Date: Wed, 19 Oct 1994 12:57:53 +0700 From: djones-AT-uclink.berkeley.edu (jones-bhandari) Subject: falling rate of profit I just read Stephen Cullenberg's The Falling Rate of Profit: Recasting the Marxian Debate (London: Pluto Press, 1994). Praised by Bertell Ollman and MC Howard, the book raises several criticisms about orthodox analyses which I have found persuasive (Grossmann, Mattick, Rosdolsky, Yaffe, Cogoy, Fine, Weeks, Shaikh). Here is a very partial response--and not on behalf of these thinkers whom I may have misunderstood. C. takes such orthodox analyses as examples of "holistic social theory" which he then subjects to critique. This is how he defines such theory (which he also calls the hegelian totality): "The whole is understood to be a structured totality or a unity which is organized by an inner essence. The inner essence imparts on the totality a purpose and/or logical cohesion. The parts of the totality have meaning only as they are considered in and through their place or function in the totality. The parts of the totality are sometimes referred to as the surface manifestations, or appearance, of the inner essence of the totality."(21) According to C such an understanding of totality underlies both the ontological premises and methodological procedures of orthodox analysts, thusly recapitulated: "The capitalist mode of production is conceived to exist prior to and independent from its consituent parts. The relevant part for the debate of TRFP is the capitalist enterprise, which is variously referred to as the capitalist, capitalist firm, or simply 'capital'. Accumulation is capital's inner law of motion and it is capital's role to express this essence. Accumulation is contradictory process which is manifested in part by the law of the TRPF." [31] Drawing as usual upon those much more advanced than I, I would like to make two objections to this characterization of orthodoxy: the first in its own terms, the second based on a different conception of the relationship between parts and the whole. Drawing upon Althusser, C. casts ontological doubt upon orthodoxy since these theorists themselves supposedly reduce the realm of many capitals to but the manifestation of the putative essence of capital in general--which they then posit as accumulation through upward pressure on the organic composition of capital. That posited, the falling profit rate can only follow logically. Here C brings into play many of the fundamentals of the postmodernist theory of knowledge: anti-essentialism and -reductionism, as well as ontological parsimoniousness. The reality of any essence of Capital is called into question, and the attempt to reduce all firms to that essence is resisted. Julius Sensat, Jr. has argued that the hypostatization which C is calling into question is not to be attributed to orthodox Marxist social theorists but to the capitalist production of commodities, which itself is a process of mystical hypostatization. To quote Sensat at length: ...when (Marx) says that individual capitalists should be viewed as capital personified, he is not abdicating his materialism in favor of the ontological view that the individual capitalist, rather being an actual human being capable of existing and acting apart from his status as a capitalist, is simply capital in a personal mode of existence. Rather, he is pointing to the determining role of capitalist relations of production. His view is that embodiments of capitalist relational structures tend to have a certain dynamic (though transitory) stability--that is, they tend to undergo preservation and modification of structure in accordance with certain laws of production and development. These laws do not deny genuine agency to individuals who are the relata of the structure. Rather, when laws are in effect (in virtue of appropriate boundary conditions), they constrain the determinants of that agency and channel its effects in such a manner that the indicated dynamic stability is exemplified. Events transpire as if capital, in order to realize itself, takes on the personal form as the individual capitalist, much as the God of Christianity is said to have assumed a human form in Christ. Thus though the said laws require individuals to hypostatize capital, they themselves do not hypostatize capital." As John Weeks explains, crisis-induced devaluations of capital transpire or seem to be brought on by accumulation itself in order to allow it to be reestablished. But contrary to C, there is no religion or functionalism involved in such an understanding of capital accumulation. This is a feat of analysis. If accumulation implies upward pressure on the organic composition (and this is an eminently empirical, as well as theoretical, claim as I suggest below), capitalist society must have some mechanism by which to check that upward pressure as it has in fact reproduced itself. It is the task of analysis to determine the means by which that reproduction is achieved in practice. (See Grossmann, 1929, pp131-134)Or as Mario Cogoy has put it: "the central task of modern Marxist political economy is to analyze how, up to a point, the social system of production provisionally organizes itself with a view to maintaining certain variables at the required levels in conditions of rapid technological development with strong capital intensity." But C may not take Sensat's passage as an example of the hegelian totality, as capitals are not seen here not as the expressive causality (or the Spivakian subject-effect) of any essentialism or Spirit: accumulation is not The Spirit (or Moses and the prophets) which takes the personal form of many and every capitalist. Sensat understands accumulation in the context of determinants and channels of "appropriate boundary conditions", i.e., capitalist competition. So as even the early Marx did not understand alienation in terms of a Feurbachian philosophical anthropology, accumulation is also understood as the necessary result of a specific ensemble of social relations. But C. points out that the orthodox theorists do not explain accumulation as the result of competition but rather competition as the result of accumulation. And Cullenberg quotes Marx from the Grundrisse: "Competition can permanently depress the rate of profit, if...and insofar as a general and permanent fall of the rate of profit, having the force of a law is conceivable prior to competition and regardless of it. To try to explain the inner laws of capital simply as the results of competition means to concede that one does not understand them." (751-2)But then C simply dismisses this passage because it comes from Marx's most Hegelian mature work. So what obviously needs elaboration here is the Marxian concept of competition. But what needs to be brought into play first is the simple concept of extra surplus value, for that can be most effectively appropriated through economies of scale and technical change--that these methods are superior to, say, simply a supervisor-enforced increase in the intensity of exploitation is a very well-established empirical claim, not a Truth, a priorism or essence. Because of competition (and because firms better withstand uncertainity with an excess of surplus value), firms are indeed forced to reach for extra surplus value. But then as social values are then competed down to the values of the innovating capitalists (another empirical claim), the reduced rate of profit will limit the magnitude of the mass of surplus value, even as greater productivity may yield a sufficiently greater mass of use values that surplus value can still grow absolutely. As Mattick Jr has explained: "Marx's concept of organic composition refers not so much to a different numerical ratio as to a property of the value composition: namely, its relation to changes in the the technical composition. To speak of the organic composition as having a tendency to rise, therefore, is really to say that in each period of capitalist prosperity within the trade cycle, and in the history of capitalism as a whole, the increasing productivity of labor resulting from capitalists' ceaseless attempts to extract surpluys value from labor implies upward pressure on the value composition of capital." Let us leave aside here Okishio's challenge that competition, insofar as it "uncovers" the declining unit values of commodities that are both the outputs of and inputs to basic industries, will actually enhance the general rate of profit. The effect on the general rate of profit by the accumulation of many capitals is not the question here. As I understand them, orthodox theorists are not explaining the falling rate of profit via competition for two reasons: first, competition merely enforces the law of value upon producers--it is increased productivity resulting from a higher ratio of dead to living labor which has brought down the *rate* of profit (similarly for the Okishians the increased rate of profit would find its efficient cause in greater productivity, while competition would only bring this unintended effect out); secondly, competition only tendentially equalizes the rate of profit but competition in no way determines what the depressed (or enhanced) rate of profit averages out to be (for this task we need 1. an understanding of the relationship between the parts and whole which C does not develop but see Fred Moseley in Marx's Method in Capital and 2. an explication of the concept of tendency, especially tendential equalization--see Guglielmo Carchedi). Moreover, it is the depression of the average rate of profit that then motivates even more frantic attempts to accumulate via rationalization within the firm, foreward planning to avoid bottlenecks in the supply of raw materials or the establishment of new branches with a lower organic composition of capital, which due to their labor intensity create the potential for more value to be produced, thereby unintentionally raising rate of profit for capital as a whole--even if, contra the neo-Ricardians, these new branches are not the sort of basic industries which can directly counteract general upward pressure on the value composition of capital (e.g., as would cheap foodstuffs from neo-colonies). Of course the flip side of this is that increases in the organic composition of luxury industries will depress the average rate of profit.(This has been explained by Carchedi in his last book). The Revival of Fundamentalism (Accumulate! Accumulate! That is Moses and the prophets) can only be understood in the context of a crisis of capital as a whole; it cannot be attributed for example to the Weberian Puritan callings or the Schumpeterian biological instincts of entrepreneurs. The crisis of capital as a whole calls for nothing less than a resubmission to idols--to Schumpeter's Cult of the Entreprenuer, Gilder's Spirit of Enterprise,the economists' new fetishes of Dynamics and Technical Change, even the Marxist hypostatization of Technological Determinism as the omnipotent force of History. These are but different names for the hypostatization which capitalist production itself requires. They are the Gods, seemingly standing outside of space and time, of which entire nations, much less simply all capitals, must be an expression. *Capitalist enterprises can in fact only appear, i.e., survive, as surface manifestations or appearances of a hypostatization, viz., the inner essence of capitalism.* One is either a fundamentalist Christian, or one is damned. As Marx put it in Vol III "If the rate of profit falls, there follows on the one hand, an exertion of capital in order that the individual capitalists, through improved methods, etc., may depress the value of their individual commodity below the social average and thereby realise an extra profit at the prevailing market price. On the other other hand, there appears swindling and a general promotion of swindling by recourse to frenzied ventures with new methods of production,new investments of capital, new adventures, all for the sake of securing a shred of extra profit which is independent of the general average and rises above it." So 1. the essence of capital--accumulation via technical change in the form of either new capital-intensive methods and new products--is that of which all capitals must in fact endeavor, on pains of extinction, to be a causal expression, especially in times of systemic crises of profitability. 2. this essence is not posited but rather is both the cause and effect of the competitive search for extra surplus value, which (the search) in itself cannot explain the falling profit rate. Indeed that search may have the unintended consquence of so increasing relative surplus value that overall surplus value may rise sufficiently for a faster rate of accumulation, but this is another argument and one to which I will return in a later post when I attempt to defend a dialectical social theory both in terms of a different understanding of (a)relationship between parts and the whole and of (b)the interconnection of all parts. I disagree with C on his understanding of both these aspects of totality. Some citations Julius Sensat, 1988. "Methodological Individualism and Marxism." Economics and Philosophy 4 G. Carchedi. 1991. Frontiers of Political Economy Paul Mattick, Jr. 1987. Value Accumulation and Crisis. International Journal of Political Economy, vol 17, no 2 (see his introductory comments to Cogoy's essays) John Weeks, 1981. Capital and Exploitation for a different understanding of what Stephen C is calling the hegelian totality, see Rosdolosky's chapter on capital in general in The Making of Marx's Capital Paul Mattick, Jr. "Some Aspects of the Value-Price Problem", International Journal of Political Economy, vol 21, no 4. Winter 1991-1992 Fred Moseley, ed. 1992. Marx's Method (especially the first part of Fred's essay). for an excellent critique of Althusser's theory of ideology (which Stephen makes use of), see Christopher L. Pines, 1993. Ideology and False Consciousness: Marx and his Historical Progenitors jb ------------------
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