Subject: [OPE-L:1639] wages, cycles, and crises
From: Gerald Levy (firstname.lastname@example.org)
Date: Sat Nov 06 1999 - 10:52:29 EST
In [OPE-L:1631] I reproduced the following from Marx's chapter in Volume 3
on "Counteracting Factors" to the law of the tendency for the general
rate of profit to decline:
"2. REDUCTION OF WAGES BELOW THEIR VALUE
We simply make an empirical reference to this point here, as,
like many other things that might be brought in, it has nothing
to do with the general analysis of capital, but has its place
in an account of competition, which is not dealt with in this
work. It is none the less one of the most important factors
stemming the tendency for the rate of profit to fall." (Penguin
ed., p. 342)
I then asked for others to comment on the significance of this passage. No
one bit, though.
So, let's begin with what Marx states clearly in the passage above:
a) a reduction of wages below the value of labour-power has "nothing to do
with the general analysis of capital";
b) this subject, which is not part of the general analysis of capital,
"has its place in an account of competition, which is not dealt with
in this work";
c) Nonetheless, it is "one of the most important factors stemming the
tendency for the rate of profit to fall".
This raises many important issues, e.g.
a) the relation between a "general analysis of capital" and the subject of
b) *why* a reduction in wages below the value of labour-power has "nothing
to do with the general analysis of capital".
c) If a reduction of wages below their value is "one of the most important
factors stemming the tendency for the rate of profit to fall", why
isn't it developed at greater length at the same level of abstraction
as the TRPF?
Perhaps we should be clear about what is at stake here.
A number of Marxist theoretical and empirical studies of cycles and
crises highlight the role of changes in wages over the course of the trade
E.g. there are crisis theories which emphasize the role of class
struggle as the cause of changing wages over the course of the cycle.
These theories range from "profit squeeze" approaches (e.g.
Glyn/Sutcliffe, etc.) to autonomist Marxist interpretations of crisis.
On the other hand, there are labor power shortage theories (Bauer, Uno)
which emphasize changes in the labor market that are related to changes
in the size of the industrial reserve army as the cause for changing
Makoto has, in the past, emphasized how the later theory has the merit of
explaining the periodicity of crisis (with changes in the labor market
causing wages to decline in the crisis and rise during the expansion).
Part of what *both* groups of theories have in common is the belief that
fluctuations in wages above or below the value of labour-power are
important causal mechanisms explaining the crisis and the cycle. From an
Uno-perspective, this -- indeed -- is a component part of "basic theory".
Yet, in the passage above, Marx very clearly states that this subject has
"nothing to do with the general analysis of capital". If that is the case,
how can it be part of "basic theory"?
Of course, Marx *does* discuss how there can be a "growing demand for
labour-power [which] accompanies accumulation" in Volume 1, Chapter 25 of
_Capital_. Yet, the analysis in that section of Ch. 25 is under the
assumption that the composition of capital remains constant. Yet, when we
are discussing the TRPF (and crisis and cycles), this assumption is no
longer valid. Consequently, an appeal to what Marx wrote in this section
of _Capital_ is not satisfactory.
For those who claim, however, that the crisis and the cycle are caused by
an increasing organic composition of capital, an important link in the
argument is missing. I.e. what happens to wages?
Interestingly, some of the same people who have emphasized the increasing
OCC as the cause of crisis *also* have tended to argue -- when discussing
specific crises -- that a depression of wages below the value of
labour-power is an important way in which capitalists have overcome
crises. Indeed, the "assault on the working class" is often explicitly
identified as the only way out of the crisis (other than revolution, of
Clearly, more work needs to be done in this area.
A final question: if the TRPF was the "fundamental law" of political
economy, why didn't Marx go on to discuss the issue of "one of the most
important factors stemming" it at greater length?
I don't think that it is sufficient -- or even legitimate -- to claim that
the fluctuation in wages around the value of labour-power over various
phases of the business cycle is a subject which can be relegated to the
purely contingent and phenomenal. This is because the underlying mechanism
of the changing demand for labour-power and changes in the size of the IRA
over the course of the cycle are parts of what we might call, with Uno,
Yet, perhaps the above suggests that "basic theory" must be extended to
levels of abstraction *beyond* the "general analysis of capital". Thus,
e.g. one could claim that "basic theory" must extend to the subject of
"world market and crises" (and subjects in between that topic and the
general analysis of capital).
In solidarity, Jerry
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