument does not question the LTRPF as Marx presented it as a contradictory process, which necessarily leads to a rise in the mass of capital and profit, and as much leads to a rising rate of profit as a falling rate of profit. In fact, as Marx sets it out in Capital III, Chapter 15, it is precisely the contradictions in the PROCESS that leads to these things, i.e. a rise in social productivity, which causes crises as short term events that resolve temporarily these contradictions, and NOT the tendency for the rate of profit to fall.

      Rocha’s comment is wrong, because it is an exercise in comparative statics. It assumes that the process of accumulation of capital takes palce in a vacuum, whereby capital simply keeps accumulating in the same industries, producing more and more of the same commodities.

      But, Marx set out as early as Capital I, that that simply doesn’t happen. Even the original capitalist families divided their capital between different members of the family who used their fraction to establish their own independent capitals producing other commodities. Firms diversified into the production of other commodities related to their original production.

      When we move beyond the “monopoly of private capital” as Marx described these capitalist families, to the socialised capitalist of the Joint Stock Company via the “expropriation of the expropriators”, this process increases many fold, because money-capital becomes footloose in the form of share capital, able to go at a minutes notice into these “new lines” of production, that Marx describes as having low organic compositions and very high rates of profit.

      This is the process Marx describes in the Grundrisse as the Civilising Mission of Capital, whereby, in order to precisely overcome the problem of overproduction that Daniel Rocha outlines, Capital does create these new lines of production does, begin to produce a whole new range of use values that it must sell to workers, thereby expanding their horizons, and at the same time enabling it to realise produced surplus value produced by the already established capital.

      Of course, I don’t at all disagree that the process by which it achieves this involves crises of overproduction. That is precisely what I have said, and what Marx says about that overproduction arising from these rises in productivity and rises in profits and the rate of profit within this contradictory process, but it is as Marx says a short term event resolving that contradiction, and thereby speeding up the process of reallocation of capital.

      Of all the goods and services produced in man’s entire history on the planet, 25% were produced in the first decade of this century. There has been a massive rise in the range of use values produced over that period as this process of establishing new lines described by Marx has unfolded – just think about all the computers, mobile devices, biotechnology developments and so on. Just look at the fact that a large proportion of average household income is now devoted to “leisure” commodities, including things like computer games that did not exist 40 years ago.

      The process also necessarily changes workers and their labour. It is precisely the process Marx describes in the Grundrisse, when he writes.

      “On the other side, the production of relative surplus value, i.e. production of surplus value based on the increase and development of the productive forces, requires the production of new consumption; requires that the consuming circle within circulation expands as did the productive circle previously. Firstly quantitative expansion of existing consumption; secondly: creation of new needs by propagating existing ones in a wide circle; thirdly: production of new needs and discovery and creation of new use values. In other words, so that the surplus labour gained does not remain a merely quantitative surplus, but rather constantly increases the circle of qualitative differences within labour (hence of surplus labour), makes it more diverse, more internally differentiated. For example, if, through a doubling of productive force, a capital of 50 can now do what a capital of 100 did before, so that a capital of 50 and the necessary labour corresponding to it become free, then, for the capital and labour which have been set free, a new, qualitatively different branch of production must be created, which satisfies and brings forth a new need. The value of the old industry is preserved by the creation of the fund for a new one in which the relation of capital and labour posits itself in a new form. Hence exploration of all of nature in order to discover new, useful qualities in things; universal exchange of the products of all alien climates and lands; new (artificial) preparation of natural objects, by which they are given new use values. The exploration of the earth in all directions, to discover new things of use as well as new useful qualities of the old; such as new qualities of them as raw materials etc.; the development, hence, of the natural sciences to their highest point; likewise the discovery, creation and satisfaction of new needs arising from society itself; the cultivation of all the qualities of the social human being, production of the same in a form as rich as possible in needs, because rich in qualities and relations — production of this being as the most total and universal possible social product, for, in order to take gratification in a many-sided way, he must be capable of many pleasures [genussfähig], hence cultured to a high degree — is likewise a condition of production founded on capital. This creation of new branches of production, i.e. of qualitatively new surplus time, is not merely the division of labour, but is rather the creation, separate from a given production, of labour with a new use value; the development of a constantly expanding and more comprehensive system of different kinds of labour, different kinds of production, to which a constantly expanding and constantly enriched system of needs corresponds.”

  8. Dear Michael,

    I did Carchedi, he produced some excellent books on Europe and on Political Economy related to the depression of 1970s and 1980s from the perspective of a long wave inspired by Kondratiev, Schumpeter and especially Ernest Mandel.

    But is looks to me as if for Carchedi every Long wave and depression have the same characteristics and dynamics, Dumenil and Levy showed in their paper called the Great Depression: A Paradoxical Event? that not every depression phase has the same aspects, especially related to OCC categories! I attach their paper

    Click to access dle1995e.pdf

    Carchedi has to do more empirical research on the crucial variables influencing OCC, as did Dumenil and Levy……

      1. Michael, than it is ideology which is not based on extensive empirical research, I consider this law true for the period between 1945-1980 in the way Mandel and others (Carchedi) formulated it, in a long wave perspective, it is not one size fit’s all…..

  9. Dear Michael,

    To complete my critical remarks on Carchedi relating to his use of OCC categories and refering to the empirical research of Dumenil and Levy, this very important paper of them related to US technical progress, page 4 could be interesting….

    Click to access dle1996d.pdf

      1. michael,

        I did the article you mentioned, the 2 graphs in your article give a trendline of a declining OCC for a very long period and than it starts rising again, I have no problems with this, but it is different from a secular rising OCC, why should only this last period being responsible for the crisis and not the whole period, one can argue that rising profit rates and a declining OCC do result in overaccumuation by which the OCC will rise due to lowering capacity utilisation ratio’s…In general I am very happy with your long wave analysis, which is an excellent explanation of the actual crisis!

    1. Michael, the whole argument of Carchedi on OCC is based on a confusion between the TCC and the OCC, there is no doubt that the TCC has been rising over the history of capitalism, that is not the same with the OCC, the history of capitalism is also the history of trying to improve the productivity in the basic sector and last but not least to try to influence the price of oil, we can find long wave patterns in prices of resources oil included, which affect OCC…

      I was more impressed by the Cachedi who used the concept of international oligopoly capitalism and superexpliotation which has no place in his thinking anymore so it seems….

  10. Michael,

    To complement my critique on Carchedi from an empirical point fo view, I like to mention that I support a long wave perspective on the development of capitalism, but contrary to Carchedi, I think that capitalism can create a long wave upswing in the global economy with a decline in OCC which helps to increase the rate of profit and will lead to overinvestments (OI) leading to a decline in the rate of profit and a rise in OCC again, so I am an admirer of a reformula- lation of the Tendency of the Rate of Profit to Fall as an OI theory of TPRF. See the attached article of the Great Depression…

    Click to access JD-1994-Depression.pdf

    Jim Devine, has two models of the OI theory of TPRF, one with a Labor abundant economy (1930s) and one with a Labor scarce economy (1960 and 1970). See attached paper.

    Click to access V13N3P271_280.pdf

    This can be easily integrated in a long wave theory of capitalism.

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