falling rate of profit

Les Schaffer schaffer at optonline.net
Fri Dec 28 11:28:52 MST 2001


Mine wrote:

> Basically, Devine is *repeating* the same stuff others have said
> already--ABCs of economics..

i wouldnt know myself being a novice in the study of the theory. in
that case ABC's are extremely helpful as a jumping off point.

> What is the theoretical contribution of this talk?

this brings to mind something i was wondering about, which is: what is
the current state of the art in discussions of FROP? its helpful when
just starting out at the ABC's to see how far down the line a thread
has traveled.

seems like the last time FROP was discussed on this list, there were
some heated arguments of which i could never really grasp the
origins. having sat down with the ABC's and the simple algebra and the
extrapolation from the relation

  r = s' * ( 1 - k)

with

       r  =            rate of profit.
       s' = S / V      ratio surplus value to labor costs (variable).
       k  = C / (C+V)  ratio fixed capital to fixed plus variable
                       capital.

to the argument that for fairly fixed s' (bounded from above??), as
capitalist tried to replace V with C power, k goes towards one and r
falls.

But the actual evolution of the two products which make up r, s' and
1-k are what a lot of the fighting of the past has been about, so i've
learned.  the hard part is trying to see how s' and 1-k will vary over
time. also, i didnt know Rosa Luxemberg was involved in this
debate. these are good ABC's.

I am reading Bade Onimode's "An Introduction to Marxist Political
Economy", Zed Books. Onimode is an economist from Nigeria so his
perspective is helpful.

For example:

  Moreover, after Marx, the massive export of capital from the
  imperialist coutries to the Third World since the end of the 19th
  century, coupled with the exploitation of these countries under
  colonialism and contemporary neocolonialism, has exercised very
  powerful countervailing influences on the tendency to the falling
  rate of profit in the imperialist countries of Western Europe, North
  America and Japan. In addition to the higher rates of profit in
  Third World countries than in the imperialist centers, these facts
  provide very good grounds for the tendency to the rate of profit
  to fall as capitalist expansion proceeds. Western Marxists and
  bourgeious economists who emasculate the problems of imperialism can
  be well understood when they ignore such critical aspects of the
  problem.

 p. 103

Mine, any thoughts on this? Also, i'd like to see how Victor's point
interplays with this one.

Onimode's math equations are unfortunately badly typeset by Zed and
oft quite confusing, which is one reason i decided to write up
something for myself and other interested novices. He's written quite
a few other texts, see amazon.com for a list.

>From Onimode, p. 101:

  Marx, however, recognized five countervailing forces which may lower
  organic composition, or raise the rate of surplus value, to modify
  thus falling tendency of the rate of profit. These are,

     1.) increase in the intensity of exploitation, which raises the
     rate of surplus value independently of any increase in k

     2.) depression of wages below the value of labour power

     3.) cheapening the elements of constant capital through
     capital-saving innovations that reduce k

     4.) relative over-population through th eindustrial reserve army
     which encourages the expansion of industries with low k

     5.) foreign trade, which cheapens the elements of both constant
     and variable capital, reduces k and increases the rate of surplus
     value.

  The enormous export of capital in the age of monoploy capitalism and
  multilateral imperialism through the multinational coroproations is
  a crucial element of this foregn trade factor which occured to
  Marx. Thus, while the first and second of these countervailing
  forces raies the rate of surplus value, the other three factors
  operate to lower organic composition.


Onimode goes on to discuss more current comments on Marx's theory.
my interest in FORP is varied:

  a.) what's all the arguing about?
  b.) helping people weak in math to follow the basic algebra of the
      theory
  c.) part of my work life is involved in engineering of machinery (C)
      and i'd like to have a wider understanding of what i am working
      on.
  d.) in connection with c.) i had thought cappies use machinery to
      lower their costs of production. how does this square with the
      claim it causes rate of profit to fall. if ROP falls, why does
      the cappy do it (replace V with C)? ABC questions, undoubtedly.

Onimode also has chapters on Schemes of Simple and
Expanded Reproduction, which i find quite appealing in some way. He
also discusses the transformation problem. My little experimental
web-page-to-be is my attempt to learn the ABC's of this
stuff. Comments such as Mine's and Devine's i intend to link into the
web page.

> Is Devine aware of what is going on in Argentina? Any suggestions
> from list members???

I thought Jim did mention Argentina specifically in his talk,
basically saying what the NYTimes article Lou posted this morning
said, which was that the IMF induced the problems of the Argentine
economy.

les schaffer


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