[OPE-L:6884] Re: Re: Re: Re: Re: Re: Re: Re: Iraq

From: Cyrus Bina (binac@mrs.umn.edu)
Date: Wed Apr 03 2002 - 16:35:38 EST

Dear Rakesh,

Thanks for the point on JSM.  I have to run to my seminar now.  However,
there is a great deal work on the point, including your wonderful
references.  Yet, Fine is very clear on Marx's interpretation.



----- Original Message -----
From: "Rakesh Bhandari" <rakeshb@stanford.edu>
To: <ope-l@galaxy.csuchico.edu>
Sent: Wednesday, April 03, 2002 2:57 PM
Subject: [OPE-L:6883] Re: Re: Re: Re: Re: Re: Re: Iraq

> 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
> >new 'value' over the cycles of production.  This is at the heart of
> >crisis theory.   This is totally different from the so-called long-term
> >in the rate of profit that is so popularly debated these days.  I think
> >origin of this latter approach is in Smith and Ricardo.  See, for
> >Ben Fine, Theories of Capitalist Development. 1981.
> >
> >Best,
> >
> >Cyrus
> >
> >----- 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
> >societies,
> >>  >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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