Louis Proyect: The Unrepentant Marxist

May 29, 2013

Some thoughts on Michael Heinrich versus “the classics”

Filed under: economics — louisproyect @ 6:45 pm

Michael Heinrich

For me, wading into the Michael Heinrich controversy is a little like eating my spinach—it is good for me in the sense that it forces me to engage with an important aspect of Marxology. Although I never would devote as much time to it as other matters of more immediate concern, it at least behooved me to read the long and fairly arcane article in Monthly Review by Heinrich (Crisis Theory, the Law of the Tendency of the Profit Rate to Fall, and Marx’s Studies in the 1870s), Michael Roberts’s reply to the article (Michael Heinrich, Marx’s law and crisis theory) and finally Marx himself.

For those who are first coming around these questions, I would not recommend Heinrich or Roberts. The best bet is Chris Harman’s The rate of profit and the world today, an article that appeared in the Summer 2006 International Socialism journal. While Roberts is more lucid than Heinrich, Harman—who shares Roberts’s adherence to the proposition that there is tendency for the rate of profit to fall–can’t be beat:

Marx’s basic line of argument was simple enough. Each individual capitalist can increase his (or occasionally her) own competitiveness through increasing the productivity of his workers. The way to do this is by using a greater quantity of the “means of production” – tools, machinery and so on – for each worker. There is a growth in the ratio of the physical extent of the means of production to the amount of labour power employed, a ratio that Marx called the “technical composition of capital”.

But a growth in the physical extent of the means of production will also be a growth in the investment needed to buy them. So this too will grow faster than the investment in the workforce. To use Marx’s terminology, “constant capital” grows faster than “variable capital”. The growth of this ratio, which he calls the “organic composition of capital”, [6] is a logical corollary of capital accumulation.

Yet the only source of value for the system as a whole is labour. If investment grows more rapidly than the labour force, it must also grow more rapidly than the value created by the workers, which is where profit comes from. In short, capital investment grows more rapidly than the source of profit. As a consequence, there will be a downward pressure on the ratio of profit to investment – the rate of profit.

Each capitalist has to push for greater productivity in order to stay ahead of competitors. But what seems beneficial to the individual capitalist is disastrous for the capitalist class as a whole. Each time productivity rises there is a fall in the average amount of labour in the economy as a whole needed to produce a commodity (what Marx called “socially necessary labour”), and it is this which determines what other people will eventually be prepared to pay for that commodity. So today we can see a continual fall in the price of goods such as computers or DVD players produced in industries where new technologies are causing productivity to rise fastest.

Heinrich’s main point in the article is to demonstrate that Marx began to doubt his own theory and that was moving toward a new approach:

Several times, Marx makes note of possibilities for the rate of profit to increase, although the value-composition of capital was increasing. In the case of a renewed composition of book III, all of these considerations would have had to find their way into a revision of the chapter on the “Law of the Tendency of the Rate of Profit to Fall.” A consistent regard for them should have led to the abandonment of the “law.” Marx also hints at this in a handwritten note he made in his copy of the second edition of volume I, which no longer fits the tendential fall and which Engels incorporated as a footnote in the third and fourth editions: “Note here for working out later: if the extension is only quantitative, then for a greater and a smaller capital in the same branch of business the profits are as the magnitudes of the capitals advanced. If the quantitative extension induces a qualitative change, then the rate of profit on the larger capital rises at the same time.”42

Heinrich also points to Marx’s growing interest in the role of the national banking systems like the Federal Reserve, which obviously can have a major impact on economic crises. Furthermore, if the banks can play such an important role, then any theory on crisis must take into account the role of the state as well. One thing, however, struck me as a bit of a puzzle. He states that Marx sought to develop a new approach on crisis that included the role of the world market but was still “of the opinion that he had to initially abstract from relations on the world market.”


Part three of Volume 3 of Capital, which is titled “The Law of the Tendency of the Rate of Profit to Fall”, includes chapter fourteen that has the intriguing title “Counteracting Influences”. That chapter mentions foreign trade as one of the “counteracting influences” that mitigates against the tendency of the rate of profit to fall is Foreign Trade. Marx writes:

Capitals invested in foreign trade can yield a higher rate of profit, because, in the first place, there is competition with commodities produced in other countries with inferior production facilities, so that the more advanced country sells its goods above their value even though cheaper than the competing countries. In so far as the labour of the more advanced country is here realised as labour of a higher specific weight, the rate of profit rises, because labour which has not been paid as being of a higher quality is sold as such.

Just as a manufacturer who employs a new invention before it becomes generally used, undersells his competitors and yet sells his commodity above its individual value, that is, realises the specifically higher productiveness of the labour he employs as surplus-labour. He thus secures a surplus-profit. As concerns capitals invested in colonies, etc., on the other hand, they may yield higher rates of profit for the simple reason that the rate of profit is higher there due to backward development, and likewise the exploitation of labour, because of the use of slaves, coolies, etc.

I don’t know about you but these two paragraphs are a revelation to me. I had always assumed that Marx had little interest in what would later be referred to as imperialism or what Arrighi called “unequal exchange” but this is a pretty clear statement that the mother country can avoid the consequences of the overproduction of capital through the superexploitation of colonies. He puts it quite succinctly: “As concerns capitals invested in colonies, etc., on the other hand, they may yield higher rates of profit for the simple reason that the rate of profit is higher there due to backward development, and likewise the exploitation of labour, because of the use of slaves, coolies, etc.”

Interestingly enough, this is pretty much the same tack taken by Henryk Grossman, who is generally regarded as the early 20th century’s key defender of classical Marxist economics, including the tendency of a falling rate of profit. In his case, the reference to the world market as a countervailing tendency was even more specific.

In Grossman’s “The Law of Accumulation and Collapse of the Capitalist System”, there’s a chapter titled “Restoring Profitability through World Market Domination” that pretty much jibes with Marx’s analysis.

He points a highly revealing passage in chapter 21 of Marx’s “Theories of Surplus Value” that establishes foreign trade as a sine qua non for capital accumulation:

But it is only foreign trade, the development of the market to a world market, which causes money to develop into world money and abstract labour into social labour. Abstract wealth, value, money, hence abstract labour, develop in the measure that concrete labour becomes a totality of different modes of labour embracing the world market.

“Thus”, according to Grossman, “the limits on the production of surplus value are extended; the breakdown of capitalism is postponed.”

In the subsection titled “Foreign trade and the sale of commodities at prices of production deviating from values”, Grossman makes a strong relationship between the ability of the capitalist system to extract super-profits from the colonial world where the organic composition of capital is lower. In other words, he is calling attention to the presence of the production of absolute surplus value (lengthened work-day, child labor, etc.) in countries such as India or the Congo. In industrialized countries, the production of relative surplus value is facilitated by the wide-scale use of advanced technologies which enables the imperialist countries to dominate the markets in Asia, Africa and Latin America even as they have a tendency to lead to a higher organic composition of capital and long-term profit decreases. He writes:

International trade is not based on an exchange of equivalents because, as on the national market, there is a tendency for rates of profit to be equalised. The commodities of the advanced capitalist country with the higher organic composition will therefore be sold at prices of production higher than value; those of the backward country at prices of production lower than value. This would mean the formation of an average rate of profit of 18.5 per cent so that European commodities will sell for a price of 118.5 instead of 116. In this way circulation on the world market involves transfers of surplus value from the less developed to the more developed capitalist countries because the distribution of surplus value is determined not by the number of workers employed in each country but by the size of the functioning capital.

Grossman continues:

In effect price formation on the world market is governed by the same principles that apply under a conceptually isolated capitalism. The latter anyway is merely a theoretical model; the world market, as a unity of specific national economies, is something real and concrete. Today the prices of the most important raw materials and final products are determined internationally, in the world market. We are no longer confronted by a national level of prices but a level determined on the world market [emphasis added.] In a conceptually isolated capitalism entrepreneurs with an above average technology make a surplus profit (a rate of profit above the average) when they sell their commodities at socially average prices. Likewise on the world market, the technologically advanced countries make a surplus profit at the cost of the technologically less developed ones.

This paragraph is about as succinct a definition of imperialism as you are going to find. And once again, Grossman finds support for his analysis in Marx’s writings—in this case the very chapter of Volume 3 of Capital that deals with foreign trade as a countervailing tendency. And finally, Grossman refers to “unequal exchange” specifically as defining the relationship between a dominant nation like Britain and one dominated, like India:

In the examples cited above the gain of the more advanced capitalist countries consists in a transfer of profit from the less developed countries. it is irrelevant whether the latter are capitalist or non-capitalist. It is not a question of the realisation of surplus value but of additional surplus value which is obtained through competition on the world market through unequal exchange, or exchange of non-equivalents [emphasis added].

I suppose my problem with the debate between Michael Heinrich and his detractors is that there is so little attention paid to this dimension. Andrew Kliman, Michael Roberts, and the other “classic” Marxists are totally absorbed in what happens in a country like the U.S. or Britain, as if the most recent crisis was a sign of a mounting inability of capitalism to continue—functioning in some way as a machine that has faulty parts at the core, like the Yugo or the Edsel.

Heinrich is correct, I suppose, to point to deficiencies in this approach but does not do enough to acknowledge that Marx understood how the system could continue going forward mercilessly and relentlessly to maintain profits. A look at the recent fires in Bangladesh should be sufficient to make that case.


  1. This section of Heinrich’s short MR Press book is of some interest here: 11.3 World Market and Imperialism. What Heinrich says about the field of vision Marx used for developing ideas about crisis might only mean that extending his field to the entire world was not something he could easily do. Heinrich is, of course, aware of the section of Vol. 3 Louis quotes above, but I am not sure that this invalidates what Heinrich says about Marx’s crisis analysis. BTW, Heinrich rejects Lenin’s theory of imperialism pretty much altogether.

    Comment by michael yates — May 29, 2013 @ 7:21 pm

  2. Louis, you’ve taken this quote out of context:

    “of the opinion that he had to initially abstract from relations on the world market.”

    Heinrich is referring to the 1863-1865 manuscripts in that passage.

    Also, one has to keep in mind that although there are sporadic references to the effects of the world market throughout the three published volumes of Capital, there is nowhere the systematic treatment that Marx intended for the 6-volume “Critique of Political Economy”, where the world market was going to receive its own volume!

    Comment by negative potential — May 29, 2013 @ 7:26 pm

  3. Well, maybe I took it out of context but my main point is that chapter 14 of V. 3 of Capital contains the seeds of an analysis that reached full bloom in Grossman. Basically, when there is a falling rate of profit due to an increased organic composition of capital the system has ways of overcoming it through what David Harvey called geographical displacement.

    Comment by louisproyect — May 29, 2013 @ 7:44 pm

  4. There has to be some infrastructure for this superrexploitation to take place, ports,roads, stable population, a unified country. China is the only country to have this infrastructure and a large mass of exploitable labor. The other countries you mention have only pockets and can’t begin to take on the role China plays in world manufacturing. Try driving around India, its a disaster.
    That’s why its important to note that China’s working age population is now at its peak. It will decline sharply in coming years, which is going to put pressure on wages.They are trying to dismantle the state enterprises to free up more labor, but

    Comment by purple — May 29, 2013 @ 9:21 pm

  5. but, there is going to be fierce resistance and the pool of potential cheap labor is not large enough to offset their ageing population.

    All in all, it looks likely that these factors will lead to a profitability crisis in global production.

    Comment by purple — May 29, 2013 @ 9:24 pm

  6. There has to be some infrastructure for this superrexploitation to take place, ports,roads, stable population, a unified country.

    You need to read Adam Hochschild’s “King Leopold’s Ghost”.

    Comment by louisproyect — May 29, 2013 @ 9:25 pm

  7. How important is this? In 1960 and the half dozen years before and after, at the height of U.S. imperialism, the sum of its exports plus imports of goods was less than 7 percent of GDP, with a net of exports over imports of half a percent to one percent.

    Comment by Proportion and context — May 29, 2013 @ 11:07 pm

  8. How important is this?

    As important as China is. Basically manufacturing has moved to China to exploit cheap labor, making Walmart shelf goods affordable to a working class whose wages have stagnated. There is a tendency to look at FROP from the standpoint of a country defined by its borders. But I always look at capitalism as a world system. It entered history as a world system (contrary to the Political Marxists, damn their eyes) and still exists as one. It will be replaced by another world system: socialism.

    Comment by louisproyect — May 29, 2013 @ 11:19 pm

  9. The China story is certainly important now, but it is too late for explanatory value. It does not figure in the mechanisms of U.S. imperialism at its height. Nor does it explain the long decline in the real earnings of U.S. workers, which began i 1973, almost twenty years before lots of Chinese labor became available to foreign capital.

    Comment by Proportion and context — May 30, 2013 @ 12:08 am

  10. I am wary of explanations that follow some kind of “rational” order. Trying to put all these world historical elements into a comprehensive whole would be beyond Karl Marx even.

    Comment by louisproyect — May 30, 2013 @ 12:14 am

  11. You forget the role of the currencies as a limit to this unequal exchange, sooner or later there will be an appreciation of the more developed countrys currency and a deppreciation of the currency of the less developed countrys, until the flow of the surplus value from the later to the former stops or even becomes negative. The only way to overcome this obstacle is foreign direct investment (another counteracting tendency) from the imperialist nation to the poor countries but this will tend to rase the productivity and the organic composition of capital, in the later and so there is a longer tendency of rate of profit equalization in the world economy.

    Comment by Dimitris — May 30, 2013 @ 2:37 am

  12. Louis,

    Speaking of MR, what are your thoughts on Sweezy’s critique of Grossman/Bauer (put forth in his The Theory of Capitalist Development)?

    IMHO, the falling rate of profit theory has always rested on somewhat shaky ground in the hands of the “fundamentalist” Marxists, since a) their attempts to calculate the “average rate of profit” are fraught with all kinds of methodological perils, and b) they usually do not take into consideration the role of the “counteracting” tendencies (or explain, as Heinrich points out, why the rising organic composition of capital finally overcomes them all in the end). Moreover, Sweezy rightly points out that there was always an uneasy tension in Marx’s assumption under the tendency for the rate of profit to fall that surplus value remains constant in the face of a growing organic composition/mechanization, since in just about every other part of Capital (especially Vol. 1), he states quite clearly that such a phenomenon increases surplus value.

    In any event, Sweezy and Baran at least tried to ask what effect the increasing concentration and centralization of capital (i.e. monopoly state of capital) has had on Marx’s early conception of a competitive capitalism (and, coupled with this, was their theoretical insight regarding the increase in the output of specifically “capitalist” use values and the waste associated with it – ably expounded upon by Ian Gough in NLR back in the 80s). Naturally, their attempts to “go beyond Marx” were anathema to the latter day Roberts and Klimans (Mattick, Yoffe, Meeks, etc.), who likewise branded MR as “underconsumptionist” and “keynesian”, without bothering to engage their more original/substantive arguments re: monopoly/oligopoly and its significance for modern capitalism, Now it seems we are back to believe in perfect competition mixed with the Tugan-Baranowski concept of capitalists building windmills upon windmills (or was that Sismondi?) to escape any demand side restrictions. Either way, the circular firing squad that these warring parties form hardly furthers the project of leftist revivalism….

    P.S. Kliman is perhaps the most curious of that crowd. He is so invested in demolishing the “underconsumptionist” thesis that he denies that labor has been trounced at all over the last 30 years. IN fact, they have done quite well as a class. Well, at least he’s consistent!!!

    Comment by Tim D. — May 30, 2013 @ 4:15 am

  13. We are already in the midst of a global shake-up of capital. In the 1970s businesses began moving production abroad out of the USA as a response to that crisis. The crisis of 2007-8 was not by any means just a local breakdown in the US economy as a national entity. It was a global crisis which seems to have receded for now, but whose shadow is still in the background. At this point it should not be a big discovery to note that capitalism has in the past been able to resolve national crises through global expansion. But today the room for that global expansion is being rapidly depleted.

    Comment by PatrickSMcNally — May 30, 2013 @ 11:12 am

  14. Actually Kliman says workers have received a larger share of the profit pie over the years (a part of the surplus), but it does not follow from that that they are doing well, nor that there wages have to increase.
    He, and some of his defenders (including myself on this issue), demonstrate that point here:

    Comment by CB — May 30, 2013 @ 1:08 pm

  15. “At this point it should not be a big discovery to note that capitalism has in the past been able to resolve national crises through global expansion.”

    Could it be possible that capitalism is moving forward as a consequence of “national crisis”? What is the relationship of relatively immaterial forms of accumulation to this question? In the 1920s, the emergence of Hollywood (as well as radio) signalled the discovery of media and entertainment as new arenas for it. The end product was immaterial and non-utilitarian (such as, for example, a car or a washing machine). Enormous profits were subsequently made, with professional sports in the last few decades being one of the most recent examples of it. Ted Turner fused them when he purchased a small South Carolina television station, got it on fledging cable networks around the country and bought a baseball team, the Atlanta Braves, for a pittance to show on this network, christened WTBS, and marketed them as “America’s Team”. Steinbrenner did something similar with the Yankees.

    Social media appears to be the next frontier in the regard, with its ability to enable capital to colonize every aspect of our lives. From the birth of your child to the death of your parents, and everything in between (especially sex, of course), all of it is now open for business in real time. And, it is transnational. It appears that the problem is, however, that, unlike the period of industrial capitalism, a lot less workers are needed.

    Comment by Richard Estes — May 30, 2013 @ 5:33 pm

  16. Interesting points from Grossman. The following articles from the journal Pod Znamenem Marksizma (translated index for 1922-29 at http://libcom.org/library/under-banner-marxism) also go into this theme: http://libcom.org/library/international-exchange-law-value-isaak-dashkovskij

    Louis, in issue no.9; 1929 there are reviews of P.V. Maksakovskij’s Capitalist cycle and of Grossman’s book (the latter by Poznjakov, who was a good Marxist economist himself). There should be more articles from this journal available. It would be great if a library had all these issues digitized (because ordering them one-by-one is too costly); from 1930 onwards they seem already digitized: http://catalog.hathitrust.org/Record/007848926
    Could you check whether you can access this journal through one of your libraries?

    Comment by Noa Rodman — May 30, 2013 @ 7:13 pm

  17. I second Tim D’s comments. Also, the growth of oligopolies aids in the globalization of capital. More systematic pressures upon government can also be exerted. It provides funds for formalizing and habituation of research and development that finds new ways to Taylorize production, including building it to the design of products. Sophisticated forms of control of the labor process are also more likely to be uncovered and used.

    One of the comments above suggests that the shift of production to poorer nations will provide, in the long run, no real advantage in terms of the rate of profit to the firms that have exported production. This sounds eerily like the neoclassical economics to me. When you have to resort to a long run argument, you are dealing in things that you can never demonstrate. You just say, well, profit rates haven’t fallen, but they will. Once in a seminar I attended, the economist Ryuzo Sato was asked what happened when an economy’s growth rate diverged from the so called golden age equilibrium growth path. How did we know the economy would return to that special path. He said it would, according, he implied, to his mathematical model, though it might take 100 years. I think I head a guffaw from somewhere in the room.

    It is interesting how such a smart fellow as Anwar Shaikh, who wrote two articles in Science and Society, that demolished the neoclassical theory of international trade, could still believe with every one of the extraordinary number of brain cell he has, that there is an invariable tendency for the rate of profit to fall.

    Comment by michael yates — May 30, 2013 @ 9:53 pm

  18. The Neue Marx Lekture in Germany is a retreat by Marxist academics into an abstract scholasticism, a bit like the Uno school in Japan, except that Heinrich will sometimes sound off a few thoughts about the Left Party etc. I find little of merit in Heinrich’s expository work, except that he quite rightly notes that Marx’s work was very much unfinished, and that Marx had doubts about various issues and would rethink things. Which is true, and it provides an opportunity for Heinrich to introduce his own Marxist brand. But in reality his understanding of Marx is poor, as – about this I have no doubt – future scholars will point out. The ludicrous thing then is, that American Marxists in search of a foreign European guru or a Marxist messiah, hail Heinrich as the greatest thing since sliced bread. In reality, there is nothing much that justifies the aura growing around Heinrich. Grossman, by the way, never really studied the world economy. He studied abstract schemas about the world economy. The fact is, that there are world market prices for some product types, but not for others, among other things, because some products aren’t sold much in the world market, while others are. In the case of the EU, the majority of products traded internationally are traded within the EU, at EU prices.

    Comment by Jurriaan Bendien — May 31, 2013 @ 6:39 pm

  19. Jurriaan Bendien’s comments sound like sour grapes. Take issue with Heinrich’s interpretation of Marx all you want, but claiming that his understanding of Marx is poor is just petulant carping. Heinrich has already combed through more unpublished manuscripts by Marx than most people will in a lifetime. I already called this shit out in the comments section at The North Star, but Bendian has yet to respond. Like the deeply paranoid Andrew Kliman, Bendien seems to regard Heinrich’s work as a personal affront.

    Comment by negative potential — May 31, 2013 @ 10:08 pm

  20. “profit rates haven’t fallen, but they will.”

    You make it sound as if US-based companies just began shifting production abroad yesterday and we are all simply speculating about what may happen inj the future. It’s been going on for several decades now and we can already map out a general patern. As many of the traditional permanent full-time jobs have been stripped away from the US workers, the consumer-purchasing power has become more dependent upon credit. As production techniques improve, vast new quantities of goods are available on the market. Yet selling all of those goods for a profit requires that potential consumers must have the purchasing power to buy them at a profit for the seller. Since income is much more unstable than before, credit must substitiute. But credit can only be maintained insofar as the one being credited already possesses some assets which may act as collateral for the credit. As the job market becomes more shaky, the basis of collateral assets among consumers who are being granted credit also becomes more shaky. Eventually this results in things like what we saw in 2007-8. None of this involved some far away speculations.

    In fact, the most recent trend is for companies to move some jobs back to the USA. The wages of US workers have already been undercut to a point where it can at least be argued that some companies may do better by simply keeping the production process here. So rather than making guesses about the long run we already have a pretty good practical map of how all of this has played out over the last half-century. It clearly has not resolved the problems inherent in the declining rate of profit and over-production.

    Comment by PatrickSMcNally — May 31, 2013 @ 11:07 pm

  21. I haven’t got time now for an extended exposition of Heinrich’s errors (which start off with simple distinctions such as between value and exchange value). I am not an academic at present.

    I’m not really concerned about what Heinrich does or doesn’t do, he can do what he likes. It’s just a laugh to see how the American Left promotes all the wrong and misleading ideas by second-rate thinkers, as if they are the greatest thing since sliced bread, that is all.

    I mean, if you are going to promote particular thinkers, why not promote the best, instead of trailing behind all kinds of obscurantist weirdo’s?

    Comment by Jurriaan Bendien — June 1, 2013 @ 7:31 am

  22. “I’m not really concerned about what Heinrich does or doesn’t do”

    LOL, apparently you’re concerned enough to give your 2 cents on every blog where his name is mentioned, as well as editing Wikipedia pages to attack the proponents of the Neue Marx-Lektüre.

    Comment by negative potential — June 1, 2013 @ 8:42 am

  23. I doubt it. I have commented on Heinrich a bit on perhaps two or three blog pages. I debated with Heinrich on OPE-L. I’ve also mentioned Heinrich in a wiki article I wrote on “value form”, but there is no criticism of Heinrich in it – I was just commenting on what people perceive as the arcane scholastic nature of the value-form debate. But that is about it. I have nothing to do with that evil Jewish tyrant Kliman either. You can count on American and British leftists to translate the worst of the Marxist literature from Germany, instead of the best.

    Comment by Jurriaan Bendien — June 1, 2013 @ 7:12 pm

  24. I post some comments on this article here: http://trotskyschildren.blogspot.com/2013/06/bangladesh-factory-disasters-are-good.html

    Comment by Dan King — June 1, 2013 @ 8:36 pm

  25. Actually Dr Kliman boasted and bragged to me about his Jewish ancestry. He probably imagines that he is descended from a long line of rabbi’s, just like Marx…

    Comment by Jurriaan Bendien — June 2, 2013 @ 8:49 am

  26. For once Proyect you have absolutely hit the nail on the head.

    The likes of Kliman, Roberts et al, ignore the world market because it blows their empirical evidence out of the water. Marx was clear that his tendency for the rate of profit to fall was an abstraction. It is a totally justified abstraction because the ability to utilise unequal exchange is diminishing, and then Roberts and Kliman may find the empirical evidence to back their dogma’s.

    Incidentally, when you say:

    “it at least behooved me to read the long and fairly arcane article in Monthly Review by Heinrich (Crisis Theory, the Law of the Tendency of the Profit Rate to Fall, and Marx’s Studies in the 1870s), Michael Roberts’s reply to the article (Michael Heinrich, Marx’s law and crisis theory) and finally Marx himself.”

    You should have said it is necessary to actually look at the historical evidence also!

    Comment by SteveO — June 2, 2013 @ 2:36 pm

  27. You should have said it is necessary to actually look at the historical evidence also!

    An important point. When I find the time, I am going to compare the Fortune 100 ratings from 1955 or so to today.

    Comment by louisproyect — June 2, 2013 @ 2:42 pm

  28. I think the point is, there is no basis for dichotimizing the difference between the analysis of capital in abstraction from the effects of the world market – effects that Marx was obviously well are of – and an analysis that would then proceed to factor in the effects of that world market on, say, the rate of profit and its tendency, a concept derived from the purely abstract analysis of capital in the first place. So why the effort to artificially juxtapose two obviously categorically different concepts?

    Perhaps in an effort to latch on to this or that aspect of Marx’s dialectically elaborated system as a kind of intellectual property. Whatever the motivation, it’s best to critically absorb all sides. So there is no reason to apriori exclude “underconsumption” (why not “over”-consumption as a problem as well?) as a problem of capitalist accumulation, once we conceptually distinguish accumulation from capitalist *production*, which is exactly what the M. Roberts/Kliman/Artesian school does not do. That doesn’t mean they are wrong in their single-nation analysis, I think they tend to be right here, as far as that goes. But Marx’s Capital in all three volumes is a *single nation* analysis; he never got around to a full exposition on “the State, foreign trade, the world market” as proposed in the 1859 Preface.

    So lets get on with it already. My favorite pet peeve is the treatment of the question of rent. It is no accident that both M. Roberts and MR are both what I call “rent ecumentalists”, where all categories of the distribution of surplus value that are not directly appropriated by capitalist producers (industrial capital) as profits of enterprise, are lumped into a sort of “excess” bucket called “rentier capitalism”, in turn associated with something called “financialization”. This doesn’t correspond to anything Marx dealt with in terms of rent. Maybe he was wrong, but the point is to make the argument. Present theories of “financialization” don’t make this argument in relation to Marx’s theory of rent, on the contrary, they blur over it. Strikes one as pure intellectual laziness, nothing more. The precise form of the appropriation of surplus value (“distribution”) makes all the difference for understanding the trajectory of accumulation. It makes a difference if it is appropriated as interest, dividends, or rents, even though – to inject a further question – they are all returns on fictitious capitals.

    And whether accumulation tends toward productive reinvestment or ficticious capital formation is obviously of import to a theory of crisis. And that doesn’t mention what should be of the greatest import to the critique of capitalist production, accumulation and crises: the effect of all on the reproduction of labor power, producing a crisis of that reproduction, without which capitalism can’t exist. That same crisis also produces the class struggle.

    Comment by matthewrusso9 — June 2, 2013 @ 7:28 pm

  29. The fact is that the global economy does increasingly resemble a “single nation” model. There are obvious regional differences, such as often exist even within nations. But we’re long past the time when it was an easy matter to maintain the US standard of living and consumption while shifting low-paying jobs abroad. The crisis of 2007-8 did essentially reflect the globalization of the economy.

    Comment by PatrickSMcNally — June 5, 2013 @ 11:36 am

  30. I find it amazing that everyone can blather on about the tendency for the rate of profit to fall without acknowledging that Marx explicitly said that his was a simple model that would need disaggregating into rent, unproductive labor, profit to enterprise, government . “That the fall of the rate of profit can further be delayed by the omission of existing deductions from profit, e.g. by a lowering of taxes, reduction of ground rent etc., is actually not our concern here, although of importance in practice, for these are themselves portions of the profit under another name, and are appropriated by persons other than the capitalists themselves” http://www.marxists.org/archive/marx/works/1857/grundrisse/ch15.htm

    further this profit must be divided by the last monetary price paid for capital ie non-labor inputs and labor inputs (or a real price measured in the unit of account. in other words, if the capitalist exchanged his product for a machine you would take the exchange value of that product in another context and measure that against the machine to get it’s monetary price. this only applies in a generally capitalist economy)

    any discussion of the tendency for the rate of profit to fall that doesn’t acknowledge these elements is effectively useless.

    Comment by Nathan Tankus — June 6, 2013 @ 3:34 am

  31. “the fall of the rate of profit can further be delayed by … a lowering of taxes …”

    The last 4 decades have seen a steady stream of tax-cuts. It’s not as if this is some new idea on the board. What has been most funny on this thread is the way that many supposedly educated people have referred to the possibility of overseas investments, tax cuts, et cetera as if these are fresh inspirations which might just be able to solve the problems of capitalism. In reality, the last 4 decades have been fervently dedicated to putting all of these types of solutions to work. The crisis of 2007-8 was the outcome.

    Comment by PatrickSMcNally — June 6, 2013 @ 9:03 pm

  32. That’s true, Patrick, but it would have been much more like 1929 if China had remained a “workers state”.

    Comment by louisproyect — June 6, 2013 @ 9:08 pm

  33. If the profitability of a capital asset falls, the value of the capital asset itself is likely to fall too. If that is so, then the latter drop can offset the former. Marx was well aware of this, but he evidently argues the average profit rate on invested production capital will decline regardless of that. However, Marxists have to my knowledge never explained, credibly, how exactly that works. Presumably the drop in average profitability would be proportionally larger and faster, than the drop in the real value of capital assets, but why that would necessarily be so, remains unclear.

    Comment by Jurriaan Bendien — June 7, 2013 @ 8:10 am

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