[OPE-L] valorisation, realisation, and the two equalities

From: Jurriaan Bendien (adsl675281@TISCALI.NL)
Date: Sat Oct 06 2007 - 11:12:05 EDT


Marx's idea of the levelling-out of profit rates by competition, resulting in a general rate of profit, assumed that capital can and will enter and exit branches of production freely, according to relative capital returns. This assumes something like perfect market competition, insofar as this means there are no obstacles to the free movement of capital.

In this regard, Marx writes explicitly:

The incessant equilibration of constant divergences is accomplished so much more quickly, 1) the more mobile the capital, i.e., the more easily it can be shifted from one sphere and from one place to another; 2) the more quickly labour-power can be transferred from one sphere to another and from one production locality to another. The first condition implies complete freedom of trade within the society and the removal of all monopolies with the exception of the natural ones, those, that is, which naturally arise out of the capitalist mode of production. It implies, furthermore, the development of the credit system, which concentrates the inorganic mass of the disposable social capital vis-a-vis the individual capitalist. Finally, it implies the subordination of the various spheres of production to the control of capitalists. http://www.marxists.org/archive/marx/works/1894-c3/ch10.htm

All the abstract models of the distribution of surplus-value among capitals, assuming a general rate of profit, also assume a competitive process has already taken place, of which that general rate of profit is a result. But all that Marx has done in his models is to provide a sketch (an idealisation) of the overall outcome that the competitive process would tend towards. 

Marx goes on to note explicitly that:

Our analysis has revealed how the market-value (and everything said concerning it applies with appropriate modifications to the price of production) embraces a surplus-profit for those who produce in any particular sphere of production under the most favourable conditions. (...) A surplus-profit may also arise if certain spheres of production are in a position to evade the conversion of the values of their commodities into prices of production, and thus the reduction of their profits to the average profit. We shall devote more attention to the further modifications of these two forms of surplus-profit in the part dealing with ground-rent. http://www.marxists.org/archive/marx/works/1894-c3/ch10.htm

All of the transformation problem literature is based on the idealisation of a uniform rate of profit, the formation of which, as said, presupposes "perfect competition" in the sense of the absence of any obstacles to the free movement of capital.

As Ernest Mandel quite correctly noted, if you wanted to understand anything at all about the real growth-path of capitalist development, you have to start out from the assumption of imperfect competition (competition also involves blocking competitors) and understand that the quest for surplus-profits is the economic driving force in the history of capitalist development. For example, currently the largest surplus-profits arise in the oil industry, and these dominate capitalist development, also politically of course. Indeed, modern capitalism tends increasingly towards a rentier capitalism, as Bob Pollin notes. Unfortunately Mandel's own analysis of surplus profits remains rather superficial and in some respects inconsistent, although his basic idea - expounded in "Late Capitalism" and in his introduction to Cap. Vol. 3 is quite correct I think.

One inconsistency is, that if free competition does not in reality occur, the equalisation of profit rates does not occur, and in that case prices of production in Marx's complete sense are not formed out of market values. At most there is a tendency towards that result. As a corollary, there is no general rate of profit in reality, as Farjoun & Machover argue. Mandel argues that there is no international equalisation of profit rates, but that there is a national equalisation of profit rates. However there is no reason to believe that international conditions are overall significantly different from national conditions with respect to profit rate equalisation. As Anwar Shaikh quite correctly noted, in our theories we should not assume that one set of competitive conditions applies in a national setting and another one in an international setting. 

With the aid of a bit of simple math, you can show that if surplus-profits are introduced into the picture, the "two equalities" will not hold either. Unlike Paul Cockshott (or Paul Bullock), I do not believe in a "conservation law" of commodity-exchange, because I do not believe the existence of value is dependent on exchange. In my interpretation, value is conserved by living labour. 


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