Re: [OPE-L] Raya Dunayevskaya Myths and Legends

From: Rakesh Bhandari (bhandari@BERKELEY.EDU)
Date: Sun Nov 13 2005 - 12:14:40 EST

Can someone tell me why this is something other than
a summary  HG's theory of  Marx's methodology and crisis or Paul
Mattick's exposition of it. Do remember that at this point
the FROP theory was essentially seen as Grossmann's interpretation and that
Mattick had been defending it for over 15 years in the US. Are
we to believe that Freddie Forest also had no knowledge of ICC
Correspondence, Living Marxism.
Did RD wake up one morning completely ignorant of HG and/or Mattick
and articulate this theory of crisis? This is absurd.
RD was too well read not to know where her ideas were coming from.

Raya Dunayevskaya 1947
The Decline in the Rate of Profit and The Theory of Crises

Editor's Note: This discussion by Raya Dunayevskaya of Marx's
critique of capitalist production consists of excerpts from the first
draft of what became her first book, MARXISM AND FREEDOM - a
manuscript entitled "State-Capitalism and Marxism",written in 1947.
The original can be found in THE RAYA DUNAYEVSKAYA COLLECTION,
microfilm no. 472.

Volume III [of CAPITAL], which deals with the phenomena of capitalism
in their concrete movements, is the one which is preferred by
present-day academic economists. These tell us that it is only from
this vantage point, where Marx deals with prices and profits, that
one can understand Volume I where he deals only in abstractions:
value and surplus value. MARX'S POINT WAS THE EXACT OPPOSITE. He
maintained that once you understand the law of surplus value, the law
of profit would present no difficulty; if you reversed the process,
you could understand neither the one nor the other.
It is true that Volume III is Marx's nearest approximation to the
real world. Commodities are seen to exchange not at value, but at
prices of production, that is, cost of production plus average rate
of profit. Furthermore, surplus value does not remain an abstract
mass of congealed unpaid labor, but assumes the palpable shape of
profit, interest and rent - all in the form of liquid capital. The
merchant and his middleman's profit and the financier and his
transactions and credit manipulations all come to life. What,
however, is lost sight of by those who think that this shows that in
Volume III common sense has triumphed over the Hegelian mysticism of
Volume I, is that none of the laws enunciated in the latter is
abrogated in the former. The laws, modified in their actual
operation, may not, through the intervention of counteracting
tendencies, ever reach their ultimate limit, but none of these laws
is controverted.
Surplus value remains a GIVEN magnitude, the congelation of so many
unpaid hours of labor, which serves as the straitjacket of
capitalists, which they cannot get out of by any market
manipulations. All that competition can accomplish is to effect a
general rate of profit, a sort of "capitalist communism" which
assures that all capitals of given magnitudes receive corresponding
shares of the total surplus value.
The transformation of the rate of surplus value into the rate of
profit is merely the expression of the ratio of surplus value to
total, instead of only to variable, capital. But this in no way
changes the law of surplus value, which is that only living labor is
creative of surplus value. Individual prices oscillate above or below
value, but, in their totality, all prices are equal to all values.
Monopoly also brings a modification into the operation of the average
rate of profit, but that is not the dominant law of capitalist
The dominant law of capitalist production - and the heart of Volume
III - is the Law of the Falling Tendency of the Rate of Profit. Marx
considered the theory of the declining rate of profit the "PONS
ASINI" of the whole of political economy, that which divides one
theoretic system from another.
The constant revolutions in production and the constant expansion of
constant capital necessitate, of course, an extension of the market.
But the enlargement of the market in a capitalist nation has very
precise limits. The consumption goods of a capitalist nation are
limited by the luxuries of the capitalists and the necessities of the
workers when paid at value. The market for consumption goods is just
sufficient to allow the capitalist to continue his search for greater
This is the supreme manifestation of Marx's simplifying assumption
that the worker is paid at value. The innermost cause of crises,
according to Marx, is that labor power IN THE PROCESS OF PRODUCTION
AND NOT IN THE MARKET, creates a value greater than it itself is. The
worker is a producer of overproduction. It cannot be otherwise in a
value-producing society where the means of consumption, being but a
moment in the reproduction of labor power, cannot be bigger than the
needs of capital for labor power. This is the fatal defect of
capitalist production. On the one hand, the capitalist must increase
his market. On the other hand, it cannot be larger. This is what Marx
calls THE GENERAL LAW OF CAPITALISM which cannot be overcome other
than by the abrogation of the law of value.
The only "market" that enlarges beyond the limits of the working
population paid at value is the capital market. But there too the
constant technological revolutions make the time necessary to
REPRODUCE a product tomorrow less than the time to PRODUCE it today.
Hence there comes a time when all commodities, including labor power,
are "overpaid."
The crisis that follows is not caused by a shortage of "effective
demand." On the contrary, it is the crisis that causes a shortage of
"effective demand." The worker employed yesterday has become
unemployed today. A crisis occurs not because there has been a
scarcity of markets - the market is largest just before the crisis -
but because FROM THE CAPITALIST VIEWPOINT there is occurring an
unsatisfactory distribution of "income" between recipients of wages
and those of surplus value or profits. The capitalist decreases his
investments and the resulting stagnation of production appears as
overproduction. Of course, there is a contradiction between
production and consumption. Of course there is the "inability to
sell." But that "inability to sell" manifests itself as such BECAUSE
rate of profit, which proves that capitalist production creates a
barrier to its own further development, is what causes competition,
not vice versa.
The law of the falling tendency of the rate of profit is the
expression of the law of value under the most advanced conditions of
capitalist production. Under these conditions the ever greater
preponderance of dead over living labor brings about such a falling
relation of surplus value to total capital that a day might come
when, even if the capitalist could appropriate all 24 hours of labor
of the EMPLOYED army, and the laborers lived on air, the capitalist
could not get SUFFICIENT surplus value to run the mammoth capitalist
machine on an ever-expanding scale. The general contradiction of
capitalism thus reaffirms the three principal facts of capitalist
production: (1) decline in the rate of profit, (2) deeper and deeper
crises, and (3) a greater and greater unemployed army.
Today, when we see the fruition of the most abstract postulates of
Marx - the concentration of capital in the hands of one single
capitalist or one single capitalist corporation - we can see that the
absolute limit of development of the law of centralization and
concentration of capital has in no way been able to solve the problem
of crises and the declining rate of profit. The given single
capitalist society remains dominated by the law of value, the law of
the world market, having its origin in technological revolutions no
matter where they originate. Atomic energy may be the secret
discovery of the United States. But Russia must follow suit or
One section of THEORIES OF SURPLUS VALUE, entitled "Accumulation of
Capital and Crises" of particular pertinence to today's
discussion....Marx's critique of Malthus, for example, is also the
answer to the underconsumptionists of today.
"The only merit of Malthus," wrote Marx in 1865, "is that he
emphasized the uneven exchange between capital and labor. This merit
is negated thanks to his confusion between the determination of value
(VERWERTUNG) of money or commodity AS CAPITAL with the value (WERT)
of the commodity as such...
"The condition of overproduction is the general law of production of
capital: production proceeds in accordance with the productive
forces...and disregards the existing limits of the market, effective
demand...besides, the mass of producers is limited and, because of
the nature of capitalist production, must always remain limited..."
In contrasting classical political economy with "vulgar" economics,
Marx comes to conclusions which cannot be overestimated for our day.
He contends that finance capital theorists are so far removed from
the direct process of production, live so fully in the fetishistic
realm of interest, that they have produced theories of money and
credit which are nothing short of "a fiction without fantasy."
The fact that this very important work has been wholly neglected in
the United States by Marxists and non-Marxists alike does not lessen,
but heightens, the interest in it by scholars and the public alike.

Dunayevskaya Internet Archive

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