[OPE-L:6337] Re: Rates of Profit?

C. J. Arthur (cjarthur@pavilion.co.uk)
Mon, 23 Mar 1998 21:26:54 +0000

>As I recall, in V3 of CAPITAL, Marx uses two terms to
>describe the rate of profit -- general and average.
>Is this a translation problem or is his use of the
>two different adjectives intentional?

Chris Arthur replies:
Herewith an extract of a paper I am working on:
The apparent identity of 'average' and 'general' rates of profit occurs in
the very title of chapter 9, and I think Marx never at any point makes a
distinction between them and treats these terms as synonyms. This is a
pity. For they are not. Furthermore they could usefully be so defined as to
refer to distinctly different concepts as follows:
a) the notion of a 'general rate' implies that we have here something
determined by other generalities.
b) the notion of an 'average rate' implies an average of prior
differences; hence a redistribution (of something created in particular
sites) as a result of the interrelations of individual capitals, that is to
say, as a result of competition. (An average can of course also be worked
out in advance theoretically but this is of no consequence; in reality it
is a question of the conditions of competition and whether they really tend
to form a uniform profit rate across the capitals concerned.)
Because Marx treats these very different concepts as identical it is not at
all clear how he thinks the rate in question is determined. Much of the
text can be read as if he held only the second notion, whereby the
individual rates are prior to their average, and ironed out by competition
(253, 273). But in one place where he speaks of 'the average rate of
profit' he really seems to mean 'general' in our sense. For he says that it
is determined by 'the level of exploitation of labour as a whole by capital
as a whole' (298-99).
The 'average' notion supports the idea that the rate of profit is
codetermined with prices of production at the same level of analysis, while
the notion of a 'general rate' is compatible with the possibility that the
rate is determined at a higher level and is given prior to prices of
production. Of course, even in this latter case, there would remain a real
process whereby a uniform rate of profit would become actual, in tendency
at least, through the mediation of competition; the point, however, would
be that the resulting rate would be known in advance, resulting, in effect,
from the posited general determinations. Competition would merely work
within this constraint, and to make the general rate visible.
Clearly, both the notion of 'general' and that of 'average' imply reference
to a total amount of value. In the case of the former notion this total
would be a socially determined mass which is available for distribution to
particular capitals so as to realise a uniform profit rate, through the
formation of prices of production. In the latter case the total would be
merely the theoretical sum of the individually determined outputs and it
would be reallocated through competition.
The text itself often seems to favour the former interpretation: for
example Marx speaks of 'total social capital', and of individual capitals
as simply 'aliquot parts' of it. Indeed he does not hesitate to speak of
these capitals as 'shareholders' in a 'common enterprise' which naturally
accrue returns pro rata; hence such a return 'is governed not by the mass
of profit that is produced by this specific capital in its specific sphere
of production, but by the mass of profit that falls on average to each
capital invested, as an aliquot part of the total social capital invested'.
(258-9) However, the imagery of 'share holding' seems on the face of it
thoroughly misleading when it is recalled that these capitals necessarily
confront one another in competitive struggle. Indeed Marx's real position
seems put beyond doubt when he begins his chapter on 'the equalisation of
the general rate of profit through competition'. (273) He says that, while
it is easy enough in theory to carry through an equalisation of the rate
of profit conserving total value and total surplus, 'the really difficult
question' is how exchange and competition effect it, since 'a general rate
of profit...is evidently a result and cannot therefore be a point of
departure'.(274) So in this passage it appears that Marx is committed to
the view that a general rate of profit is established in reality as a
result of competition between individual capitals, and has no prior
existence in any meaningful sense. However it is not so simple; because
this competition turns out to be structured by social determinations.
'This is the form in which capital becomes conscious of itself as a *social
power*, in which every capitalist participates in proportion to his share
in the total social capital.'(297) Only in the last few pages of chapter
10, does Marx make a real attempt to justify such claims.
To begin with Marx makes every effort to assimilate all capitals to each
other by arguing that they equally care for nothing but profit, that
conversely labourers are indifferent to the specific character of work,
being prepared to 'be flung from one sphere of production to another'.(297)
This identity in the essential nature of capital means that migration of
capitals will equalise profit rates if there is no obstacle they encounter,
if capital 'subjects all the social preconditions that frame the production
process to its specific character and immanent laws'.(297-98)
In an exceptionally important passage Marx says that equalisation depends
on the *mobility of capital and labour* (298) and he shows how social
determinants accomplish this. One key institution making capital more fluid
is the credit system which concentrates the available social capital and
puts it at the disposal of the individual capitalists. (298) Marx then
argues that exploitation is itself socially determined; it is a matter of
class against class 'not just in terms of class sympathy, but in a direct
economic sense' (298-99); for each capital 'has the same interest in the
productivity of the social labour applied by the total capital' (299-300),
while 'the particular interest that one capitalist ...has in exploiting the
workers he directly employs is confined to the possibility of taking an
extra cut, making an excess profit over and above the average'.(295)
While the argument in these closing pages of chapter 10 is not, in my view,
fully theorised, the general drift tends to qualify, or even overturn, the
assertion at the beginning that the general rate of profit is a result of
competition, not a point of departure. For here he says that 'the average
rate of profit depends on the level of exploitation of labour as a whole by
capital as a whole'.(299) To be sure, this is mediated case by case, as
individual capitals attempt to squeeze out that bit 'extra'. But the
general conditions of the class struggle are prior to this.
Furthermore Marx also draws attention to the mobility of capital and the
credit system as conditions of possibility of competition securing
equalisation. This again refers us to 'capital as a whole'.
-One approach to the problem would take 'capital' simply as a class name,
the reality being that capitals are *fully individuated beings* whose only
connection with each other is conflictual, that the determination of profit
is peculiar to the ability of each capital to squeeze out a surplus from
its own work force, and that the tendency towards a uniform rate of profit
kicks in subsequently as a result of the external pressure arising from
capitals migrating whither returns seem greater.
-Another approach to the problem would take the equalisation achieved
through competition as realising a general rate of profit whose essential
determinants are already given prior to the formation of prices of
production, that the aggregate value and surplus value arise from
system-wide determinations effective at the level of the capitalist
totality (which presupposes that 'capital in general' has a real existence
and is not merely a theoretical tool) and then allocated to 'aliquot parts'
of it.