Saturday, April 26, 2014

And Furthermore...........

Furthermore, Marx's analysis, showing that the conditions that determine the tendency of rate of profit to decline are the conditions that accompany the increase in the mass of profits is developed on the basis of the consideration of the total social capital.

Marx is referring to the total social capital; he is analyzing the development of capital as a totality.

Therefore, furthermore,  the more capitalist production develops, the more capital accumulates, the more it reproduces itself, the more it engages wage labor, the greater the mass, and the lower the rate of profit. This is cold consolation, and no compensation for the capitalists, since the increment of the expansion of value– the rate of accumulation is the be all and end all of value production. As a consequence, the distribution of the mass becomes ever more critical– which is why Marx asserts that competition does not cause the rate of profit to decline; rather the decline in the rate of profit determines and intensifies competition.

As, furthermore Marx says in Vol 3 of Capital ["The Law Itself"] “Previous economists, not knowing how to explain the falling rate of profit, invoked the rising mass of profit, the growth in its absolute amount, whether for the individual capitalist or for the social capital as a whole, as a kind of consolation, but this was also based on mere commonplaces and imagined possibilities.”

How does Marx explain the increase mass of profits?– By a massive increase in capital deployed against, engaging, increased masses of wage-labor:

“When the percentage composition in the previous example was 60c + 40v, the surplus-value or profit on it was 40 and the rate of profit therefore 40 per cent. Let us assume that at this level of composition the total capital was 1 million. The total surplus-value and total profit would then amount to 400,000. If the composition were later to become 80c + 20v, the surplus- value or profit on each 100 would be 20 with the level of exploitation being the same. But the surplus-value or profit grows in its absolute mass, as we have shown, despite this decline in the rate of profit or the decline in the production of surplus-value by each capital of 100 and this growth might be from 400,000 to 440,000 say. This is possible only if the total capital that corresponds to this new composition has grown to 2,200,000.  The mass of the total capital set in motion has risen to 220 percent of its initial value, whereas the rate of profit has fallen by 50 percent. If the capital had simply doubled, then at the rate of profit of 20 percent it could only have produced the same amount of surplus value and profit as the old capital of 1,000,000 did at 40 percent. Had it grown by less than this it would have produced less surplus value or profit than the capital of 1,000,000 did previously, although at its earlier composition this would only have had to grow from 1,000,000 to 1,100, 000 in order for its surplus value to rise from 400,000 to 440,000.

“Here we can see asserting itself the law we developed earlier [ volume 1, chapter 25, 2] according to which the relative decline in the variable capital, and thus the development of the social productivity of labor, means that an ever greater amount of total capital is required in order to set the same quantity of labour-power in motion and to absorb the same amount of surplus labour…”

“A fall of 50 per cent in the rate of profit is a fall of a half. If the mass of profit is to remain the same therefore, the capital must double.” 

And, furthermore,  where does this massive increase in capital come from to generate the massive profits? Where can it come from? With the means of production organized as commodities, as values, it can only come from the expansion of value; it can only come from the expanded and/or intensified exploitation of labor-power.

Hence, furthermore,  at a certain point the accumulation of capital sooner or later reaches a point where it must attempt to drive the wage below the value of labor-power, below its costs of reproduction.

At its apotheosis, capital is nothing but primitive accumulation all over again.

Marx isn't kidding when he says of the law of the tendency of the rate of profit to fall that that tendency is the most important law of capitalist reproduction.   Furthermore.

April 26, 2014

Thursday, April 24, 2014

On Marx on Value, Fixed Capital, and the Rate of Profit.

You know, I hate citing texts.  Kind of like I hate repeating myself.  If the analysis has validity, then we can find, examine, and display that validity in the concrete-- that is to say not just in history, but in immediate, concentrated history, which is, and is all, that economics  will ever be until that glorious day when it, economics, is abolished; we can find, examine, and display that validity in the real relations between classes; in the specific, and specificity of the, conditions of labour which is all that history has been; and all an economy and its "laws of motion" ever was.

But every once in awhile, I think, "Wait a minute......I have notebooks filled with comments of my own on paragraphs and pages Marx wrote and what X or Y or Z or a H or a P or Maoist ABC, or Leninist XYZ says Marx says is not at all what Marx said."

For example, I write: "No, value is not an eternal, universal condition of production.  The law of value doesn't operate ahistorically, regardless of the class relations."

So OK,  I pull out the notebooks, and the citations, and the page/reference numbers to where Marx says what I said he said and I try to put a really fine point on it, just because... well, somebody isn't  getting the point and I know that someone sure can't be me.

Well then, from the notebooks and other places:

1. In the Grundrisse, Marx points out “Circulation therefore does not carry within itself the principle of self-renewal. The moments of the latter are presupposed to it, not posited by it.” And later in the Grundrisse: “The simple movement of exchange values can never realize capital.”
Make what you want of that. I make that the realization of capital requires the expansion of value production, meaning the exploitation of wage-labor, and when the profitability of that exploitation falls, increased circulation cannot overcome the decline.

2. Marx makes it clear in the Grundrisse that labor exists as a/the use value of/for capital; the mediating activity by which capital realizes itself. It is the means by which it reproduces itself AS EXPANDED VALUE.

If we are to regard Marx’s work as the immanent critique of capital, as the critique contained within capital’s own manifestations, then we have to recognized that the “fault” “limits” “conflicts” “contradictions” of capital are contained exactly in this reproduction of expanded value. We must recognized that VALUE is an historically specific category, not a “universal” one; that VALUE production is the limit to capital. That, at a certain point, the labor process and the value production process which are fused in a specific social form, are in opposition to each other and explode into conflict.

3.  Marx states: “The constantly ongoing devaluation of capital, resulting from the increase in the force of production………”
Stop right there: Get that? Capital is constantly devalued by increasing the force of production. This represents and obstacle, and impediment, and integument to the reproduction of capital. It is necessary to the expansion of capital– just as the prices of production serve to transfer value, to devalue some capitals– but the ongoing devaluation overtakes accumulation when profitability, when the rate of profit declines and the devaluation of “secondary” tertiary, etc. capitals does not siphon enough profit to offset that decline in profitability.

4. Certainly capital shares “something” with all previous production– namely that it is “social” production; involving the organization and distribution of the total socially available labor-time over the activities necessary to the reproduction of society.

Yet capital is a specific organization of that social labor-time; where the “need” can only be meet through the organization of labor as a commodity for exchange– as a value for the production of values. This in turn requires a specific set of historical conditions (which Marx claims have been most clearly and perfectly achieved in England.  And good for Brenner, to take that seriously)– those conditions being the separation of the laborer from the instruments of labor– the dispossession of the independent, subsistence, and subsistence plus surplus producers. This IS the fundamental condition for the organization of capital; for VALUE PRODUCTION, which after all, is what capital is. And all this depends on LABOR having NO USE VALUE to the laborer SAVE ITS VALUE IN EXCHANGE FOR THE MEANS OF SUBSISTENCE.
This leads to the exchange of commodities at the time socially necessary for their reproduction– a UNIQUE SPECIFIC CONDITION for social production.

Marx puts it like this in the Grundrisse:

“The great historic quality of capital is to create this surplus labour, superfluous labour from the standpoint of mere use value, mere subsistence; and its historic destiny (Bestimmung) is fulfilled as soon as, on one side, there has been such a development of needs that surplus labour above and beyond necessity has become a general need arising out of individual needs themselves– and, on the other side, when the severe discipline of capital, acting on succeeding generations has developed general industriousness as the general property of the new species, and finally when the development of the productive powers of labour, which capital incessantly whips onward in its unlimited mania for wealth, and the SOLE CONDITIONS IN WHICH THIS MANIA CAN BE REALIZED (caps added), have flourished to the stage where the possession and preservation of general wealth require a lesser labour time of society as a whole, and where the labouring society relates scientifically to the process of its progressive reproduction, its reproduction in constantly greater abundance; hence where labour in which a human being does what A THING COULD DO HAS CEASED" (caps added-SA).

So if “value” is eternal, if the law of value is universal, how can any of the above be accurate? How in fact if the “issue” the "offspring"  of capitalism is unique, socialism, and requires such previous development, can the “law”– WHICH IS THE CLASS RELATION necessary to this development– have existed universally, eternally previous to the existence of the classes? It cannot.

Hence, what counts are the specific laws of value production, and the specific conflict within the terms, the conditions of value production– the conflict between labor and the conditions of labor. The condition of labor in capitalism is that in order to aggrandize greater portions of surplus value, capital has to expel proportionately greater amounts of living labor from production, thus undermining the very source of its profitability– the component, the relation, the RATIO of the source of new value, of profit to the production process.

5. Criticizing Ricardo for assuming that the categories of capitalist production are “natural,” ahistorical, universal, Marx writes:

“With him [Ricardo], however, wage labour and capital are again conceived as a natural, not as a historically specific social form for the the creation of wealth as use value; i.e. there form as such, precisely because it is natural, is irrelevant, and is not conceived in its SPECIFIC relation to the form of wealth, just as wealth, itself in its exchange value form, appears as a merely formal mediation of its material composition; thus the specific character of bourgeois wealth is not grasped– precisely because it appears there as the adequate form of wealth as such….. as if the form of wealth based on exchange value were concerned only with use value, and as if exchange value were merely a ceremonial form….. ”

So much for the universality of value production, its “eternal” quality divorced from the specific class relations of capital.

6. Marx:   “But from the fact that capital posits every such limit as a barrier and hence gets IDEALLY beyond it, it does not by any means follow that it has REALLY overcome it, and since every such barrier contradicts its characters, its production moves in contradictions which are constantly overcome but just as constantly posited. Furthermore. The universality towards which it irresistibly strives encounters barriers in its own nature, which will, at a certain stage of its development, allow it to be recognized as being itself the greatest barrier to this tendency, and hence will drive towards its own suspension…”
“…The whole dispute as to whether OVERPRODUCTION is possible and necessary in capitalist production revolves around the point whether the process of the realization of capital WITHIN PRODUCTION [caps added] directly posits its realization in circulation; whether its realization posited in the PRODUCTION process is its REAL REALIZATION…..Ricardo and his entire school never understood the really MODERN CRISES, in which this contradiction of capital discharges itself in great thunderstorms which increasingly threaten it as the foundation of society and production itself.”
–Grundrisse The Chapter on Capital Notebook 4 (Transition from the process of the production of capital into the process of circulation…..)

And there’s always this gem: “The higher the development of capital, the more it appears as a barrier to production– hence also to consumption–”

7. Marx says this: “Hence, the larger is the part of the capital consisting of the fixed capital–i.e. the more capital acts in the mode of production corresponding to it, with great employment of produced productive force- and the more durable the fixed capital is, i.e. the longer its reproduction time, the more its use value corresponds to its specific economic role- the more often must the part of capital which is determined as circulating REPEAT THE PERIOD OF ITS TURNOVER, AND THE LONGER IS THE TOTAL TIME THE CAPITAL REQUIRES FOR THE ACHIEVEMENT FOR ITS TOTAL CIRCULATION.
– –Grundrisse, The Chapter on Capital, Notebook 7 (Turnover time of capital…..)

8.  Marx continues, as if anticipating the tub-thumpers of fictitious capital:
“This much clear, then, which already follows from the difference introduced by fixed capital into the industrial cycle, namely that IT ENGAGES THE PRODUCTION OF SUBSEQUENT YEARS, and just as it contributes to the creation of a large revenue, it anticipates future labour as a counter-value. The anticipation of future fruits of labour is therefore in now way a consequence of the state debt, etc., in short, not an invention of the credit system, It has ITS ROOTS IN THE SPECIFIC MODE OF REALIZATION, MODE OF TURNOVER, MODE OF REPRODUCTION OF FIXED CAPITAL."

That specific quality introduced with increasing fixed capital is– lengthening of the period of total turnover, of total realization.

9. Now, if the introduction of the increased component of fixed capital into the increasing component of constant capital, does not reduce the turnover period, but lengthens it; does not offset the decline in the “unit” rate of profit by increasing the annual rate of profit, where are we? We’re where we always are– with the relation between the living and dead components of capital determining profitability; with the contest between accumulation and devaluation; where accumulation produces devaluation.

And this is where the decline in the rate of profit is NOT offset, and cannot be offset by an increase in the MASS of profit–

that point is the point where, with a declining rate of profit because of the amassed, stored, accumulated capital in its fixed assets, the ability to EXPAND the production of VALUE at an increment high enough to generate profit is IMPAIRED due to the high THRESHOLD COSTS FOR SUCH EXPANSION represented in the established industries themselves. Thus boutique auto producers can gain a hold, a fraction, in the market, and  thus markets can be segmented or “niched”; thus automakers accustomed to, organized around lower profit margins, as the Japanese automakers are can gain significant market share– with the support of MITI, or similar organizations;but the large auto makers, established majors in their “home markets,” are not generating profits quickly or massively enough to capture significantly greater shares of the established markets.

10.  Now we come to Marx’s analysis of the rate of profit in the Grundrisse. In Notebook 7, Marx says:  

“Thus, in the same proportion as capital takes up a larger place as capital in the production process relative to immediate labour, i.e. the more the relative surplus value grows–the value-creating power of capital– the more DOES THE RATE OF PROFIT FALL. ….Hence the rate of profit falls relative to the total value of the capital presupposed to production–and of the part of capital acting as capital in production. The wider the existence already achieved by capital, the narrower the relation of newly created value to presupposed value (reproduced value). PRESUPPOSING EQUAL SURPLUS VALUE, I.E. EQUAL RELATION OF SURPLUS LABOUR AND NECESSARY LABOUR, there can therefore be an unequal profit, and it must be unequal relative to the size of the capitals. The rate of profit can rise although real surplus value falls. Indeed the capital can grow and the rate of profit can grow in the same relation if the relation of the part of the capital presupposed as value and existing in the form of raw material and fixed capital rises at an equal rate relative to the part of the capital exchanged for living labour. But this equality of rates presupposes growth of the capital without growth and development of the productive power of labour. One presupposition suspends the other. This contradicts the law of the development of capital, and especially of the development of fixed capital. Such progression can take place only at stages where the mode of production of capital is not yet adequate to it….”

First let’s keep in mind that all these movements of capital are cyclical, but that within the cycles, that with the repeated cycles, and trend is established, an overall structural movement based on the growing accumulation of capital.

The movement of the rate of profit in synch with the growth of the fixed assets and raw materials is possible, but it is an “outlier”– it is a condition counter to the real domination of capital– where the productivity of labor does not grow, which means in fact, that the application of fixed assets to production is impeded in that the necessary labor, the wage is not reproduced in less time;  “This contradicts the law of the development of capital, and especially the development of fixed capital.”

Marx calls the various iterations of the decline in the rate of profit, or the changes in rates of profit in proportion or disproportion to the size of the capital the “most important law of modern political economy, and the most essential for understanding the most difficult relations. It is the most important law from the historical standpoint. It is a law which, despite its simplicity, has never been grasped and, even less, consciously articulated.”

Marx, of course, is about to consciously articulate the importance of the law: “hence it is evident that the material  productive power already present, already worked out, existing in the form of fixed capital, together with the population etc., in short all conditions of wealth, that the greatest conditions for the reproduction of wealth, i.e the abundant development of the social individual– that the development of the productive forces brought about by the historical development of capital itself, when it reaches a certain point, suspends the self-realization of capital, instead of positing it.”

Wow.

 Let’s continue:

“Beyond a certain point, the development of the powers of production becomes a barrier for capital”….. [ and let's not lose sight what capital "means"-- it means the expansion of value production, of the production of the means of production and subsistence as values to be exchanged with living labor; it means reproducing the capital relation and "materializing" that relation in greater accumulations]…. ; hence the capital relation a barrier for the development of the productive powers of labour. When it has reached this point, capital; i.e. wage labour enters into the same relations towards the development of social wealth….as the guild system, serfdom, slavery, and is necessarily stripped off as a fetter…. [Marx is just getting warmed up]… “the material and mental conditions of the negation of wage labour and of capital…are themselves results of its production process [see previous comments about the conflict between the labor process and the valuation process; between labor and conditions of labor].

“The growing incompatibility between the productive development of society and its hitherto existing relations of production expresses itself in better contradictions, crises, spasms. The violent destruction of capital not by relations external to it, but rather as a condition of its self-preservation, is the most striking form in which advice is given it to be gone….Since this decline of profit [NOTE: Marx does not distinguish rate from mass of profit here, the decline of one is the decline of the other] signifies the same as the decrease of immediate labour relative to the size of the objectified labour which it reproduces and newly posits, capital will attempt every means of checking the smallness of the relation of living labour to the size of the capital generally, hence also of the surplus value, if expressed as profit, relative to the presupposed capital by REDUCING THE ALLOTMENT MADE TO NECESSARY LABOUR AND BY STILL MORE EXPANDING THE QUANTITY OF SURPLUS LABOUR WITH REGARD TO THE WHOLE LABOUR EMPLOYED.”{caps added}

“These contradictions lead to explosions, crises, in which momentary suspension of labour and annihilation of a great portion of capital violently lead it back to the point where it is enable [to go on] fully employing its productive powers without committing suicide.”

So, I’ll pause here… with plenty of more from the Grundrisse still to come– not to mention the other economic manuscripts Marx wrote between 1857 and 1864, and from volume 3 itself.
One can, of course, disagree with Marx, argue that Marx was wrong… but what one cannot do is  pretend Marx is saying something about the rate of  profit and profitability which he does not say.

S.Artesian  April 24, 2014

Tuesday, April 15, 2014

It's That Time of the Year Again

It's that Passover, Easter, Spring Break, baseball, crocus-daffodil-tulip, tree-budding, lunch outdoors, insect returning,  time of the year again.

And speaking of insects returning, sap rising, hope springing, spring hoping,  and rituals of the season--well,  I was about to say "meaningless rituals..." intending specifically the religious holidays but that seems a bit redundant.  Rituals are at their very essence meaningless, aren't they?  Pledges of allegiance to the archaic, the obsolete. Decimation of the imagination by nostalgia; a tic; a triumph of decay. Ignorance, superstition, pathology.  Preserve us from a future where we won't be doing next year exactly what we're doing this year.  Let us affirm our solidarity with the market for things, relations that never were, but will always be.  Ritual, rites... those are the traditions of all dead generations that weighs like a.... nightmare?  an Alp?... on the brain of the living.

So speaking of bugs, it's that time of the season when the Left Forum starts hawking its latest hoe-down, jamboree, hootenanny, sing-along, barn-raising, quilting--bee, pottery class and all around expo called, amazingly enough, the Left Forum.

Last year, you will recall, or better yet, maybe you won't, the Left Forum rolled out its radish carpet (red on the outside, white on the in) for Alvaro Garcia Linera, once-upon-a-time r-r-r-evolutionary guer-r-r-r-r-illa and now vice-president in charge of leasing gunmen to that well-known international brigade of freedom fighters,  MINUSTAH.  What thunderous ovations were bestowed on Mr. Linera by the left forumers!  All power to the coca planters !  Political power comes from the barrel of a gun, especially when that gun is leased to the bourgeoisie.  We're all Maoists now, proclaims the Bolivian of the Bolivarian Revolution.

Tough act to follow, I guess.  I mean how to top that?  Mandela's dead. He can't speak. Comrade Delta from the British SWP was already engaged in exactly what I don't want to know.   Qaddafi's dead.  Morsi's under arrest.  Assad-- well we know he's not leaving Syria anytime soon.  Hamas can't get a visa.  Hezbollah-- check with Assad.  Kirchner can't travel, doctor's orders.  Every time Bachelet tries to go anywhere, Chile either catches on fire, or gets ripped by an earthquake. Putin...maybe, but then he annexed Crimea just because it holds Russia's only warm water port, and he wound up not only on the no-fly list, but the no-land list.  The Core Four's done, the BRICs have become the Fragile Five and Paul Krugman-- well ever since you know what his fees have gone through the roof.

Who, what, how to follow the triumph of Linera? 

Well come on, we watch Mad Men.  We know what the key to marketing is.  Sure we do.  The Left Forum is a shop, and every shopkeeper knows that business is all about location, location, location.  So this year, with its theme "Imagining a World with Transformative Justice," the Left Forum chose as its locus for imagination......the John Jay College of Criminal Justice.   Now that really is a triumph of the imagination, and location.

Not to put too fine a point on it, but one of the founding institutions of the the "discipline" that became the John Jay College of Criminal Justice was...the New York City Police Department. The school was founded originally as the College of Police Science.  But that's just so much history, and as that other great revolutionary, what'shisname said,  "history is bunk."

Recognizing that "College of Police Science" was somewhat limiting, might tend to impair the school's ability to market itself, and penetrate its markets, the school, in the greatest of great American traditions, rebranded itself as the John Jay College of Criminal Justice-- naming itself for the first chief justice of the US Supreme Court. 

Let's not get the wrong idea here.  I could care less that Mr. Jay resigned from the Continental Congress rather than sign the Declaration of Independence.  I kind of like the fact that Mr. Jay ruled against the state of Georgia in Chisolm vs. Georgia-- not as much as I like the way Sherman ruled against the state of Georgia, but different strokes for different folks as Sly and the Family Stone would say.  And I know that Mr. Jay was an opponent of slavery. 

None of that is the point.  The point is that the college, the curriculum, the field of "criminal justice" no matter how "enlightened" is about preserving, extending, deepening police "science," the science coming down to, as science always does, the proper application of effective force at the proper time against certain subjects, those subjects being those who need to overthrow the existing relations of social reproduction.   

If you doubt me, and please, don't ever stop doing that,  just check the 4 year academic program for its BS (!) in Criminal Justice available here

What gets me about this is... simply..........one of us is nuts.  Either I'm crazy for thinking that being "radical" or being a "revolutionist" or a "Marxist" means opposing those who pimp armed forces to the bourgeoisie to suppress the struggle of the most mistreated people in history; either I'm crazy for thinking that "transformative" means radically opposing colleges of progressive police science or I'm not crazy, in which case the organizers, supporters, participants, book dealers, and attendees of and at the Left Forum are nothing other than the current incarnation of past defeats, determined to smother the prospects for future emancipation. 

S.Artesian

April 15, 2014