[OPE-L:6883] Re: Re: Re: Re: Re: Re: Re: Iraq

From: Rakesh Bhandari (rakeshb@stanford.edu)
Date: Wed Apr 03 2002 - 15:57:22 EST

Dear Cyrus,
According to Grossman and Bernice Shoul, the combined theory of the 
falling rate of profit and its counter-tendencies was developed by 
John Stuart Mill to whom Marx was quite unfair.

Another antecedent is Richard Jones who observed that the 
accumulation of capital was often most rapid when the rate of profit 
was low--Samuel Hollander has also hit on this point.

  Grossman developed this idea by underlining that capital had to 
accumulate in order to ensure the mass of profit grows even as the 
rate of profit falls. That is why Sweezy's argument that in the face 
of the shortage of surplus value the rate of accumulation (or the % 
of surplus value that is capitalized as additional constant and 
variable capital) would simply and easily be adjusted downward does 
not hold. Capital is not free not to accumulate at such a low rate 
that the mass of profit does not grow, for if the mass of profit 
does not grow capitalist production would have no meaning to the 
capitalist class and would stall forthwith.

  Another  question is whether there is any reason to believe that 
those counter-tendencies that do operate in the course of a downturn 
as Ben Fine and many others recognize tend to become relatively 
weaker over time, thereby rendering a purely 'economic' solution to 
downturns only partial.

Finally the theory of counter-tendencies is marred by confusion or 
rather conflation of those counter-tendencies that help certain 
capitals stave off falling profitability at the expense of others and 
those counter-tendencies that
restore the rentability of the system as a whole.

All the best, Rakesh

>Dear Rakesh,
>Just briefly, for now:  The Marxian question of the decline in the profit
>rate is a tendency, which meets its counter-tendencies in the formation of
>new 'value' over the cycles of production.  This is at the heart of Marx's
>crisis theory.   This is totally different from the so-called long-term fall
>in the rate of profit that is so popularly debated these days.  I think the
>origin of this latter approach is in Smith and Ricardo.  See, for instance,
>Ben Fine, Theories of Capitalist Development. 1981.

>----- Original Message -----
>From: "Rakesh Bhandari" <rakeshb@stanford.edu>
>To: <ope-l@galaxy.csuchico.edu>
>Sent: Wednesday, April 03, 2002 11:47 AM
>Subject: [OPE-L:6875] Re: Re: Re: Re: Re: Iraq
>>  Paul C writes in 6871
>>  >
>>  >If one views things sufficiently abstractly all states are class
>>  >to say that the whole world is submerged within the social relations
>>  >of capital is in anycase not true even at the economic level.
>>  >What proportion of the worlds working population are wage labourers?
>>  One way of understanding capital as a global relation is to focus on
>>  the establishment of prices at production at the level of the world,
>>  rather than any national, market.
>>  For example, Grossmann wrote in 1929:
>>  "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 in the world market. In a conceptually isolated
>>  capitalism, entrepreneurs with an above average technology make a
>>  surplus profit (a rate of profit above the average) when they well
>>  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. Marx
>>  repeatedly draws out the international effects of the law of value.
>>  For instance, he says, 'most agricultural peoples are forced to sell
>>  their product *below* its value whereas in countries with advanced
>  > capitalist production the agricultural product rises to its value. "
>>  As I understand Cyrus' argument, such a global relation was not in
>>  fact fully developed until the 1970s.
>>  That is, until about 1970 the price of oil was basically determined
>>  by monopoly capital that then enforced that price on a global scale.
>>  For Cyrus--as I understand him--both imperialism and monopoly capital
>>  break down and the price of oil comes to determined in and through
>>  world-wide competition (the OPEC countries as landlord govts also
>>  become more effective in seizing rent the magnitude which is
>>  determined by the price set in and through global competition, with
>>  spot markets playing a leading role). Oil was the first industry to
>>  come under the global social relation. I believe that this is what
>>  Cyrus is arguing.
>>  Without realizing it, Robert Brenner seems to have raised recently
>>  the same problems that Cyrus already had.  Brenner's argument for
>>  example can be read as claiming that prices of production had been
>>  formed within regional/national blocs until the late 60s; then as
>>  Japanese and German production entered the global market, there was
>>  a period of prolonged crisis from which emerged  a structure of
>>  global prices of production which immediately benefited the higher
>>  productivity producer nations (Germany, Japan which had successfully
>>  built on a superior technological foundation) at the expense of the
>>  lower productivity ones (the US).
>>  However, the US competitive responses  (currency devaluation, wage
>>  repression) prevented the exit of the capital that was inefficient in
>>  terms of the new global prices of production, and this insufficient
>>  exit then had the effect of bringing the rate of profit down in the
>>  system as a whole.
>>  Of course there has been a lot of argument that this analysis cannot
>>  hold at the micro-logical level, and I have not presented it well
>>  either.
>>  But if in fact prices of production are established at the global,
>>  rather than the national level, then why are we interested in so
>>  called national profit rates at all?
>>  All the best, Rakesh

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