[OPE-L:4837] Binary question/Dialectical answer

David Laibman (DLaibman@brooklyn.cuny.edu)
Tue, 22 Apr 1997 08:09:58 -0700 (PDT)

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Alejandro asks the following "binary (yes or not)" question: "Let
us suppose a hypothetical Dimitriev-capitalist-economy with living
labor = 0. Would this entity have a profit rate > 0?"

I have problems with "binary questions," for two reasons. First,
dialectics. Marx (from memory): "Their [these gentlemen's]
communication is 'Ay, Ay, Nay, Nay, and whatsoever cometh not of
these cometh of evil.'" Second, agendas. Folks who ask binary
questions, or pose "riddles," think they already have the answers.
In this case, they should state their cases simply and directly,
and not make others guess what they have in mind.

Now, to the point. (I have no idea how Dmitriev enters into this;
I leave that to better historical scholars than I can claim to be.)

My earlier post [4768] and my EEA paper posited a capitalist
economy in which output and capital stocks are growing at one rate,
and labor at a slower rate. Let's set up this special case: output
and capital stocks (and/or flows) are constant, and living labor is
declining at some positive rate, i.e., falling toward zero. The
wage rate is constant.

There are now two questions. 1) [Economics] What is happening to
the calculated profit rate in the case in question? 2) [Political
economy] Does this path tell a consistent story from the viewpoint
of the social relations of production? (I see "economics" as a
valid component of "political economy"; "economism" (in one sense
of that term) is the sundering of economics from its wider frame,
not the use of economic categories as such.)

1) The profit rate is clearly *rising,* toward a maximum given by
the output-to-capital ratio. I believe that conclusion holds even
for those capitals for which historical-cost valuation -- the
domination of the financial moment over the productive moment -- is
decisive. This is, in classic terminology, a case with a constant
organic composition of capital (as appropriately defined) and a
rising rate of exploitation.

2) The situation at the level of political economy is more complex.
Unless the labor constantly being expelled from production is
migrating elsewhere -- or population growth is negative, an
unlikely assumption -- an explosively large IRA (industrial reserve
army) is forming, and progressively threatening the foundations of
capitalist exploitation, the rising rate of profit notwithstanding.
Even if the excess labor is not threatening the production
relations, the dependence of capital on a smaller and smaller
workforce constitutes a contradiction that will eventually explode.
We often note the power conferred on the working class by virtue of
its increasing numbers (a central insight of the Communist
Manifesto). As the skilled trades divisions in the UAW (United
Automobile Workers, USA) long ago noted, however, in some
circumstances *small* numbers convey power: capitalist indifference
to wage increases for a small group of workers (this, of course,
violates the constant real wage assumption of our case); and the
fact that it is easier to organize and secure coordinated action
with a smaller number.

I believe the situation depicted is quite unstable, and that the
reason is indeed the constant real wage rate assumption. From
various points of view, constant real wages (and therefore
perpetually rising rates of exploitation) are (would be) a major
obstacle to long-term accumulation of capital. It is very
difficult to tell a coherent story based on this notion. I
developed this theme in the paper that I gave at the ASSA meetings
in January, where I was addressing Frank Thompson's contention that
technical change can *never* lead to a falling rate of profit! The
fascination with a constant real wage rate, on the part of both the
Okishians *and* their dogmatic orthodox critics (yes, Andrew, if
name naming is called for, I believe that characterization applies)
is an intriguing fact, worthy of further study.

(An aside. The real wage rate *has been* constant in the United
States for the last one or two decades, and I think that *does*
bode ill for the near future accumulation path here!)

Now, I believe Alejandro is (implicitly) suggesting this view: no
labor, no value; therefore, no profit. This sort of reasoning lies
somewhere in between my levels (1) and (2) above. I think there is
a danger in arguing from the extreme case. Note that my story
above talks about a *tendency* for living labor to fall *toward*
zero. When we set it *at* zero, the political-economic questions
become extremely urgent: what power over dispossessed labor -- the
capacity to block access to the means of production -- do
capitalists possess, in an economy where machines produce goods and
machines by themselves, and life grows on trees? We would not be
talking about a capitalist economy in this case (apologies, I
guess, to Dmitriev); there would not even be any true collective
"ownership" of the productive process, and therefore no rate of
*return* (to whom?). In this sense, Alejandro's implicit argument
is borne out; but I do not think this has much relevance for the
debate about the trend in the rate of profit in capitalist

Final point (interesting footnote). When I was an undergraduate
student at Antioch College (early 1960s), a group of students put
together a nasty little presentation, based on (their reading of)
Marx, together with the "Triple Revolution" document (anyone
remember it?). Their point could be summed up in a syllogism: a)
Marx's entire critique of capitalism depends on the labor theory of
value; b) labor is increasingly irrelevant in the modern economy,
due to automation and cybernetics; ergo, c) Marx's critique is
increasingly irrelevant to the modern economy. Now this is
nonsense, if, again, we do it the right way: let labor fall
*toward* zero rather than setting it *at* zero. Then, *unit*
values fall toward zero, but the *ratio* of unit values (relative
prices) do not. (Once again, the focus on total rather than unit
values is a sloppy habit of thought that is shared by many critics
and ultra-defenders of Marx alike.) But if one insists on the
extreme case -- living labor = 0 -- then there is the ironic fact
that none other than Ernest Mandel, in his *Introduction to Marxist
Economic Theory,* used this thought experiment to *demonstrate*
that labor is the substance of value! The argument goes like this:
with no living labor, and all production done by machines, goods
would not be scarce; therefore, they would not command one another
in exchange. To wit: no labor, no exchange value. QED. The
problem with this argument, from the standpoint of the great
contest in value theory for the status of substance of value, is
that the (only?) other candidate, marginal utility, would *also* be
zero, in the situation described.

Well, I apologize, Alejandro, for giving a decidely non-binary
answer to your binary question!

In solidarity, y hasta victoria siempre,