On Feb 8, 2013, at 6:56 PM, Jim Devine wrote: > As I read Marx, he argued that the true barrier to capitalism's growth > is capital itself, i.e., that capitalism undermines its own health > (where "health" is of course defined in capitalist terms, perhaps > measured by the rate of profit). I agree with that point, but I find > his argument that the internal dynamics of capitalism are always > driving the rate of profit downward (only temporarily delayed by > counter-acting tendencies) to be unfinished and incoherent. > > His theory should not be discussed using the premise that "Marx was > always right." Good to see the admission that there *is* a logic to his theory, even though earlier it was called 'incoherent" (which, if valid--and it ain't--would be a criticism of the editor not his co-author) > Instead, people need to look at the _logic_ of his > theory. Why doesn't the steady rise of labor productivity in the > sector producing the means of production (and other > counter-tendencies) prevent the fall of the rate of profit from > describing a trend seen in the real world?
As for the other countertendencies specified by Marx, all are limited and necessarily temporary. What about the rise of productivity (obviously something identical with progress in social productivity) in production of capital equipment (Marx's phrase is "reducing the cost of the elements of constant capital")? This can not refute the Law for two reasons: 1.) Productivity growth in the capital-goods sector means that the capital equipment required to put in motion a certain number of labor hours and attain a given product would have declined in value while the value created by the labor set in motion remained constant. By definition that is a decline in the organic composition of capital, which of course would really counteract the Law on a long-term basis. Obviously the organic composition of capital, the capital/productive labor** ratio, has grown steadily and indeed enormously,. since Marx's day. But that is a mere empirical consideration. The theoretical question at issue is whether the historical fact of a rising organic composition reflects an inherent lawful tendency of Marx's model of the capitalist system. 2.) The demonstration of this (I developed it at length in my 1963 dissertation) rests on the fact that the very purpose of capital accumulation is to lower the cost of labor. The use-value of a capital good is its labor-saving capacity. Therefore, no matter how quickly technical progress takes place in machinery etc. manufacture, the technologically superior equipment will command a premium price as against the machinery it would replace and thus increase the quantity of fixed capital (socially necessary labor time averaged over the whole economic system as represented by the labor-content of the money paid for the capital good). If the capitalist can produce the same amount for a lower labor cost, or a greater amount for the same labor cost, he will invest in the superior, not inferior, machinery to the extent that his more expensive investment is expected (expectations, moreover, are very pro-cyclical so investment goods during the prosperity phase, when most investment takes place, command even higher prices) to be recouped in his alloted payout period (which is perhaps influenced, but certainly *not* determined by market interest rates). This is the always operating mechanism directing capital accumulation into technologically progressive forms and raising its organic composition. The "health" of a capitalist economy amounts only to the strength of the drive to capital accumulation--and that is why Marx makes the point of his Law's operation the profitability of "new offshoots of capital," what Keynes called the "Marginal Efficiency of Investment." **to avoid quibbles about Marx's definition of productive labor I would roughly define it as all capital-employed labor with a positive marginal social productivity, ie., all such labor whose increase or decrease would cause a *direct* increase in the "real" quantity of final products, goods and services, available for purchase for consumption or investment (what Marx might call the "elements" of fixed and circulating capital). Shane Mage "All things are an equal exchange for fire and fire for all things, as goods are for gold and gold for goods." Herakleitos of Ephesos, fr, 90 _______________________________________________ pen-l mailing list [email protected] https://lists.csuchico.edu/mailman/listinfo/pen-l
