[Marxism] Fwd: Ed George's Question

Shane Mage shmage at pipeline.com
Wed Feb 6 08:30:39 MST 2013

On Feb 6, 2013, at 6:47 AM, Ed George wrote:
> Me: Capitalists introduce technical change because it allows them  
> (the innovators) to realise an above average rate of profit (at  
> least for a period of time). Other capitalists are forced to adopt  
> new techniques (through competition) to avoid being priced out of  
> the market. My question is: why are capitalists *necessarily* driven  
> to pursue surplus-profits? That they are is an observable fact; but  
> why are they?

The answer is insecurity.  In the competitive-capitalism model used by  
Marx (well reflecting the institutional framework of that epoch's  
capitalism) productivity-raising technological change allows its  
adopter to undersell the others and drive the weaker ones out of the  
In those conditions failure to "seek excess profits" is a death  
sentence--"one capitalist kills many."  That process of "creative  
destruction", over a century-and-a-half, has now reached the point of  
market domination by concentrated, globalized, financialized  
oligopolies; an institutional structure best described as a  
combination of state-monopoly-capitalism (the US/EU model) and  
monopoly-state-capitalism (the East Asia model). In its initial  
stages, the main driving insecurity was military: the US Civil War and  
every subsequent conflict demonstrating that the price of  
technological retardation was defeat or conquest by the advanced  
power.  That pressure obviously remains today, but over the course of  
development since Marx's day the driving force has been ever- 
increasing indebtedness, "financialization." In Marx's competitive- 
capitalist model the direction of production is determined by the  
owners of the capital at stake.  But in "monopoly [shared-oligopoly]  
capitalism" every institution large enough to implement technological  
progress is financed by *borrowed* capital, whether in the form of  
'loans" or "shares."  On which dividends or interest must be paid out  
of realized surplus-value on pain of bankruptcy.  The last competitive  
capitalist was Henry Ford. The modern corporation has production  
determined by managerial personnel who depend on realized surplus- 
value for their colossal salaries (what Marx in his day called "a new  
swindle') and the colossal valuation of the "incentive" shares that  
they allocate to themselves. What became crucial was no longer market  
presence, and now no longer even market share--it has become access to  
capital markets.  Moreover, generalization of oligopoly pricing means  
that trying to raise sales by lowering prices means lower, not higher,  
profits. Under pressure of the law of the falling tendency of the rate  
of profit, impelled by an organic composition of capital steadily  
rising not merely on account of the normal and traditional capital- 
using innovation but at least equally by the institutional requirement  
of a steadily increasing  diversion of constant capital into the  
spheres of circulation and the state apparatus, multiplying the  
quantity of unproductive fixed capital and unproductive labor  
(unproductive circulating capital), the return on investment cannot be  
maintained out of the stagnating or even falling *net* productivity of  
labor but only out of the rents procured from ever-increasing  
environmental destruction (cf. fracking, tar sands, rare earths,  
dragnet fishing, atmospheric CO2, etc.).  What Marx demonstrated to be  
the central contradiction of capitalism as a market (political  
economy) system remains central to the overall crisis, the fatal  
crisis, of capitalism as a material (ie., natural) socio-economico- 
politico system.

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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