Date: 27 Nov 95 02:09:55 EST
From: "Chris, London" <100423.2040-AT-compuserve.com>
Subject: Marx's limit cycles


There appear to be three different but not mutually exclusive
statements by Marx on the fundamental nature of cycles, and the 
*principal* reason for their periodicity.

Which should we prefer?




John said:

> Do you accept Marx's idea that the turnover of fixed capital
>   would form the material basis for a theory of crisis?
>
Chris said:

>- Could you give a reference by chapter and para number, for this
>idea?

See CAPITAL, BK II, Ch. 9, Para 11



Comment by Chris:
-----------------

1.
xx

Thanks for the convenient reference by
chapter and para, which helps regardless of edition.

"One may assume that in the essential branches of modern industry
this life-cycle now averages ten years. However we are not concerned
here with the exact figure. This much is evident: the cycle of 
interconnected turnovers embracing a number of years, in which capital is 
held fast by its fixed constituent part, furnishes a material basis
for the periodic crises..."


2.
xx


The argument presented in this passage is consistent with that
in the Communist Manifesto but not identical:

"How does the bourgeoisie get over these crises?  On the one
hand by enforced destruction of a mass of productive forces;
on the other ..."

Here the statement could imply that the discounting of vast 
quantities of unsold stock in a slump, is an essential part of 
the process of resolution of the crisis, as well as the discounting
of large areas of uncompetitive fixed capital.

3.
xx

Capital Vol 1 Ch xxv "The General Law of Capitalist Accumulation", para 6:

"... a rise in the price of labour resulting from the accumulation of 
capital implies the following alternative:
Either the price of labour keeps on rising, because its rise does not
interfere with the progress of accumulation. ...
Or, on the other hand, accumulation slackens in consequence of the rise
in the price of labour, because the stimulus of gain is blunted. The rate of
accumulation lessens; but with its lessening, the primary cause of that 
lessening vanishes, i.e. the disproportion between capital and exploitable
labour-power. The mechanism of the process of capitalist production removes
the very obstacles that it temporarily creates. The price of labour falls 
again to a level corresponding with the needs of the self-expansion of 
capital, whether the level be below, the same as, or above the one which
was normal before the rise of wages took place. We see thus: In the first 
case it is not the diminished rate either of the absolute,  or of the 
proportional, increase in labour-power, or the labouring population, 
which causes capital to be in excess, but conversely the excess of 
capital that makes exploitable labour-power insufficient. In the second
case, it is not the increased rate either of the absolute, or of the 
proportional, increase in labour-power, or labouring population, that makes
capital insufficient; but, conversely, the relative diminution of capital 
that causes the exploitable labour-power, or rather its price, to be in 
excess. It is these absolute movements of the accumulation of capital which 
are reflected as relative movements of the mass of exploitable labour power,
and therefore seem produced by the latter's own independent movement.
To put it mathematically: the rate of accumulation is the independent,
not the dependent, variable; the rate of wages, the dependent, not the 
independent, variable."  

This passage, much quoted by Steve Keen, appears to me to say that the 
principal cause of crises is the limitation of the total available capital
in the form of both variable and constant capital, because there is a limit
to the total exchange value of the society, and that the limiting factor 
that tips the cycle into crisis is a slowing of the rate of accumulation of 
capital.


Are these three somewhat different Marxist explanations of the limit cycle
and its repeated resolution, incompatible, and if not, which is the most 
authoritative version?

Chris, London







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