[Marxism] Marx and capitalism

Philip Ferguson philip.ferguson at canterbury.ac.nz
Tue Dec 14 15:16:04 MST 2004

Tom wrote:
>Militant trade unionism forces up wages, which in turn drives
capitalists to invest in labour-saving machinery, which in turn leads to
a falling rate of profit.

I've seen this argument before, for instance by a couple of leaders of
the British SWP (Chris Harman in one place and John Molyneux in
another), and it always strikes me as strange.  (I should add here that
a lot of the rest of the Molyneux book that this argument is in is

In the 50 pages that Marx spends on the falling rate of profit in
'Capital' (vol 3), however, he nowhere attributes the falling rate of
profit to workers' wages rising.

The reason capitalists invest in labour-saving devices/new
technology/plant is because of competition with other capitalists.  

This is a significant point because it explains how crisis is endemic to

If it were really wage rises that led to capitalists investing more in
labour-saving devices, then all that capitalists would have to do to
stave off the falling rate of profit would be to limit wage rises.
Crisis would not be endemic and unavoidable.

On the other hand, precisely because capitalism is a system of competing
individual capitals, each capitalist has no choice but to invest in new
technology to stay competitive.

Of course, this is also a refutation of state capitalist theory, because
while the state can own sectors of an economy which is still capitalist,
and can even use exploitation within those sectors, capitalism as a
system cannot function if it is entirely owned by one person or one

I might add that recently I've been reading a new book called "Lenin's
Legacy Down Under", which I was given to review for a NZ history
journal.  It's about the CP, and its successor parties in NZ (and to
some extent in Oz) and their relations with Moscow and overall NZ-Soviet
relations from 1917 to the end of the Cold War.  There is an interesting
interview with a senior NZ diplomat who did two stints in Moscow, the
second as ambassador to Russia in the early post-Soviet years.  He
mentions going and visiting the dachas of the top bureaucrats and being
amazed at the fact that they were basically at the level of the middle
class or upper middle class in NZ: "All that," he said, "Just for
this!!!"  (By "that" I assume he means the whole repressive apparatus
and practices of the old Soviet state).

If the Soviet bureaucracy were really a capitalist class they were one
helluva unusual capitalist class.  Indeed, so unusual as capitalists to
not really be capitalists at all.

There is also the little matter that the market had to be restored in
the ex-Soviet bloc during and after Gorbachev for capitalism to
function.  The workers in that part of the world are certainly aware of
the dramatic nature of this change.

Philip Ferguson

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