Profit debate; long post from "Ahab"

glevy at glevy at
Sun Oct 8 03:01:43 MDT 1995

Steve wrote:

> Thanks to Jerry and Jim for their comments on my post.
> While I think Jim's observation that Jerry's post
> "misses Khalil's point, which only applies to labor
> time, productivity and the means of production
> considered from the technical standpoint" hits the
> mark, I think it worth reiterating the simple algebra
> that lies behind the TRPF, and Marx's countervailing
> forces against it, in order to bring out its
> relevance (assuming that it is a real tendency) to
> socialism.

You missed the point. The LTGRPD (not TRPF) can *not* be reduced, as so
many attempt, to "simple algebra."

> (1) The labor theory of value presumption that
> direct labor is the sole source of surplus.

This is Ricardo, not Marx.

 (or using Marx's more> loaded terminology, variable and constant capital)>

The categories c and v are not examples of "loaded terminology."
> (2) The awareness (from a 19th century viewpoint) that
> technical progress seems to involve more indirect labor
> per unit of direct labor, so that the ratio of c to
> v (and therefore of c to c+v) rises over time. This
> leads to the definition of the organic composition of
> capital (occ) which can be written as either
> occ = c/(c+v) or occ = c/v or c/(c+v+s)
> without losing the insight that, as this ratio rises,
> and if the rate of surplus value remains constant, then
> the rate of profit must fall.

More confusion. Firstly, the occ is not viewed by Marx as a definition,
but as a process. Secondly, Marx makes it clear in V3 that the same
process that causes the occ to rise also causes the s/v to rise.

> (3) A similar awareness--with which Marx's own
> discussion of the TRPF is prefaced--that the increase
> in capital intensity has been so great, and the apparent
> fall in the rate of profit so little, that some explanation
> of why the "law" has not manifested itself more impressively
> is called for. Hence Marx's naming of this as a "tendency"
> rather than a "law", and his enumeration of countervailing
> tendencies, which were:

Actually, Marx called this process "the law of the tendency for the
general rate of profit to decline."

 > 1* Increasing intensity of exploitation
> 2* Depression of wages below the value of labour-power
> 3* Cheapening of elements of constant capital
> 4* Relative over-population
> 5* Foreign trade
> 6* The increase of stock capital
> As Jim pointed out, all the elements of (1) and (2)
> above continue to apply to a socialist economy, though
> the rate of return is now (working at an idealised
> level and ignoring what actually happened to the
> surplus in Soviet Russia etc.) the property of the
> entire population, rather than just the workers.
> Thus if technical progress is to occur more rapidly
> under socialism (again, ignoring what happened, partly
> for the very good reasons Louis gave recently), then
> the rate of profit should fall over time under
> socialism.

It is the LT GENERAL RPD. How does one obtain prices of production under
socialism? The LTGRPD, and the categories specific to that "law", can
only be understood in historically-specific terms. One of the failings of
Ricardian (and most other) economic theories, according to Marx, is the
tendency to transform categories particular to capitalism into
ahistorical natural and eternal categories.

Since Steve's post is rather long, I'll stop here.


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