[Marxism] Fwd: Special Page at Monthly Review (My reply to Heinrich) Part III

Shane Mage shmage at pipeline.com
Mon Dec 2 12:33:44 MST 2013

> ...Defeating the Law.  Faced with this historical tendency toward  
> ever falling profitability of the social capital, painfully manifest  
> in every period of crisis, each capitalist ruling class attempts to  
> reverse it in various ways. These ways go outside the bounds of the  
> closed-system model used to derive the Law. Marx outlines five such  
> "counteracting causes": raising the intensity of exploitation;  
> cheapening the elements of constant capital; depressing wages below  
> their value; relative overpopulation; foreign trade. Since the  
> tendency to be counteracted expresses at any time given rates of  
> exploitation and organic composition, the counteracting causes  
> (which are not independent of each other) must take effect through  
> raising the former or diminishing the latter.
> --raising the intensity of exploitation. This is conceptually  
> distinct from the systemic economic tendency for increasing organic  
> composition to produce relative surplus-value.  Exploitation is also  
> increased by extraction of absolute surplus-value, through  
> intensification of the labor-process itself by forcing laborers to  
> work harder and faster for the same wage.  The intensity of work,  
> which the working class always tries to minimize and the capitalist  
> class to maximize, is itself on average the resultant of the balance  
> of class forces.  To raise it, thus, requires capital to win a  
> battle in the class struggle.  For that advantage to be durable, not  
> to be reversed by the working class when the next prosperity-phase  
> restores its bargaining power, means that a new social norm of  
> intensified work would have been established. Thus even were the  
> total amount of surplus-value, and hence the rate of profit, to be  
> durably increased, that would constitute only a one-time gain.  
> Starting with the next cyclical upswing all the forces tending to  
> reduce profitability would return to full operation.
> --cheapening the elements of constant capital. As shown above, this  
> cannot by itself have any tendential effect on organic composition.   
> What is involved is circulating, rather than fixed, capital.  Such  
> cheapening works to reduce the value of the inventory component of  
> the capital stock, and to that extent it lowers organic composition  
> and raises profitability. But unless they express increasing average  
> productivity of labor (in which case it would, as has been shown,  
> merely reflect increasing organic composition) such instances of  
> cheapening are merely one-off gains that do not effect the long-run  
> tendency of profitability to fall.
> --depressing wages below their value. The value of the real wage  
> signifies the cost of reproduction of labor-power. This value  
> declines tendentially with growth in labor productivity, even though  
> real wages have tended to increase over the long course of  
> capitalist development (a tendency that Lenin called a "law of  
> increasing requirements").  To depress wages below their value, at  
> any given time, means to depress the real wage below its historic  
> social norm--to depress the standard of life of the working class.   
> Economically, the only barrier to this is the level at which  
> immiseration directly impacts labor productivity, and presently in  
> advanced countries there seems to remain a considerable margin  
> before that point is reached.  The real obstacle is always the power  
> of the working class to resist immiseration, for popular unrest is  
> always at its most explosive when living standards are under  
> attack.  It is this point which gives Marx's Law its most pointed  
> political relevance, especially in the present context of systematic  
> attack on popular living standards throughout the Western capitalist  
> systems.
> --relative overpopulation. Long-term increase in the industrial  
> reserve army, through recruitment of workers from low-productivity  
> or noncapitalist lines of production (like subsistence farming),  
> both depresses real wages and provides labor-power for lines of  
> production with low organic composition.  This is perhaps the most  
> visible of all the counteracting factors, in the form of mass  
> immigration from colonial or semi-colonial societies (Latin America,  
> Africa, Eastern Europe) into the advanced Western economies or, in  
> China, India, Brazil, etc., from an impoverished peasant hinterland  
> into mushrooming industrial cities. Though this process can persist  
> long-term there also are definite limits: demographic (decrease of  
> potential recruits), economic (local industrialization), and social  
> (popular resistance to the disruptive effects of large-scale  
> migration). Moreover, as migrants assimilate they become a full part  
> of the working class and so disappear as an independent  
> counteracting factor.
> --foreign trade. This sustains profitability in two ways: the  
> Ricardian mechanism of specialization in high relative productivity  
> industries; and the availability of cheap consumer goods and raw  
> materials.  These are basically instances of raising relative  
> surplus value, either  by raising average physical productivity or  
> through lowering the value of the real wage and of material  
> inventories.  But they are short-term factors.  Trade among  
> capitalist systems can never negate the long-term tendencies at work  
> in every one of those systems.  Even a totally globalized, frontier- 
> free, capitalist system would merely combine each system's own law  
> of the falling tendency of the rate of profit into a law of the  
> whole world system.
> Aggravating factors. Over the century-and-a-half since Marx  
> formulated his Law, three tendencies far more important than all the  
> counteracting causes put together have manifested to intensify the  
> consequences of the Law.  They are the ecological crisis of the  
> planet (especially global warming), the depletion of essential  
> natural resources (fisheries, land, fresh water, and minerals), and  
> the bureaucratization and financialization of the capitalist  
> economy.  This is not the place to detail their vast scope. Suffice  
> it to state that they impose enormous and unaccounted costs from  
> natural disasters and cleaning up (or, worse, not cleaning up)  
> pollution; multiply natural-resource rents to parasites like the  
> Russian ex-nomenklatura, the Gulf monarchs, or the Koch brothers;  
> and divert resources on the largest scale to unproductive activities  
> and unproductive capital. As surplus-value is swept into rents and  
> interest and executive loot the amount left for profit-of- 
> enterprise, the source and motive of new productive investment, is  
> constantly diminished while the real (environmental) cost of  
> production is forced ever higher.  Even as technology increases the  
> gross productivity of labor, its net productivity comes under
> always-increasing pressure. The peau de chagrin continues ever to  
> tighten.
> 													[footnote one]
> Heinrich is very insistent, and rightly so,  that Marx's abstract  
> model presents capitalism in its "ideal average."
> 													[footnote two]
> In vol. 1 Marx says that "The organic composition of capital is the  
> value composition of capital insofar as it reflects the technical  
> composition of capital."  The value composition is defined as the  
> ratio C/v.  It is the technical, not the value, composition that  
> determines the development of the Organic Composition. Over  
> historical time all these compositions necessarily increase.  The  
> "value composition," C/v, ceases to reflect  organic/technical  
> composition because v represents only the paid portion of the  
> performed productive-labor-hours, and it is fundamental for Marx  
> that the continual creation of "relative surplus value" tends over  
> time to reduce the paid portion of working time.  Accordingly, "V,"  
> the stock of circulating capital represented by the portion of  
> consumer-goods inventories destined for productive workers,  
> constitutes a constantly diminishing portion of the social capital  
> stock. This justifies our simplifying the definition of the overall  
> rate of profit as (s'v)/C  rather than as s'v/(C+V). The only  
> distortion involved in abstracting from V would be a very slight  
> underestimate of the actual decline in the rate of profit.
> 													[footnote three]
> It should be noted that, insofar as a piece of capital equipment is  
> significantly innovative and therefore unique, the very concept of  
> "labor productivity" in its manufacture is problematic.  What sense  
> does it make to say that the labor involved in manufacture of a  
> Boeing Dreamliner is more or less productive than that in a Boeing  
> 727?  At any rate, market price cannot be used as an indicator of  
> "real" output because that can be done only for commodities of  
> comparable use-value to the various purchasers.  Capital equipment  
> is purchased only for its utility as a means of producing surplus- 
> value in the specific economic context of another producer, not for  
> its utility to a final consumer. The US central bank, correctly,  
> does not use capital-goods prices in its estimates of inflation but  
> relies only on the personal consumption expenditure (PCE) deflator.
> 													[footnote four]
> The perpetually rising tendency of the technical composition of  
> capital is central to the materialist conception of history, which  
> underlies everything in Marx's thought. In Capital Marx cites the  
> phrase of Benjamin Franklin: "man is the tool-making animal." But  
> historical materialism goes much deeper (other animals have been  
> shown to make tools): man is not only a tool-making animal; man is a  
> *tool-made* animal!  Man's "tools," his material means of  
> production, are his material technology, the objectification of his  
> ideas (compare Hegel: "reasonableness manifests as such" in the fact  
> that "the plow is more honorable than the immediate enjoyments that  
> are procured through it and serve as ends.  The instrument is  
> preserved, while the immediate enjoyments pass away and are  
> forgotten.  In his tools man possesses power over external nature,  
> although as regards his ends he frequently is subjected to it.")  
> Because of their persistence, those external
> idea-embodying material forms, the means of social production, are  
> the basis for continual and reciprocal improvement of both ideas and  
> tools (intellectual and material technology), and hence the basis of  
> human social evolution and corresponding material evolution (the  
> Darwinian mechanisms, natural and sexual selection, giving  
> reproductive advantage to types of human beings better fitted to  
> function as productive members of the given human social group--an  
> advantage that becomes cumulative through selection among groups).
> Shane Mage
> This cosmos did none of gods or men make, but it
> always was and is and shall be: an everlasting fire,
> kindling in measures and going out in measures.
> Herakleitos of Ephesos

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