# Re: [OPE-L] Marx on the 'maximum rate of profit'

From: ajit sinha (sinha_a99@YAHOO.COM)
Date: Wed Oct 11 2006 - 06:48:26 EDT

```--- Francisco Paulo Cipolla <cipolla@UFPR.BR> wrote:

> I do not think the maximum rate of profit argument
> is a mathematical
> tautology since it is grounded on the idea of a
> rising composition of
> capital (rising c/L) which is a historical tendency
> of capitalism.
> Rising rate of exploitation and falling rate of
> profit go together.
> Wasn´t this that Ajit said it was difficult to show?
> Paulo
____________________________
Paulo, let me first quote you. You wrote: "Then,the
argument goes, IF the value composition of production
c/L (as Shaikh(?) calls it) presents a tendency to
increase, the maximum rate of profit L/c must present
"if" makes your statement almost a tautology. Why did
I say almost and not a tautology? Because a pure
tautology would be a statement such as: 'either it is
raining or not raining'. This statement, though gives
you no information about the weather, is always true.
Your statement is always true but on the condition
that the elementary methematical law that if the value
of a ratio is rising then its inverse must be falling.
So for all practical purposes it is a tautology, but
since a philosopher could protest, I took the measure
to protect against such criticism by calling it almost
a tautology.

Now you say, "Rising rate of exploitation and falling
rate of profit go together. Wasn´t this that Ajit said
it was difficult to show?

First of all, since you have put your V = 0, which
means the rate of exploitation is infinite even if the
working time is one second, the concept of "rising
rate of exploitation" is meaningless. In any case,
what the rate of exploitation has got to do with
rising rate of composition of capital? And why cannot
you understand my proposition which you are making me
repeat time and time again? Let me repeat it for the
last time. My proposition is: show me how the three
tendencies exist together: (1) real wages, i.e. wages
in terms of goods and services, is rising; (2) the
share of wages in net income, which is divided between
capitalists and workers, is declining; and (3) the
rate of profits on capital investment is declining.

Now, just to save my time, I will make a few comments
on the notion of 'maximum rate of profits'. The notion
of 'maximum rate of profits', which is the rate of
profits when V is put equal to 0, plays an important
technical role in allowing Sraffa to decelop his
Standard commodity. Sraffa gives credit to Marx for
Value then you will know that Marx was very critical
of Smith (and also sometimes of Ricardo) on the issue
that they resolve total output into wages, profits,
and rent without any commodity residual, which
basically allows the maximum rate of profits to become
infinite. Marx thought that this was an important
criticism of Smith and Ricardo. I think Marx's
interpretation of Smith was misplaced, but then that's
another story. Cheers, ajit sinha
___________________________

>
> ajit sinha wrote:
>
> > --- Francisco Paulo Cipolla <cipolla@UFPR.BR>
> wrote:
> >
> > > Jerry, V=0 is not a hypothesis. As a hypothesis
> it
> > > wouldbe unsustainable. The
> > > maximum rate of profit is the rate of profit
> > > attaining under maximum rate of
> > > exploitation, in fact, infinite.
> > ______________________
> > Actually, maximum rate of profits cannot be
> infinite
> > if there is positive constant capital. You must
> mean
> > rate of surplus value, but then it is not the same
> > thing as the rate of profits.
> > ________________
> > Unfortunately the
> > > citation you brought is not
> > > related to the issue. In your citation what
> counts
> > > is the rate of profit when
> > > wages are squeezed down to a minimum, the
> > > physiological minimum. In the
> > > maximum rate of profit argument all new value
> > > created stands in the numerator
> > > and capital advanced in the denominator, the
> well
> > > known L/c, where L is the
> > > new value crested and c the constant capital.
> Then,
> > > the argument goes, if the
> > > value composition of production c/L (as
> Shaikh(?)
> > > calls it) presents a
> > > tendency to increase, the maximum rate of profit
> L/c
> > > must present a tendency
> > > to fall. This is the kind of argument Ajit said
> has
> > > never seen in print. It is
> > > already there regardless of being right or
> wrong.
> > > Paulo
> > ___________________
> > When did I say anything like that? What you say
> above
> > is a sort of tautology--how can anyone deny a
> > tautology (if c/L is rising then L/c must be
> falling
> > is an elementary piece of mathematics and nothing
> > else, there is no theory here). My point was about
> the
> > relative immiseration of labor, that is, the
> thesis
> > that though real wages are rising, the wage share
> in
> > relation to profit is falling simultaneously with
> the
> > long term trend of the rate of profits to fall.
> Since
> > in your above example of c/L, V = 0, it simply
> cannot
> > have any bearing on the problem. Cheers, ajit
> sinha
> >
> > __________________________________________________
> > Do You Yahoo!?
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>

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