Date: Sun, 24 Jul 94 22:24:09 MDT From: Hans Ehrbar <ehrbar-AT-econ.utah.edu> Subject: Re: Labor, Surplus value, catastrophism Yes, Alex, a small minority of Marxist economists, myself included, think the basic mechanism is that simple. But if you get into the details things become much more complex. If I had to recommend one single reference about the question whether the rate of profit has actually fallen it would be: Gerard Dumenil and Dominique Levy, "The Economics of the Profit Rate", Edward Elgar 1993, ISBN 1 85278 760 0. Even if the rate of profit falls, the next question would be, why should that lead to crisis? Could not capitalism go on for ever with a smaller and smaller rate of profit, especially if the rate of exploitation and the mass of profits increase? Dumenil and Levy have an interesting answer which I want to give here only to illustrate the depth of the question: as a response to the falling rate of profit firms streamline their operations: computerized inventory control and just in time deliveries etc. But what is rational for the firm turns out to be destabilizing for the economy as a whole. Therefore Dumenil and Levy hypothesize, along with the tendency of the falling rate of profit, a tendency of rising instability of capitalism. They have a neat little bifurcation model, their famous "pitchfork", which models this mathematically. Regarding catastrophe, however, my own concern lies in a slightly different direction. Marx was too concerned with the autosubversion of capitalism, and did not foresee that capitalism would ever become so entrenched that it could run up against the ecological limits of our earth. The labor theory of value postulates that the forces which govern the capitalist economy are not reducible to individual intentions but Marx called value an "automatic subject". There seems to be widespread optimism that it will be possible to wean the world economy of its addiction to growth and profit before it is too late. I do not share this optimism. Hans G. Ehrbar ehrbar-AT-econ.utah.edu Economics Department, 308 BuC (801) 581 7797 University of Utah (801) 581 7481 Salt Lake City UT 84112-1107 (801) 585 5649 (FAX) ------------------
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