Re: zero average profit

From: Fred B. Moseley (fmoseley@MTHOLYOKE.EDU)
Date: Fri May 30 2003 - 16:39:49 EDT

On Fri, 30 May 2003, Ian Wright wrote:

> I have a basic question that troubles me, which may nevertheless
> have a very obvious answer that I'm just not getting. Any help
> on this would be appreciated.
> When considering simple circulation at the beginning of Capital
> Vol 1., Marx explains, as I understand it, that if (a) the total
> money in a closed economy is fixed and (b) exchange is money
> conserving then (c) average profits are zero (and he therefore
> concludes that profits cannot arise from circulation). Essentially,
> any profit is cancelled by another's loss.
> Let's place the possibility of hoarding to one side.
> Marx then discusses how the distinction between paid and unpaid
> labour-time accounts for surplus-value. But the introduction of
> capitalist exploitation doesn't change the above conditions (a)
> and (b). So in this situation, consequence (c) still follows and
> we'd expect average profits to be zero (rather than, say, a
> uniform positive rate of profit).
> Is there a flaw in this reasoning?
> -Ian.

Hi Ian,

The flaw in your reasoning is that you consider only the sphere of
circulation and ignore the sphere of production.

Marx's argument in Chapter 5 in Volume 1 is that, since the exchange of
commodities is essentially the exchage of equivalent values (as you
say: "exchange is money conserving"), profit cannot arise from exchange

Marx's solution to this riddle is that profit arises from production.
Capitalists are able to buy labor-power in the sphere of circulation,
whose utilization in the sphere of production is the source of

Assumption (b) is still valid in the sphere of circulation.  But it does
not follow that profit must be zero.  Because in addition to circulation,
there is production, from whence surplus-value arises, because the value
produced by labor-power in production is greater than the wages workers
are paid in circulation.


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