Historical Materialism Conference – monopoly, imperialism, inflation and Ukraine

As usual it won’t be possible to report on all the many sessions at this year’s London Historical Materialism conference that took place last weekend.  I could only attend a few sessions and concentrated, naturally, on ones to do with Marxist economics.  Also, I was participating in two sessions myself that clashed with others that I could have reported on.

Nevertheless, there were some interesting and even challenging sessions on the role of money under capitalism, inflation, profitability and the position of monopoly in modern capitalism.  In addition, there were several sessions on the theory of imperialism and, of course, on the immediate conflict in Ukraine. 

Let’s start with money, credit and monopoly.  In a session on this, Nicolas Aquila made an interesting presentation that argued that there is a hierarchy within the money form – at one end, at the international level, there is or was gold, the universal money.  Now in the 21st century, gold has been replaced at the head of the hierarchy by the US dollar, in effect a quasi-world money.  Then we move down the scale to the secondary currencies of advanced capitalism: the euro, yen, pound etc.  At the bottom internationally are the weak currencies of the so-called emerging economies.  It’s a sliding scale of currency sovereignty.  This hierarchy, Aquila argues, explains the lack of sovereignty over money in the weaker economies and their exposure to currency crises.

In the same session we were offered a new version of the post-Keynesian theory of monopoly capitalism: ie profits arise from corporate mark-ups over costs. This is particularly the case for monopolies that now dominate knowledge markets and can set prices rather than compete with others where prices are given.  Cecilia Rikap and Cedric Durand argued that in this era of intellectual property and knowledge production, companies have a monopoly over innovation (like algorithms) and so have established permanent monopoly power.  It is no longer a question of monopoly in markets but power over innovation. 

This version of Kalecki style monopoly capitalism was not convincing to me.  Do we really think the current media and tech ‘monopolies’ will be with us forever? Monopolies come and go as innovations change and new companies appear – from GM in autos; to GE in electronics etc.  Do we really think this time it will be different? 

Monopoly or oligopoly cartels have existed since the development of mature capitalism and there has been an increasing degree of concentration of capital, as Marx predicted.  But there is no empirical evidence that increased concentration of capital and ‘monopoly power’ in certain sectors have reduced cutthroat competition – on the contrary.  Durand’s point that large companies plan their investment, sales and production internally does not mean that they can avoid perpetual and turbulent competition – indeed I refer you the devastating refutation of the ‘monopoly capital’ model by Anwar Shaikh, best expounded in his theory of ‘real competition’ versus monopoly (see chapter 8 of his book, Capitalism) and this: https://www.anwarshaikhecon.org/sortable/images/docs/publications/political_economy/2019/Capitalism_Book%20_Logical_Structure_2019.pdf

Then there was the debate about the nature and causes of modern imperialism.  Readers of this blog will know that Guglielmo Carchedi and I have published a paper on the economics of modern imperialism, in which we argue with empirical evidence that the economic core of modern imperialism is the unequal exchange of value (surplus value) through international trade (and capital flows) between the advanced capitalist economies and the rest of the world.  It is the persistent and pervasive transfer of value to the advanced economies from the rest that best characterizes the former as imperialist.  Exploitation of the global south by the imperialist bloc is not mainly the result of ‘super-exploitation’ of the workers of the south or through the monopoly of markets and finance in the north; but through the redistribution of surplus value from the technologically backward economies to the technologically advanced, both through unequal exchange in trade and through the repatriation of profits, interest and rent by multi-nationals and banks.

Now our thesis was challenged by Charlie Post who also rejected the super exploitation and Leninist monopoly finance theories.  He argued that using aggregate or average measures of the technological superiority of imperialist economies over those in the Global South failed to pick up sectors where the latter had already gained superiority.  In particular, Charlie was arguing that China has become a leader in many sectors and so could not be considered just another exploited economy, but increasingly should be considered a future entrant into the imperialist bloc.

And yet in our paper, Carchedi and I had shown a large net transfer of surplus value from China to the imperialist bloc which we defined as the G7 plus a few other economies in the Global North. All have persistent and significant net value transfers from the rest of the world.  On this definition, China (or for that matter, Russia) was not an imperialist state or economy.  Moreover, no country since Japan and the US in the late 19th century has joined the imperialist club since 1915 when Lenin identified these imperialist nations – unless you consider tiny Taiwan or South Korea as entrants. 

Will China become a ‘late developer’ and budding imperialist power?  I doubt it.  It is still a long way behind on technology and productivity levels, even though it has made the fastest process of catching up in history.  One comment from the floor in the session was that “it was a no-brainer that China was capitalist and imperialist”.  Well, instead I have put my brain to work to show that China is not only not imperialist in the sense defined above, it is also not capitalist (yet).  See my many posts on this here.  What is clear is that US imperialism is out to ensure that China does not catch up. 

I won’t now go into the discussion about whether ‘super-exploitation’ is the main way in which the workers of the Global South are exploited by imperialism, as this is dealt with in detail in our imperialism paper and also in several posts in my blog.  Suffice it to say that low wages are not a definition of super-exploitation which refers to when wages are below the value of labour power ie below levels of subsistence.  That is prevalent in the Global South but not in my view decisive in explaining the transfers of value to the imperialist bloc – ‘normal’ exploitation does that.

In another session, Andrea Ricci and Giusseppe Quattomini delivered an excellent short presentation on the importance of unequal exchange in international trade and why Marx developed this theory of trade.  For Marx, capital is about a world economy not a national one.  In a national economy, there is transfer of surplus value between sectors from the most backward technologically to the most advanced, leading a move towards an average rate of profit.  This redistribution follows that same logic in international trade. 

Ricci and Quattomini agree that imperialism is thus first an economic concept. And imperialism is the result of the expansion of advanced capital into global markets to achieve that transfer of value. Henryk Grossman once explained that the rise of modern (economic) imperialism in the late 19th century was the result of falling profitability of capital in home markets – see Grossman The Law of Accumulation p 181. 

That is partly why it is difficult to accept the analysis of the US rate of profit in the last 70 years presented by Bill Jefferies in the same session. He argues that, contrary to most other studies of the US rate of profit (including my own), the rate has been rising since at least the 1990s and particularly after China entered the World Trade Organisation in 2002.  His results imply that Marx’s law of falling profitability had no role to play in causing the Great Recession in 2008-9.  Jefferies claims that all previous studies were based measures of fixed capital assets provided the US Bureau of Economic Analysis (BEA).  And those constant capital measures are useless because they are based on the neoclassical concept that capital assets as just the accumulated flow of future profits.  Instead, they should be based on the actual capital advanced.  So Jefferies uses the measures of ‘depreciable assets’ provided by the US Internal Revenue Service obtained from the tax accounts of companies.  In doing so, this reduces the size of constant capital (c) in Marx’s rate of profit formula (s/(C+v) by over 70% from the BEA data.  Thus, profit rates are much higher and also, it seems, not falling – at least not since 1990.

I was not convinced.  First, it is not correct that the BEA uses constant capital advanced just based on the present value of future profits.  The BEA fixed asset measures may start with such an arbitrary figure, but each year the rise is based on profits from the future year as invested.  Second, when we look at the BEA data (Table 7.13), we find a reconciliation between the IRS and BEA data that shows no large difference in the value of fixed assets or their depreciation.  So there are serious doubts about Jefferies’ data and method.

Let me now turn to the session in which I introduced a presentation by Guglielmo Carchedi and me on: A Marxist theory of inflation.  We have been working and developing our approach for some time and this was the latest version of our theory at a very opportune time given the rocketing inflation now engulfing the major economies around the world since the end of the COVID slump.  The inflation session.

The presentation can be found here.  The gist of the theory is that there are two structural factors that drive the inflation (or deflation) of prices of commodities in a modern capital economy.  The first is the rate of change in new value produced in capitalist production; new value being net value in a commodity after accounting for constant capital (depreciation of fixed assets and raw materials).  The second is the intervention of the monetary authorities to adjust the rate of change in the money supply.  The rate of change in new value tends to slow in capitalist production because more investment is directed towards the means of production or constant capital instead of towards investment in more labour (power).  This is because the capitalists want to boost the productivity of labour with technology to lower costs in competitive markets.  But in so doing, this will reduce the labour time involved in each unit of production.  A rising organic composition of capital (c/v) will tend to lower the rate of profit on capital invested and thus new value growth will tend to slow. 

In what we call our value rate of inflation theory, slowing new value growth would mean slowing inflation of prices; and in slumps, deflation.  But there is a counteracting factor to this long term tendency, namely changes in the money supply, and in a modern economy where the money supply is controlled by the banking system and the state, this can act in the opposite way and raise inflation.  As the monetary authorities try to boost growth with cheap money, they exert upwards pressure on inflation rates.  In our paper, we show that the combination of these two factors (properly measured) can explain a very high proportion of the changes in consumer price inflation.

There were some questions at the session about the veracity of this theory and the empirical evidence and there have been some critical attacks on its validity since.  I won’t deal with these in this post but I think the discussion on a Marxist explanation of inflation must continue.  Suffice it to say now that, if you look at the slides, our presentation offers firm evidence against the two mainstream inflation theories (monetarism and wage-cost push) and also some differences with Anwar Shaikh’s ‘classical’ inflation theory.

Finally, there was the well-attended session on the Ukraine conflict in which I was asked to participate on the economics of the war and its global implications.  The other speakers included Ilya Budraitskas who argued, as far as I could tell, that Putin started this war because of growing opposition from dissidents at home which threatened his domestic popularity.  I found this difficult to believe as the main reason for the invasion. 

Volodymyr Ishchenko seemed to argue that we should characterize Putin’s Russia as a form of ‘political capitalism’, a term promoted by Branco Milanovic, the former World Bank economist and expert on global inequality.  Milanovic’s concept is developed in his recent book, Capitalism Alone, in which there is no possibility of socialism and so the choice before us in the 21st century is either a free market unequal ‘liberal democratic’ capitalism as in the US and Europe; or ‘political capitalism of a state-led autocratic nature as in Putin’s Russia or Xi’s China.  “Capitalism gets much wrong, but also much right—and it is not going anywhere. Our task is to improve it.” says Milanovic.  Milanovic’s characterization seemed to take Ishchenko down the road of arguing that Putin was a fascist or at least a ‘semi-fascist’.

Vladimir Unkovski-Korica took a different view of the cause of the war.  He saw it as a culmination of a growing global conflict between NATO powers seeking to reduce the strength and influence of Russia and on the other side Russia trying to maintain its control over the former post Soviet border countries.  Ukraine has become the plaything of forces on both sides.  Vladimir argued a peaceful settlement could have been reached with the Minsk accords but Ukraine’s government and the US rejected that. 

My own presentation concentrated on the economics.  Because of technical problem, I did not present my slides on the Ukraine and Russian economies – here they are. 

The gist of what I said was 1) Ukraine has been devastated by the war; apart from the loss of life and homes, Ukraine’s infrastructure has been decimated and Russia is controlling important areas of resources and industry – in a country that remains one of the poorest in Europe. 

And 2), the aim of the foreign backers of Ukraine and its current government after the war is to introduce a free market economy with massive foreign ownership and privatization of the key assets including land and agriculture, with the removal of labour and trade union rights; with a reduction in regulation of finance and the environment.  3) Putin’s Russia so far has coped with the sanctions on oligarchs, trade and finance because it has been able to sell its oil and gas.  But now Europe is increasingly reducing its demand for these and price caps are planned for Russian oil exports.  This could reduce the revenues for war that Putin has accumulated. 

Longer term, the technological sanctions on Russian industry will weaken its ability to grow.  Globally, in many way, US and NATO policy and actions are a dress rehearsal for the real conflict between the US-led imperialist bloc and China (over Taiwan) that is coming in this decade.

Finally, I note that the winner of this year’s annual Isaac and Tamara Deutscher prize was Gabriel Winant’s The Next Shift: the fall of industry and the rise of healthcare in rust belt America.  I hope to review that soon.

But above all, please note that Capitalism in the 21st Century – through the prism of value by Guglielmo Carchedi and myself is now published by Pluto.  The book covers Nature and the Environment; Money and Inflation; Crises; Imperialism; Knowledge and Computers; and the nature of Socialism. I shall be reviewing parts of the book over the next few months.

49 thoughts on “Historical Materialism Conference – monopoly, imperialism, inflation and Ukraine

  1. What was the other Marxist theory of inflation? The link left off at slide 19, terminating the series with the criticism of Shaikh’s theory.

  2. “China (or for that matter, Russia) was not an imperialist state or economy.” Imperialism is a stage of world capitalism. It is a mistake to ask up and down for individual countries, is it imperialist? (See Greg Godels, “”Is Russia an Imperialist country?” — That’s Not the Right Question to Ask,” zzs-blg.blogspot.com/2022/03/is-russia-imperialist-country-thats-not.html) All capitalist countries in the world imperialist system do what they can to get markets, raw materials, and investment outlets for their monopoly capital. China is most certainly an expansionist capitalist country.

  3. Thank you for the report, but when are you going to set up a forum to discuss the burning and strategic questions of our time. When I poured over the Historical Materialism timetable, I almost got a mental hernia. So many sessions and yet what was missing was the most important issue, no session, no plenary to discuss the state of the world economy. Dammit I forgot; it needs to be published first before it can be discussed there because HM is a glorified book club. So please consider this suggestion as without a collaborative effort we will not conquer capitalism intellectually, the pre-requisite for its overthrow.

    Nicolas Aquila point about the hierarchy of money is well made but it is still not a theory of modern money. Your point about monopolies is correct. Is it not interesting that the energy industry has made more profits than the tech industry over the last 6 months? Seems wars trump algorithms. By criticism of your VFI and in the spirit that inflation needs to be discussed further I presume you include my criticism. Yes, Inflation is one of those burning questions that needs collaborative discussion. To this end, http://theplanningmotive.com/2022/11/15/observations-of-carchedi-roberts-presentation-on-inflation-given-at-the-recent-historical-materialism-conference/

    Bill Jefferies take on profitability is a classic example of a leaden article when published being turned into gold. That article based on a misreading of an accountancy-speak heading found in the Tables prepared by the IRS led him to end up ‘proving’ that the US profit rate was higher than the corresponding profit margin because he posited that the capital to output rate was only 0.5 (in 2013 for example). A novel fall in the composition of capital no less. In short, being published compensated for overturning every category established by Marx.

    On the Ukrainian debate it was to be expected that the pointing of the finger at Putin was going to surface as it is rife in academia and the anti-war movement. Look how damaging that has been. How it has held back protests. Politically if the North American and European masses were in the know that it was their capitalist masters who provoked the war, that it was ‘the enemy within’ who were responsible for the misery unfolding, then the protests against this attack on US and European workers would become unstoppable.

    So please consider setting up this discussion forum. With your reputation and reach it is eminently possible.

  4. Very simple and elegant theory. I agree with it, although it is important to say that it cannot explain 100% of all the inflation that happens and will happen in capitalist because there’s always the accidents of production and reproduction of capital that do, to a negligible or minor scale, influence inflation. It is intellectually dishonest for your colleagues to discard it just because it doesn’t explain 100% of the inflation that happens in the world.

    Aquila’s theory of a money tier is not even Marxist. Should not be in a historical materialism (i.e. Marxist) conference. Easily refutable by the first chapters of Capital.

    Imperialism, not being a term Marx used on a theoretical level, is more flexible, so it is expected for different economists to give it their own definition. It is truly an academic problem. I don’t consider China imperialist because it is a socialist country.

    1. VK, I think you are wrong in claiming that the definition of imperialism is academic. It can be defined historically as the extortion of the wealth of a given group of nations based on the extorting nation’s monopoly of means of violence: for example, Athen’s imperial system based on a merchant capitalist/landed aristocrat alliance that financed the extraction of wealth from other city states by means of trading/invading/colonizing merchant warships. The United States “empire of bases” is the epitomizing/(hopefully end) product of centuries of the activities, analogous to Athen’s, of Western European colonialism. The US of Nato’s imperialist extortion of wealth from the countries of the so-called global south takes the form of outright theft, imperially extorted rent, and transnational financial “interest” chicanery.

      It’s ironic that the insistence of some Western marxists that the profitability of countries at the imperial centers can be calculated based on data provided by the such and empire makes a fetish of Marx’s labor theory of value. The labor theory of value is only applicable to industrial capitalism. It’s application to the nations of de-industrialized/de-industrializing imperial centers requires much bending and twisting. Monthly Review suffers much demonization by some commentors on this post. Sweeney and Baran did just and and only some bending of the law, while never denying the continuing, long term influence of Marx’s labor theory…

      ….But things have evolved catastrophically for Western industrial capitalism. 85% of the world’s value-creating industrial labor lives outside the degenerating, but increasingly militarily aggressive imperial center….

      …As Dionysios Perdickis puts it: “… what commodity does Apple produce?”

      1. …As Dionysios Perdickis puts it: “… what commodity does Apple produce?”

        If Apple is supposed to be an example of a catastrophe for “Western capitalism,” we need a new definition of the word catastrophe.

        The important question isn’t “what commodity does Apple produce?” The important question is “What commodities does Apple OWN so that it can claim its gigantic share of total profit?”

      2. Anti-capital, you miss the point–which doesn’t address the loot as such that Apple and all the other Apples appropriate, but the necessarily self-destructive degenerate way in which they have to appropriate it. Most of the world (seemingly excluding you and Apple) hopes it will be their last meal.

      3. Wouldn’t be the first of your points I missed, but that has as much to do with the mistaken nature of the “points” as it has to do with my own flaws.

        I can’t figure out why Apple, sub-contracting with Taiwanese owned Foxconn to exploit workers in China to produce Iphones represents, or so it seems from your rendering, “degenerating imperialism,” while at the same time, the CPC accommodating, facilitating, and benefiting from Foxconn’s brutal exploitation of workers in China amounts to “progress” “development” and even an advance for “socialism with Chinese characteristics.”

        The “goal” here is not to substitute “healthy” “robust” capitalism for a “degenerate” “decaying” one, but rather to overthrow the common basis for both the “healthy” and “degenerate” iterations– the organization of labor power as wage-labor, as a commodity producing value. At least that’s what I think the goal is. Obviously, you don’t share that.

      4. I do want a real socialist revolution!. ….I suspect that you are doing all you can to make one under prevailing conditions here in the United States. …But demonizing China (and waiting for the criminally insane US elite to nuke it?) will not speed up the process….

        China’s obscenely large capitalist sector, its zero Covid policy, its recent militarization, are defensive reactions to almost a century of ilmperialist aggression, which has never stopped. But much of what China produces does not appear as GDP but is produced for use, much of it demanded by organized working people and supported by the government, for example ecologically sensitive geological and agriculture projects. …There is way more organized working class socialist agitation in China than here.

      5. Critique is not demonization. I challenge you to produce anything I’ve written that qualifies as “demonization” of China. Nor does recognition or analysis of the pro-capitalist forces fed by the policies of the CPC mean, imply, indicate that I want the US or another capitalist power to “nuke China.” The fact that you consistently conflate one with the other, deliberately identify one AS the other, really is a barrier to serious consideration of the points you’re trying to make. Although it’s quite in line with the historical practices of the “official” CPs with regards to Marxists who won’t swallow the party hook line and sinker.

        The points I made still remain unresponded to:

        1)We live in the world of capitalism. In that world of private property, it doesn’t matter what Apple produces in factories that say “Apple” rather than Foxconn. What matters is what Apple owns that gives it the ability to claim around 90% of the profits in the mobile phone sector.

        2)And why is the contract Apple has with Foxconn to exploit China’s workers indicative of capitalist “degeneration,” while at the same time the agreement Foxconn has with the CPC over the terms of that exploitation considered something other than degeneration, and in fact is supposed to be some sort of triumph of socialism over capitalism?

        Answer or don’t, it’s up to you. But spare us the falsifications and the anti-red baiting.

      6. “Maybe we should look more completely into recent events.”

        Anti-capital you are right. Foxconn is as despicable an operation as are Apple, Amazon, Blackrock, etc. China’s economy still necessarily operates within an hegemonic, but degenerating, global capitalist world, and the CPC’s relation to this contradiction has evolved with changing times, especially since 2008, and then more so since its turn to the “left” under Xi’s leadership and the US’s provocative “pivot to the East”.

        All during this contradictory time worker resistance in China has been constant, while more or less supported by the CPC–much more so under XI–and operations lke Foxconn have been sanctioned and conditions improved in the capitalist sector. But worker resistence in China will continue… until the world capitalist hegemony collapses.

        The working class is alive in China, and moribund until recently in the US. Don’t you think that working against the repressive war regime here in the US rather than hoping for regime change in China is the marxist thing to do?

      7. Just can’t let go of the anti-red baiting, can you? “Regime change”– as if anyone and everyone critical of China’s lurching towards capitalism is a proponent of the Cheney-Wolfowitz strategy for keeping the USA number one with a bullet.

        “China’s economy still necessarily operates within an hegemonic, but degenerating, global capitalist world, and the CPC’s relation to this contradiction has evolved with changing times, especially since 2008, and then more so since its turn to the “left” under Xi’s leadership and the US’s provocative “pivot to the East”.”

        Pure ideological gobbledy-gook, serving only to justify, as ideology always does, the status quo.

        “All during this contradictory time worker resistance in China has been constant, while more or less supported by the CPC–much more so under XI–and operations lke Foxconn have been sanctioned and conditions improved in the capitalist sector.”

        Proves the previous point, while distorts the actual circumstances so severely it reads like something a MAGA-‘Trumpist would have written.

        “Don’t you think that working against the repressive war regime here in the US rather than hoping for regime change in China is the marxist thing to do?”

        This from someone who claims he/she really “wants a real socialist revolution.”

        The “marxist thing to do,” oxymorons to the side for the moment, is to a) provide “merciless criticism of everything in existence” b) work for the success of an international proletarian revolution. When confronted with the challenge of picking the side that actually represents the prospects for that success– workers or cops– you can’t provide an answer.

        ‘Nuff said

    2. The contradictions that have shaped the direction of the Chinese revolution and the CPC (or any other historical event) cannot be understood within the mummified Trot/Stalinist quarrel between us that you imply.

      I think that we both agree that a marxist (historical materialist) dialectical perspective (“offical” communist/stalinist or otherwise) would be a better approach. Here’s my encapsulared view, which is a common one among most marxists.

      It is exactly the chief product of socialist (Maoist) China–its healthy, realitvely educated, but extremely poor proletariat and peasantry–that brought Nixon and Kissinger to China in 1973. China’s bid for peace and development at the expense of its educated peasantry was matched by the US’s imperial need for for cheap labor to off-set the post war return of finance/industrial capitalism’s falling rate of profit.

      It took 30 years of (I think necessarily tragic rather than criminal) primative accumulation for China to develop enough to end poverty and defend itself against imperialist attack–while continuing its developing, especailly along eco-socialist lines.

      During these thirty years, neoliberal, “degenerative” capitalism has not solved declining profitabilty, despite its endless wars on labor and the environment. The opposite is taking place in China, though threatened on all sides.

      1. Which “educated peasantry”? I’ve never heard of such class before.

        I think Westerners tend to idealize the peasant class in Russia and China in order to demonize communism. Hence the postulation of the idyllic, prosperous and peaceful kulak in the USSR before the Five-Year Plans and this what you call “educated peasantry” in China.

      2. Excuse my diction, I wasn’t referring to the “class”I of peasantry into which Mao was born, but to the fact that almost all Chinese peasants referring to the fact received some sort of education from organized cadre…I was also careless in my choice of the term “primitive accumulation”, which is bourgeois. I was referring to the accumulation of industrial infrastucture, not super-exploitation by Western investors…But is should have been clear to you what I had in mind.

      3. The above comment to VK is garbled by typos which are attributable to words and phrases I thought I had erased somehow resurrecting themselves as I posted the comment. For exampe, the letter “I” in the first line, and the phrase,”referring to the fact” appearing in the first line and then reappearimng in the the second line. I take all responsibility for my problematic ancient self and lap top…..

      4. Maybe we need to look a bit more concretely into recent events. Right now, thousands of workers at the Foxconn plant located in Zhengzhou are engaged in protests about work and living conditions. The specific precipitating events are the implementation of a “closed loop system” essentially restricting workers to the plant premises, with shortages of food arising. The workers have been confronted, and have themselves confronted the police and government and party officials.

        Which side are you on? Workers or the police/govt/management troika? Do you “abstain,” claiming the real problem is the “hegemony” of US imperialism as represented by Apple?

        Standing with the workers is not the equivalent of wanting China “nuked.”

      5. Educational levels aside, it is not clear what precisely the term “peasantry” meant in China after the collectivization campaigns, the communes of the Great Leap Forward and the various phases of the Cultural Revolution. Family land ownership+money lending families+relative shortage of lands for families to grow+relative absence of both casual employment and land purchase seem to me to parts of the classic picture of a peasant society, as opposed to a group of capitalist farmers. Whatever you think of the hou kou, it is not a part of the usual image of peasant society.

        But it does seem clear to me that one aspect of the Cultural Revolution, as bitterly resented as overlooked perhaps, was the rebalancing of social spending towards the countryside, even the extent of wage capping the so-called iron rice bowl. The turn to Nixon had a great deal more to do with the rightward drift of the Cultural Revolution (the left phase peaked as early as 1966 after all,) and its reflection in foreign policy. (Again, there is no Chinese Wall between foreign and domestic policy, two sides of the same coin, cliche, cliche, cliche.) Instead the use of cheap labor displaced from the countryside had a great deal more to do with the undoing of the Cultural Revolution and the return to private farming (on long-term leases, officially.) As I remember the economic history the magic of the market didn’t set in under Deng’s rule really, not even after the notorious Southern Tour. The really deep boom really began even later, in the late Nineties.

  5. Thanks for the update Michael.
    Just ordered your book and it looks like there is a sale on at Pluto at the moment.
    One question:
    You wrote “the aim of the foreign backers of Ukraine and its current government after the war is to introduce a free market economy with massive foreign ownership and privatization of the key assets including land and agriculture, with the removal of labour and trade union rights; with a reduction in regulation of finance and the environment.”
    Any decent references for this aspect?

  6. One more question / comment if I can:
    In the abstract to Charles Post’s HM London paper on imperialism he indicates that it would include a critique of my own work (see “Imperialism and the Development Myth, 2021, with preface by Michael Roberts”). Did he?
    I noticed your above post positively reference Shaikh’s concept of “Real Competition”. I like it too. It’ is also referenced it in my work as a more or less accurate description of how modern capitalist competition functions. However a more accurate name is not “real competition but “monopoly competition” or “monopolistic competition”.
    In this case the name matters. The later was Lenin’s view. Unfortunately Shaikh’s 1000 book work does not get around to critiquing Lenin’s view at all. This is typical of academic work on imperialism. Shaikh purports to have critiqued Lenin in the section you reference and describe as a “devastating refutation of the ‘monopoly capital’ model” (p353-357).
    But in that section (and in the few appearances Lenin makes in Shaikh’s book) he conflates Lenin’s theory with the Monopoly Capital view of Baran and Sweezy. The later does falsely claim that monopoly leads to a reduction in competition (and hence it has to abandon the Marxist law of value). Lenin’s work by contrast explicitly rejects the view that monopoly reduces competition. Lenin says that monopoly both increases competition and changes its form. Shaikh and others must assume this change in form means replacement of the capitalist Market with other, non-market, forms of competition (hence, again, negation of Marx’s law of value). That is infact the view of Baran / Sweezy, Amin and others and this critique of THEIR view is valid. But I show in my work that Lenin said explicitly the opposite.
    This is interesting because in his HM paper abstract, Charles Post promised critique of my work was to counterpose Shaikh’s “real competition” to my monopoly competition.
    Shaikh himself, I think, uses his own “real competition to oppose the view you articulate above – which I think is correct – namely: “the economic core of modern imperialism is the unequal exchange of value (surplus value) through international trade (and capital flows) between the advanced capitalist economies and the rest of the world. It is the persistent and pervasive transfer of value to the advanced economies from the rest that best characterizes the former as imperialist.”
    You then go on to say this:
    “Exploitation of the global south by the imperialist bloc is not mainly the result of ‘super-exploitation’ of the workers of the south or through the monopoly of markets and finance in the north; but through the redistribution of surplus value from the technologically backward economies to the technologically advanced, both through unequal exchange in trade and through the repatriation of profits, interest and rent by multi-nationals and banks.”
    This makes sense if by “monopoly of markets” you are rejecting something like the Baran Sweezy thesis. But your above sentence then also (correctly IMO) identifies that the imperialist countries do in fact have at least one monopoly – that of being technologically advanced. This is a “monopoly” in the very meaningful sense that you also identify in this post – that no Global South countries, including China (I agree), are able to break through it (at least not within capitalism).
    It looks like you make the same conflation as Shaikh (and Smith and many others) between the idea of “monopoly” and negation of Marx’s law of value.
    I deal with this in my book chapters 7. Lenin’s monopoly capitalist competition” and 8. Monopoly and Marx’s Labour Theory of Value.
    I think it is clear that modern TNCs and states modify the appearance of Marx’s law of value but that the still operates as the organising force of capitalist society. Of course the law can never manifest in a pure form and to actually apply it to the world we need to understand the ways in which it is modified.
    Thanks again for all your work.

    1. Dear Sam, I think we are in agreement and I also think that Lenin’s view of monopoly has been misunderstood and is not the same as Baran-Sweezy and the Monthly Review. Again, Grossman makes it clear what Lenin’s view was.

    2. I think you are rather misrepresenting John Smith’s view on monopoly.

      John and Andy insist on super-exploitation as the explanation of where is this extra surplus-value produced from, to be later redistributed as monopoly superprofits.

      Michael’s data already show that about half of the transfers of value are due to different surplus value ratios (Figure 18 Relative contribution of OCC and RSV to value transfer between IC and DC (%)
      Source: Penn World Tables 10.0, Appendix 2): https://www.researchgate.net/publication/357210363_The_Economics_of_Modern_Imperialism

      It is funny to make reference to the logic of Capital and miss the point that there can be no fundamental, systematic historical changes to how value is (re)distributed without corresponding changes in the way it is produced.

      To start with, market prices that systematically deviate from prices of production mean that value circulates via systematically unequal exchanges.

      But, systematic unequal exchanges means that the commodity form itself has gone via a fundamental change, where the exchange value (form) expresses the essence (value) in different ways.

      Indeed for Marx equal exchange was not just a theoretical assumption as an abstraction from reality, but it also meant to be a REAL abstraction, i.e.,Marx abstracted from actually operating social forces that tended predominantly to equal exchange, or in that respect, to prices of production acting as centers of gravity attracting in the long run the market prices.

      All the most, of course, if it is the value of labour power the commodity of interest!

      For Marx, the commodity form was crucial to understanding also the political forms of bourgeois society, i.e., the formal liberty and equality of individuals as on the one hand producers, owners and sellers of commodities in a market, and on the other hand, as citizens of the state with equal rights.

      So, different “market power” means different “social power” in general and changes society in a fundamental way (e.g., see Lenin’s “imperialism as reaction in all forms/scales etc”).

      Grossman has shown that imperialism is a response to the profit rate fall historical tendency.
      (Systematic) Super-exploitation is the way to pump more surplus-value into the system to counteract this tendency on the global level, i.e., on the level of total capital and total labour.
      (Systematic) Unequal exchange is the way to capture this extra value.
      And (systematic) monopoly superprofits is the way to redistribute it.
      All of these aspects form a system of relationships just like the system that Marx describes in capital, where equalization of profit rates (as a tendency) goes along with exchanges of equivalents (i.e., prices of production functioning as attracing centers of gravity), and along with production of relative surplus value.

      And yes, this is the historical evolution of the essence.

      Anyway, among other things, for Marx, free competition is essential for the reduction of all labours to simple labour, and for the establishment of a common value for simple or average labour power as well as for a society-wide surplus value rate (always as attracting centers of gravity).

      All in all, these are the real social practices (forces) behind the reduction of all concrete labours to abstract labour.

      So, unfree competition (monopoly) leads to disturbing the whole system of Marx.

      Why is it so important to theorize the essence of the capitalistic mode of production as eternal youth?!

      Isn’t imperialism “capitalism on its dying” (Lenin)?!

      P.S. By the way, technological innovation for the production of NEW commodities, i.e., new use values, has nothing to do with increasing labour productivity in producing existing commodities (except for innovation on new machinery that will increase productivity when incorporated into production, i.e., but this machinery can be bought freely by all capitalists as long as they have the capital to buy it…, no easy monopoly there….).
      Monopolizing highly complex commodities is exactly like monopolizing a whole (new) branch of production. You are absolutely right that this means monopolizing a specific labour process. But, this doesn’t mean at all that this labour process is “more productive”, i.e., it produces more value.

      I have seen an example you give in your book between Apple and Foxcon…
      My question to you is: what commodity does Apple produce?

      1. “Indeed for Marx equal exchange was not just a theoretical assumption as an abstraction from reality, but it also meant to be a REAL abstraction, i.e.,Marx abstracted from actually operating social forces that tended predominantly to equal exchange, or in that respect, to prices of production acting as centers of gravity attracting in the long run the market prices.”

        Marx assumed or presumed labor power was not super-exploited but was paid an equivalent to the necessary cost of reproduction as 1) his general argument that value was appropriated labor power 2)that the exchange of commodities could NOT be the source of expanded value as those exchanges were in sum the exchange of equals 3) that the fundamental basis of “free exchange” was “free labor”-detached from the means of subsistence and forced to present itself as a saleable “good.” 4) that this “sale” was the primary relation for the exchange of equivalents, but only through and by being at core UNEQUAL EXCHANGE, in the the value for reproduction took less time than the capitalist received in exchange.

        So unequal exchange is at the very core of the apparent equal exchanges in the markets

        Prices of production, which Marx introduces to equalize the rates of profit, do so, according to Marx by being in fact unequal exchange. Commodities do not exchange at their values but at their POP which mediated by different increments toward the goal of each sector achieving the grandest abstraction of all, the general or average rate of profit.

        “But, systematic unequal exchanges means that the commodity form itself has gone via a fundamental change, where the exchange value (form) expresses the essence (value) in different ways.”

        Not sure about that. How does unequal exchange today change fundamentally alter the function of markets as compared to say the exchange between British textile industry and slave produced cotton during the 19th century? Or between the McCormick Harvester Co and the hemp plantations using prison labor in the Yucatan that produced the twine for automatic baling ? That seems to me a greater “deviation” from the abstract “ideal” of equal exchange given the unfree labor used in the production of cotton and twine vs. the “free” labor employed in the mills and factories.

        Theoretically, slave labor cannot produce surplus value as value at all, and yet we know that once in the markets, capital assigns or imputes a value to the commodities of cotton and hemp AS IF those were produced under conditions of free labor. But what’s the basis for pricing, and is that a transfer of surplus value that is qualitatively different than how capitals of higher OCC interact with those of lower OCC?

        “John and Andy insist on super-exploitation as the explanation of where is this extra surplus-value produced from, to be later redistributed as monopoly superprofits.”

        Yes, that is Smith’s thesis. I don’t contend that super-exploitation, compensation below the level needed to reproduce the laborers, doesn’t exist and isn’t intrinsic to the accumulation of capital, but I don’t think Mr. Smith makes a very convincing case with his example of tee-shirts,. So for the transfer of value to take place, the commodities have to be purchased below their value, below their cost of reproduction, and consequently accumulation would never occur. However, we see exactly that accumulation occurring (in textiles, clothing, electronics, etc) and in many cases, emerging under the ownership of the emerging” local” bourgeoisie

      2. Dear Anti-Capital,

        thanks for the -right to the point- reply.

        Indeed, this is my main point that “free labor” and “labor power as a commodity” are Marx’s real abstractions that have to be empirically tested at each historical stage of capitalist development.

        Indeed the slave labour in colonies was not “free labor”. However, colonies were the space where the capitalist mode of production (CMP) was expanding, and not the place where it has reached its maturity.

        Therefore, the connection between the industrial capitalist country and the colony was kind of (more) “external” to CMP, the “interface” being the circulation of commodities (not so much of labour power or capital).

        Marx had witnessed the development of mature CMP in the place of feudal absolutism, he witnessed the rise of the commodity form in place of slavery and serfdom. He abstracted from such a historical reality…

        Later on, in Lenin’s time, exports of capitals started to play a bigger role, i.e., the circulation of capital itself, which led to faster development of CMP in ex-colonies and to anticolonial movements of political independence. Lenin mentioned the new category of formally independent, but exploited and oppressed states, he mentioned monopoly superprofits, he mentioned indirectly unequal exchange when talking about the financial capital of his time, and he mentioned the “double and triple exploitation” in colonies.

        Finally, today, imperialistic capitalism has incorporated imperialism deep inside its essence, by modifying/further developing it: imperialism is all about the international distribution of labour, with the imperialist countries capturing the biggest part of value, because they occupy particular positions at the beginning and ending of the value chains, owning critical natural and social resources. In particular, imperialist countries occupy themselves mostly with the development (and ownership…) of technology, whereas they outsource the actual production of commodities.

        For me, the development of technology, arts, human civilization in general, is not an activity of producing use values (means of consumption or means of production), but an activity of producing the productive subjectivity itself, i.e., the sophisticated labour power commodity. This is a developmental process, with a historical direction, and not a repetitive process that can be performe privately and independently, by independent producers…
        Therefore, I don’t consider those activities as productive of value, i.e., as productive in the narrow CMP-related sense.
        This is exactly why this capital, invested in the development of productive subjectivity, can valuate itself only via monopoly and unequal exchange: leave a patent/trade secret free and you have no (super)profits and no motivation for capital to invest…
        Other non-productive activities (state, military, lawyers, accounting, trade-related, marketing, human resources, banks, advertising etc) are also abundant in imperialist countries and aim at reproducing their role in this international distribution of labour.

        These kinds of activities are the result of the direct socialization of production, i.e., productive activities, where co-operation, not mediated by commodity exchanges, have reached an unpredecented level in extend and in depth, something like “socialism inside capitalism, under the power of capital”…
        In that respect, owning technology or arts means a direct oppression of the developed productive subjectivity (as for instance in contracts of trade secrecy, or that make sure that we don’t work for competitors for some years etc).
        Being under capital, the commodity form prevails, imposing itself to such activities that are not meant to take this form, i.e., content and form are in contradiction, the form is only formal, and a different content “disguises” itself as a commodity. So, for me, patents etc, are actually forms of fictitious capital…

        Therefore, what has changed in CMP is that it is creating itself now something that seems to be contrary to its own essence: non-productive labour, (that might be “producing” fictitious capital) unequal exchange and monopoly distribution become necessities emanating from the development of CMP itself, in a way predicted to some degree by Marx in Capital or in the Fragment on the Machines in Grundrisse.

        This is what is different from the unequal exchange and the slave labour in colonies, or with the unequal exchange that is due to different OCCs.

        In that respect, super-exploitation indeed means a non-adequate reproduction of labour power as a commodity, given its historically and ethically specific value at a given historical conjecture and part of the world. So, labour power is not reproduced at its current value as a commodity, but constantly further undervalued. Some times, this means also that it is not fully physically reproduced, e.g., in extreme cases as in mines in Congo…

        However, this is possible because there is too much reserve army of labour around the world…
        Capital has undevalued labour so much, because it has expelled it so much from the actual production, at the same time that makes everybody in the world a “free labourer”…

        By the way, Mandel has identified most of these tendencies already, i.e., he talked about semi-automated industries the only profit of which can come from technological rents, and in a couple of cases he explicitly points to something like super-exploitation as a countertendency to the lack of relative surplus value and the tendency of the rate of profit to fall, but… he somehow fails to then conclude the theoretical importance of what he has already found out and raise it to the level of a fundamental development in the essence of CMP!

        So, Apple doesn’t produce much, but only owns social resources (technology) and commands the production of commodities, later on capturing the largest part of the value produced…

      3. A small addition:

        Indeed accumulation is hindered in developing countries due to super-exploitation and tranfers of value.

        However, we don’t need to assume that this happens in absolute terms.

        Some accumulation and some development will happen. How much, though, it will depend on the interests of the imperialistic monopoly capital.

        Of course, in cases like China, political independence eventually will lead to a conflict.

        Today, we are witnessing this turning point:

        On the one hand crisis in the imperialist West is so acute that they need to expand and exploit Russia (natural resources), and China (and other Asian countries, for cheap labour), more than even in the past.

        On the other hand, they simply can’t, because the developing World, led by China and Russia, can now object to this situation.

        This is a tremendous opportunity for the working classes in the West to exploit the political crisis and overthrow capitalism.

        At the same time, imperialist led neo-fascism and racism prepare the WW3 as the ultimate battle of “freedom” and “western lifestyle” …at the expense of the rest of the world…

        So, revoluation and socialism against fascism and war is the dilemma in front of us…

  7. The United Nations SNA 2008 explain very clearly the basis for the neo-classical valuations of the Fixed Capital Stock
    “6.247 Consumption of fixed capital is a forward-looking measure that is determined by future, and not past, events namely, the benefits that institutional units expect to derive in the future from using the asset in production over the remainder of its service life”
    6.251 Conceptually, market forces should ensure that the purchaser’s price of a new fixed asset is equivalent to the present value of the future benefits that can be derived from it. Given the initial market price, therefore, and knowledge of the characteristics of the asset in question, it is possible to project the stream of future benefits and continually update the remaining present value of these.

    Click to access SNA2008.pdf

    This is also true of the Penn World Tables that you use to construct your world rate of profit, which are therefore, similarly flawed.

    1. You are completely wrong. Do your homework, instead of referencing primers. At best when comparing the BEA data to the IRS data there is a <10% variation in the measurement of the capital stock. You once said test a hypothesis to destruction by checking the data in alternative ways. May I suggest the same to you. A much much bigger problem when measuring the capital stock is the capitalisation of R&D and elements of software. It is this I.P. not discounted cash flows which accounts for the bulk of the discrepancy between the BEA's valuation and that of the IRS. This capitalisation of I.P. via an inputed (fictitious) sale has distorted GDP and the rate of profit calculation as well. It has also disturbed the turnover formula which is unforgiveable.

  8. Last time Dr Jack Rasmus paid this blog a visit, he again stressed his criticism of the LTRPF as indeterminate: if I got his argument right, he contends that corporate accounting contains so much smoke and mirrors that it’s impossible to calculate general rates of profit in a reliable, reproducible, consensual way. And that as such it’s useless as the basis of a theory of crises.

    With the caveats that I’m the shallowest of dilletantes, I remarked then that the burden of proving that was on him, and on others that are sceptical of the TRPF: if they could show that they can use equally plausible, but different methods to calculate the RoP and show not only that the final values differ, but that the TRENDS vanish or invert, then we could initiate a discussion at least of whether there’s a point in trying to calculate it, and at most whether the TRPF even exists. Until then, I reserved the right to remain convinced that the LTRPF is an empirically-demonstrated law of capitalism.

    I’d say Dr Rasmus must be feeling vindicated right now, because Dr Jefferies has done just what I contended was necessary to muddle the picture in the way Dr Rasmus said it was: he has thrown a wrench in the one-decade Marxian consensus (going by Dr Roberts’ posts here with measures from several sources, culminating in Basu-Wasner earlier this year) that the RoP has been falling in the capitalist world for the past decade or so.

    I’m afraid that going ahead, one side will criticise the other’s methods and point to weaknesses in their raw data (as already started in this post and comments), which is how empirical science moves forward, so it’s okay. But to outsiders, this could be easily portrayed as a pursuit for something that cannot be determined, and as such a dead end. Maybe Dr Rasmus has a point and we cannot rely on capitalist accounting to prove a Marxist point. This is a point raised by vk elsewhere in this blog, too: that Marxian analyses are impaired by the lack of Marxian-oriented data collection.

    I’ll keep watching how this unfolds. My gut feeling is that the LTRPF follows from first principles (being essentially, the way I understand it at least, a formulation of the law of diminishing returns applied to capitalism), so it ultimately holds. I can also see how it would correlate with cyclical crises in capitalism. But Dr Rasmus may have the last word if it turns out we cannot measure it, or even the way it changes with time. It’s like a physical law for which we lack instruments to make measurements, like general relativity in its first few decades. We’ll see.

    1. DGe Don’t worry. Both Dr Rasmus and Dr Jefferies are wrong. We can measure the rate of profit with a degree of accuracy and determination. And Dr Jefferies’ way of doing so is incorrect and produces a false result.

  9. We certainly can estimate the rate of profit with a degree of accuracy – but not by using neo-classical statistics. As the OECD explain for the neo-classicals;
    “The central economic relationship that links the income and production perspectives to each other is the net present value condition: in a functioning market, the stock value of an asset is equal to the discounted stream of future benefits that the asset is expected to yield, an insight that goes at least back to Walras (1874) and Böhm-Bawerk (1891). Benefits are understood here as the income or the value of capital services generated by the asset.”

    Click to access 43734711.pdf

    I have the methodology – including an extended critique of Michael and others in my free download capital and class article here https://journals.sagepub.com/doi/10.1177/03098168221084110

  10. Re the value rate of inflation: How does your theory, and your calculation account for Japan’s extended period of deflation while the money supply expanded? Same question regarding post 2009 “recovery” actions (quantitative easing) taken in numerous countries

    1. I think the answer is that most of this QE monetary expansion went to the banks which bought JGBs and little went into the real economy. That was the same for the US. So we can see a sharp fall in the velocity of money transactions in the real economy. The model adjusts precisely for that and so we get a close correlation between an adjusted money supply and CPI inflation of goods and services.

  11. According to Ukraine GDP chart really fast growth is expected in the future. What data it is based on? In “no war scenario” it is expected to rise from $270 bn in 2021 to $430 bn in 2026, that’s 60% up in 5 years – absolutely fantastic rate. Also losses due to current war are relatively small compared to losses due to what happened in 2014 which is rather strange considering huge infrastructure damage during current war.

  12. Dr Jefferies, it is not your methodology which is being criticised, but your calculations. Please revisit the IRS source tables and use row 27 titled ‘Depreciable assets’ as it is, DO NOT deduct row 28 titled ‘Less: Accumulated depreciation’ from it, because row 27 has already been depreciated, making it the row which is transposed to the BEA Fixed Asset Tables (see NIPA Table 7.13 for example). Next, withdraw your article, recant and join the Club whose members subscribe to the rising composition of capital, and whom you have so heavily criticised.

    As I said the problem with measuring fixed assets lies with the capitalisation of R&D and in-house software which in 2021 added 5% to the stock of fixed assets via an imputed (fictitious) sale. Visit Fixed Assets Table 2.1. https://apps.bea.gov/iTable/?ReqID=10&step=2#eyJhcHBpZCI6MTAsInN0ZXBzIjpbMiwzLDNdLCJkYXRhIjpbWyJUYWJsZV9MaXN0IiwiMTgiXSxbIlNjYWxlIiwiLTkiXSxbIkZpcnN0X1llYXIiLCIxOTkwIl0sWyJMYXN0X1llYXIiLCIyMDIxIl0sWyJTZXJpZXMiLCJBIl1dfQ==

    1. What are you on about? i don’t deduct depreciation from it. Your affection for neo-classical statistics is strange. But heh.

  13. What am I on about is that you have the wrong end of the stick. The onus is not on me to prove that the IRS data is right, it is up to you to prove it is wrong. In other words that the data the BEA copies from the IRS is wrong.

    So let us take IRS Table 4. ‘Selected Balance Sheet, Income Statement, and Tax Items, by Sector, by Size of Total Assets’ (2013) which deals with total corporate assets. I used 2013 inter alia because it was the year the rate of profit was peaking, then tested the data against your data for the same year. Using that data as well as the FED revaluations where discounted cash flows does play a role (=to 3.7% of the total), this is what we get. Figures in millions.
    (1) $12,132, IRS figure (Table 4 line 19)
    (2) $453 Fed data on revaluations in 2013 (your thing) This is separate from the IRS data = 3.7%
    (3) $12,586 Total for the two lines
    (4) $ 13,948 BEA Table 4.1 (what us neo-classical Marxists allegedly use in error.) The figure is arrived at by taking total corporate assets (line 17) minus IP assets (line 20) because IRS data excludes intellectual property assets. Once done we are comparing like with like.

    Difference between Table 4 in the raw and the BEA’s Table 4.1 is under 15% not 363% for 2013 based on your figure of $3,842. in assets. Hasn’t it clicked yet, you have been using the wrong data, you have not been using aggregated corporate. I have double checked your source material. I have quadrupled checked all the primers on discounted cash flows to see if they applied to various asset classes. Even in housing the Census Bureau has explicitly stated they have abandoned the discounted cash flow methodology when calculating the value of owner-occupied dwellings, the one area which is truly fictitious and so lends itself to discounted cash flow fictions.

    I gave you the benefit of the doubt when your article first came out then tested it to destruction to see if it would survive, which it did not. Now it is up to you to prove that the figure transferred from the IRS to the BEA is wrong.

    Link to Table 4. https://www.irs.gov/statistics/soi-tax-stats-table-4-returns-of-active-corporations and link to 2019 data https://view.officeapps.live.com/op/view.aspx?src=https%3A%2F%2Fwww.irs.gov%2Fpub%2Firs-soi%2F19co21ccr.xlsx&wdOrigin=BROWSELINK

    1. You pretend there’s some mystery that you have unveiled. Not at all. I use depreciable assets less depreciation.
      It is what it is.
      You prefer there neo classical aggregates of future revenues and pretend that the SNA do not do what they say what they do.

  14. Going back a few days, I agree with Dionysios that there is no need to say that super-exploitation and unequal exchange are mutually exclusive factors by which imperialist capitalists capture extra surplus-value and raise their profit rates. Super-exploitation in the Global South increases the amount of surplus-value extracted there; that’s at the stage of production. Unequal exchange is one of the ways in which imperialism grabs a major share of the s-v.

    Further, the standard process of unequal exchange by way of the transformation of produced values into prices of production assumes the equalization of profit rates between imperialist and imperialized capital. But this tendency gives way to monopoly power, most often to the advantage of the imperialist capitals at the head of value chains.

  15. Bill Jefferies,

    Before we swop insults let us focus on your statistics, in this case the ratios resulting from them.
    Your sheet 3 did not have years so I picked up the wrong number earlier. Your fixed asset value is actually $4,240 million for 2013 which I will use here. (I am assuming your asset figure of $4,240 excludes inventory.)

    Ratio of your Fixed Assets to gross output of $9,478 (NIPA Table 1.14) = 0.45
    Ratio of your Fixed Assets to net output of $8,028 (NIPA Table 1.14) = 0.53
    Ratio of your Fixed Assets to circulating capital of $4,146 = 1.02 (Note 1)
    Ratio of Your Fixed Assets to depreciation = $933 (IRS Table 4) yields average age of assets 4.5 years
    Ratio of your Fixed Assets to inventory $1836 (IRS Table $) = 2.31
    Annual reproduction of inventory at 3.9 = $7160 or 69% bigger than your accumulated assets.
    Ratio of profit margin to your rate of profit, or 19% vs 16% = 1.2
    (Note 1. Circulating capital = depreciation + inventory + variable capital based on 3.9 turnovers)

    In other words, you end up with the annual production of inventory exceeding accumulated fixed assets, you end up with fixed assets no higher than circulating capital, you end up with a capital to net output ratio of only 0.53 which results in your rate of profit exceeding your profit margin (a world first).

    You have therefore ended up, not with a rising composition of capital, but one falling to 0.53 by 2013 meaning that the value added in 2013 was twice as large as the accumulation of capital inherited from the past. Not so much a case of the past weighing heavily on the present but the present unravelling the past. You have therefore overturned one of the most important laws established by Marx, namely that the tendency for the rate of profit to fall is governed by the rise in the organic composition of capital. When was the last time you left your office or lecture theatre to visit a modern factory or warehouse to see the mass of fixed capital and the dearth of workers.

    Finally, my calculations are based on depreciable assets as provided by the IRS for TOTAL Corporate which is why I use NIPA Table 1.14 for comparison purposes in order to extract current value as it is commensurate with TOTAL corporate. ‘It isn’t what it is’. Yes, you do use depreciable assets less depreciation but if you use your Excel to SUM column B you will find that line 19 is already depreciated and must not be depreciated further. So, while you and this neo-classical analyst are both using IRS depreciated assets, we cannot both be right.

    So now let us swop insults. Until you withdraw this article and acknowledge you have been using incorrect data, I will not consider you to be a Marxist theoretician. Now you can understand why I dismiss your charge that I and others like Michael are neo-classicists who are mired in vulgar economics.

    As the ball is in your park, I have nothing more to say and withdraw from the discussion.

  16. Not surprisingly when you look through the prism of neo-classical statistics the world looks odd.
    The question what is the “market price” of the fixed capital stock according to the various Systems of National Accounts (SNA). If it is an aggregate of future service streams, then it treats profits as a cost and so overestimates the value of the fixed capital stock and so underestimates the rate of profit.
    The Bureau of Economic Analysis explain “In principle, the current-cost net stock is the market, or replacement, value of the stock; that is, the value for which the assets in the stock could be bought or sold in that year. In equilibrium, this market value will equal the present value of all expected future services embodied in existing assets”. M-8

    Click to access Fixed-Assets-1925-97.pdf

    The United Nations System of National Accounts explains that “The value of a fixed asset to its owner at any point of time is determined by the present value of the future capital services (that is, the sum of the values of the stream of future rentals less operating costs discounted to the present period) that can be expected over its remaining service life.”
    The OECD note that “The value of this asset at the beginning of period t, P0 t , to its owner corresponds to the discounted stream of future incomes generated by the asset.”

    Click to access 43734711.pdf

    The US Treasury Department observe ”Standard capital theory tells us that the value of an asset should equal the sum of the discounted net revenues the asset will generate in the future (net of operating costs but not depreciation)”

    Click to access Report-Compendium-1978-Part4.pdf


      1. Because the net figure is less the “consumption of capital” it is the decline in future revenues, i.e. a change to the aggregate of future profits, it is not “depreciation” the decline of capital advanced.
        “BLS productive stocks for each type of asset are based on estimates of how capital service flows of various vintages “deteriorate” as the asset ages” https://www.bea.gov/system/files/methodologies/Fixed-Assets-1925-97.pdf

  17. Robert, do you really believe that price caps on Russian oil are going to work?

    A second, more substantial question: isn’t the EU going to be less competitive, vis-à-vis the USA, without Russian energy? I keep reading that for Europe, before the war, Russian energy was ‘cheap’, so in the upcoming energy situation the EU is going to make less profits and Russia less revenues. Both are going to lose something, but which one do you think will be the biggest loser?

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