jamiller at igc.apc.org
Mon Oct 9 10:51:33 MDT 1995
THE TENDENCY OF THE RATE OF SOCIALIST PROFIT TO FALL
In Steve Keen's post on Friday, he failed to make some
crucial distinctions between capitalism and socialism.
We have to get some very basic ideas sorted out before we
can have a rational discussion on this topic.
Under the dictatorship of the proletariat, with capital's
power defeated on a world scale, the new society of the
associated producers gradually takes shape. In place of
the anarchy of the market, conscious planned production and
distribution is instituted. The law of value is defeated
by rational collective control of the means of production.
Capital, profit, money, commodities and value disappear.
Steve makes the mistake of talking about "capital" and
"profit" in socialist (or communist) society. But this is
just fantastic. It seems to me to be adapting to the idea
that capitalism is eternal.
So what remains after capitalism is done away with? We
will still have all the productive technology and tools that
are inherited from capitalism, and we will build on this
and improve it. We will accelerate the growth of the
productivity of labor by substituting machines for labor.
The long term evolution of the productive forces, from
the pre-human tool-using hominids, through all forms of
class-divided society up to communist society, is a history
of the struggle of our species to reduce necessary labor
and increase free time for the cultural development of
human beings. The goal of humanity is to progressively
develop its own potentials.
The struggle to increase free time and reduce necessary
time requires devising and building ever more productive
tools. But if more productive technology is introduced,
it reduces direct labor time per unit of physical output.
The product of labor becomes more an more a product of the
machines and devices that the direct producer operates
or controls, less and less a product of direct labor.
In socialist society, this process continues, and at a
faster pace than before because of the elimination of the
destructive effects generated by capitalist production.
The product of labor has no value under socialism, but
labor-time calculation makes it possible to calculate how
much of the total time required to produce any object comes
from the contribution of the machinery, and how much comes
from the direct labor (new labor added).
Labor time accounting can be used to calculate how much
of the total social labor time is used to replace the means
of production used up, how much is used to produce products
for individual consumption, how much is used for expansion
of the means of production, etc. Part of the total social
labor time is realized in communal projects: infrastructure,
trasportation, communication, health care, education, etc.
Part of it goes to research, insurance, the arts, etc.
One can still make a distinction between necessary time
and "free time" or even "surplus time" in this context. Due
to the relatively unrestrained growth of productivity of
labor, we can expect free time to expand in contrast to
necessary time. It will take a smaller and smaller fraction
of the social labor time to fulfill those human requirements
that are regarded as "necessary."
(Over time, the definition of "necessary" will change, as
free time reacts back upon its necessary basis and changes it.
See _Grundrisse_, p. 325, 612, 705-706, 711-712, in the 1973
As the productive apparatus becomes more massive in relation
to the living labor that functions within this apparatus, it
is axiomatic that that the ratio of newly-added labor to the
labor materialized in the means of production declines. But the
newly added labor is divided into necessary and surplus labor.
Surplus labor, or "free time," expands as against necessary
Referring to the developments that are supposed to take
place under socialism, Steve says things like, "ignored the
issue of depreciation," "the mass of fixed capital is rising,"
and "the rate of profit should fall over time under socialism."
These are meaningless phrases. We need to spend more time
thinking about what socialism is, and what will happen to
the categories of value if there really is a society of the
associated producers. I suspect that Steve thinks it's all
a pipe dream anyway. Is that true?
A couple of brief responses to other points Steve raised:
Steve says that, "thus if a revolution was inspired by the
TRPF, it would occur when (a) working hours were long and
(b) fixed capital had been developed to the utmost...etc."
This is economic determinism. Here Steve forgets historical
materialism, politics, the relative autonomy of the class
struggle, etc. (See Preface to the _Critique of Political
Also Steve says, responding to a comment I made on the
productivity of labor, "this comment effectively 'decouples'
value productivity from physical productivity: something
Sweezy was prone to push. But this was something easily
demolished (as by the Sraffians)." This statement is also
meaningless. The productivity of labor is a physical, or
technical, measure. In Marx there is no such category as
"value productivity." Physical productivity existed long
before value and money, and will exist long after value is
eliminated from social relations. Value only exists as a
social relation when commodities are produced for sale.
Some comments on other posts on this topic: John R.
Ernst says, "...it's hard to imagine a falling rate of
profit in socialism as we would be able to see the material
side of the accumulation process without the veil of value."
This is correct. The veil of value is discarded by a
conscious humanity that no longer has any use for it.
Louis Proyect recommended some writings by Fidel Castro
and Che Guevara in the early 1960s dealing with the
economics of socialism. I haven't seen what Fidel wrote,
but Che had a debate with Alberto Mora, and others, in 1963.
The contributions to this debate are published in, _Man
and Socialism in Cuba: the Great Debate_, edited by Bertram
Silverman, New York, Atheneum, 1973. Che argued that value
would be replaced by consciousness and planning.
Chris Burford said, in his post, "...I think Marx said
machinery is a source of of relative surplus value...". I
don't think Chris really thinks Marx said that. Marx said
abstract labor is the source of value, including relative
and absolute surplus value. Chris also mentioned "material
depreciation," a self-contradictory phrase. He was thinking
of physical deterioration or damage. "Depreciation" means
lowering of price. It is a value category.
Rakesh asks whether the law of value will prevail in
socialism. Value is a regulator of production when the
products of labor take the form of commodities, i.e., when
there is no plan. Planning eliminates commodities and value.
This is the basic idea.
Jim Jaszewski seems to think that there will be profit
under socialism, and that there will be a falling rate of
profit, but that people will be able to overcome it. It's
too unclear to respond to.
Jerry Levy pointed to Steve's mistaken claim that Marx
called TRPF a "tendency" and not a "law." As Jerry says,
it is the "law of the tendency of the general rate of
profit to decline." Marx explained that a law operates as
a tendency. Jerry says you can't have prices of production
under socialism. Without prices of production, no general
profit rate, etc., etc. This is fine, but if there is going
to be more debate on this, I would rather get to the bottom
of it by saying: there is no value under socialism. The
law of value dies out under the effects of planning, etc.
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