Dear Rakesh, Thanks for the point on JSM. I have to run to my seminar now. However, there is a great deal work on the point, including your wonderful references. Yet, Fine is very clear on Marx's interpretation. Best, Cyrus ----- Original Message ----- From: "Rakesh Bhandari" <rakeshb@stanford.edu> To: <ope-l@galaxy.csuchico.edu> Sent: Wednesday, April 03, 2002 2:57 PM Subject: [OPE-L:6883] Re: Re: Re: Re: Re: Re: Re: Iraq > Dear Cyrus, > According to Grossman and Bernice Shoul, the combined theory of the > falling rate of profit and its counter-tendencies was developed by > John Stuart Mill to whom Marx was quite unfair. > > Another antecedent is Richard Jones who observed that the > accumulation of capital was often most rapid when the rate of profit > was low--Samuel Hollander has also hit on this point. > > Grossman developed this idea by underlining that capital had to > accumulate in order to ensure the mass of profit grows even as the > rate of profit falls. That is why Sweezy's argument that in the face > of the shortage of surplus value the rate of accumulation (or the % > of surplus value that is capitalized as additional constant and > variable capital) would simply and easily be adjusted downward does > not hold. Capital is not free not to accumulate at such a low rate > that the mass of profit does not grow, for if the mass of profit > does not grow capitalist production would have no meaning to the > capitalist class and would stall forthwith. > > Another question is whether there is any reason to believe that > those counter-tendencies that do operate in the course of a downturn > as Ben Fine and many others recognize tend to become relatively > weaker over time, thereby rendering a purely 'economic' solution to > downturns only partial. > > Finally the theory of counter-tendencies is marred by confusion or > rather conflation of those counter-tendencies that help certain > capitals stave off falling profitability at the expense of others and > those counter-tendencies that > restore the rentability of the system as a whole. > > All the best, Rakesh > > > >Dear Rakesh, > > > >Just briefly, for now: The Marxian question of the decline in the profit > >rate is a tendency, which meets its counter-tendencies in the formation of > >new 'value' over the cycles of production. This is at the heart of Marx's > >crisis theory. This is totally different from the so-called long-term fall > >in the rate of profit that is so popularly debated these days. I think the > >origin of this latter approach is in Smith and Ricardo. See, for instance, > >Ben Fine, Theories of Capitalist Development. 1981. > > > >Best, > > > >Cyrus > > > > > > > > >----- Original Message ----- > >From: "Rakesh Bhandari" <rakeshb@stanford.edu> > >To: <ope-l@galaxy.csuchico.edu> > >Sent: Wednesday, April 03, 2002 11:47 AM > >Subject: [OPE-L:6875] Re: Re: Re: Re: Re: Iraq > > > > > >> Paul C writes in 6871 > >> > >> > >> > > >> >If one views things sufficiently abstractly all states are class > >societies, > >> >to say that the whole world is submerged within the social relations > >> >of capital is in anycase not true even at the economic level. > >> >What proportion of the worlds working population are wage labourers? > >> > >> > >> One way of understanding capital as a global relation is to focus on > >> the establishment of prices at production at the level of the world, > >> rather than any national, market. > >> > >> For example, Grossmann wrote in 1929: > >> > >> "In effect price formation on the world market is governed by the > >> same principles that apply under a conceptually isolated capitalism. > >> The latter anyway is merely a theoretical model; the world market, as > >> a unity of specific national economies, is something real and > >> concrete. Today the prices of the most important raw materials and > >> final products are determined internationally, in the world market. > >> We are no longer confronted by a national level of prices but a level > >> determined in the world market. In a conceptually isolated > >> capitalism, entrepreneurs with an above average technology make a > >> surplus profit (a rate of profit above the average) when they well > >> their commodities at socially average prices. Likewise on the world > >> market the technologically advanced countries make a surplus profit > >> at the cost of the technologically less developed ones. Marx > >> repeatedly draws out the international effects of the law of value. > >> For instance, he says, 'most agricultural peoples are forced to sell > >> their product *below* its value whereas in countries with advanced > > > capitalist production the agricultural product rises to its value. " > >> > >> As I understand Cyrus' argument, such a global relation was not in > >> fact fully developed until the 1970s. > >> > >> That is, until about 1970 the price of oil was basically determined > >> by monopoly capital that then enforced that price on a global scale. > >> For Cyrus--as I understand him--both imperialism and monopoly capital > >> break down and the price of oil comes to determined in and through > >> world-wide competition (the OPEC countries as landlord govts also > >> become more effective in seizing rent the magnitude which is > >> determined by the price set in and through global competition, with > >> spot markets playing a leading role). Oil was the first industry to > >> come under the global social relation. I believe that this is what > >> Cyrus is arguing. > >> > >> Without realizing it, Robert Brenner seems to have raised recently > >> the same problems that Cyrus already had. Brenner's argument for > >> example can be read as claiming that prices of production had been > >> formed within regional/national blocs until the late 60s; then as > >> Japanese and German production entered the global market, there was > >> a period of prolonged crisis from which emerged a structure of > >> global prices of production which immediately benefited the higher > >> productivity producer nations (Germany, Japan which had successfully > >> built on a superior technological foundation) at the expense of the > >> lower productivity ones (the US). > >> > >> However, the US competitive responses (currency devaluation, wage > >> repression) prevented the exit of the capital that was inefficient in > >> terms of the new global prices of production, and this insufficient > >> exit then had the effect of bringing the rate of profit down in the > >> system as a whole. > >> > >> Of course there has been a lot of argument that this analysis cannot > >> hold at the micro-logical level, and I have not presented it well > >> either. > >> > >> But if in fact prices of production are established at the global, > >> rather than the national level, then why are we interested in so > >> called national profit rates at all? > >> > >> > >> > >> All the best, Rakesh > >> > >> > >
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