Date: Mon, 25 Jul 1994 08:36:07 -0400 (EDT)
From: Doug Henwood <dhenwood-AT-panix.com>
Subject: Re: Labor, Surplus value, catastrophism


The falling rate of profit is one of those areas where one should tread 
carefully. Orthodox Marxists have been talking about it so long that 
you'd almost assume that the profit rate is now negative. Two points 
along these lines:

1) Empirically speaking, the rate of profit for nonfinancial corporations
in the U.S. has declined sine the late 1940s and early 1950s. If you
divide pretax corporate profits (from the national income accounts) by the
value of the capital stock (plant and equipment only, which I got from the
Fed's flow of funds accounts, but which comes originally from the U.S.
Departement of Commerce's Bureau of Economic Analysis), the rate of profit
hovered between 20 and 25% in the late 1940s, 15-20% in the 1950s, and 
then trended downward to a low of around 7% in the early 1980s. It rose a 
bit during the Reagan years, but has been more or less flat at around 10% 
since.

2) Remember that the chapter in K v III following the one laying out the
"tendential fall in the rate of profit" was called "counteracting
factors." These counteracting factors read like a description of the last
20 years of capitalism (i.e., the Reagan-Thatcher dismantling of Keynesian
regulated welfare state capitalism): more intense exploitation of labor, 
reduction of wages below their value, cheapening of the elements of 
constant capital, increasing the relative surplus population, foreign 
trade, and the increase in share capital.

Finally, the doctrine of terminal crisis has far more to do with Engels, 
Luxemburg, and other heirs of Marx than the old man himself. In a 
footnote in Theories of Surplus Value, he said that "permanent crises do 
not exist." And a passage in the Grundrisse argues that folks like 
Ricardo, who emphasize capital's ability to overcome barriers, have a 
deeper understanding of its inner essence than those like Sismondi, who 
emphasize the barriers.

Doug

Doug Henwood [dhenwood-AT-panix.com]
Left Business Observer
212-874-4020 (voice)
212-874-3137 (fax)


On Sun, 24 Jul 1994, Alex Trotter wrote:

> 
> The economic dimension of Marx's ouevre is not my forte; I wonder, 
> therefore, if those with deeper knowledge can elucidate something for me. 
> If the labor theory of value is valid (i.e., that profit derives only 
> from living labor and not from raw materials or machinery) and capitalism 
> operates by a dynamic whereby the mode of production is constantly 
> revolutionized toward an increasing ratio of constant to variable 
> capital, then the theory of the historic tendency for the rate of profit 
> to fall should also be valid. Looking at capitalism today, it does seem 
> that the preponderance of speculative over tangible wealth is quite 
> lopsided. Is this an indication that the rate of profit actually *is* 
> falling? 
> 	This leads to another question: what about the predictions 
> proffered by Marx and later, by Marxists, that capitalism would succumb 
> to catastrophic economic crisis? Certainly we know that capitalism is 
> prone to crises or "business cycles," the worst so far having been the 
> great crash of 1929. World War II and postwar reconstruction gave the 
> system a new lease on life, but it started to slow down again in the 
> early 1970s. Are we reaching, or have we reached, a situation in which 
> Keynesianism, the welfare state, and permanent war production can no 
> longer keep the engine running? What importance is now placed on the 
> theory of catastrophe?
> 	A slew of other questions come out of this too, such as the 
> relevance of Lenin's (or Luxemburg's) theories of imperialism, and also 
> the question of to what extent the social revolution is brought about by 
> the subjective will of the proletariat, or depends on the determinism of 
> objective processes in the economy. What do y'all think about this?
> 
> --Alex Trotter
> 


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