Those who argue that the crisis was caused by the falling rate of profit need to explain why the recovery in the rate of profit over the past period has not led to a real recovery in investment and a return to sustained growth. “Profits as a share of US gross domestic product have risen from less than 4 per cent in the mid-1980s to a postwar peak of 11 per cent last year, a statistic that would gladen the heart of a 19th-century robber baron”, states John Plender. “The share of wages has fallen consistently since the early 1970s.” (FT, 11/1/14) According to the American-based Bureau of Economic Analysis, US pre-tax profits peaked in the 3rd quarter of 2006 at $1,865bn, a year before the credit crunch. The rate of profit gradually declined throughout 2008, but in the 4th quarter of that year the mass of profits fell to $861bn. This coincided with the slump and the collapse of world trade, as we explained. However, by the first quarter of 2009, pre-tax profits bounced back to $1,130bn, and by the 4th quarter had reached $1,548bn. By the 3rd quarter of 2010, they had almost reached the pre-crisis 2006 high of $1,845bn.
That being the case, why is it that capitalism is still in deep crisis, with anaemic growth at best and falling investment, the live-blood of any recovery? With record profits, the theory that capitalist crisis is caused by the tendency of the rate of profit to fall is shown to be wrong. It is a one-sided, mechanical explanation that contradicts the dialectical method of Marx, who viewed capitalist crisis not as a single cause but as a concatenation of contradictions. As he explained, “The law operates therefore simply as a tendency, whose effect is decisive only under certain circumstances and over long periods.” (Marx, Capital, vol.3, p.346) As we explained, the essence of capitalist crisis is the simultaneous overproduction of capital and consumer goods for the purpose of capitalist production, i.e. for the purpose of producing profit. When there are no markets, there are no sales and therefore no profits. Why should the capitalists invest under these conditions of organic crisis? full: http://www.marxist.com/the-organic-crisis-of-capitalism-part-two.htm _______________________________________________ pen-l mailing list [email protected] https://lists.csuchico.edu/mailman/listinfo/pen-l
