Re: [OPE-L] Falling Rate of Profit as Science Fiction?

From: Jerry Levy (Gerald_A_Levy@MSN.COM)
Date: Sun Mar 05 2006 - 09:52:40 EST

> Just quickly, I have provided a brief answer to some of your queries here:

Hi Jurriaan,

Your wikipedia entry in the section on "Empirical Evidence" recognizes
some of the questions I raised.  E.g. in that section you wrote:

              "correlation does not imply causation. Just because a fall in
                profitability is observed, this does not prove any imply any
                particular *causal* theory about *why* it has fallen ...."


When you state that:

             "Most economic historians agree that, at the beginning of
              the great economic depressions or recessions in the history
              of capitalism (measured by a drop in output), there typically
              has been a downslide in the observed average returns on
              capital invested in industries, reducing the incentive to
              invest, and consequently raising unemployment."

aren't you stating the obvious?  (this is not a criticism: in certain
contexts, it's important to state the obvious.) So profitability typically
declines at the beginning of a depression, what does that tell us?
Isn't it a claim which advocates of just about every economic
theory could agree with?

When you go on to write:

            "At best Marxian economics has convincingly argued that
             profitability is the synthetic, overall indicator of the
             'economic health' of the capitalist system ...."

you are stating a conclusion that just about all of the *critics* of the
TRPF would *agree* with: to claim that profitability is an important
indicator of 'economic health' of capitalism is a profoundly
uncontroversial claim.

Then you add (as the end to the previous sentence) that "economic
crises are *system-immanent*, i.e.  capitalism is inherently crisis-
prone, because of its institutional structure and the way it functions."

What does it mean, though, to say that capitalism is "crisis-prone"?
One could examine the same historical data on cycles and just as
easily write that it is "growth-prone"!   Isn't saying that capitalism
historically is crisis-prone simply recognizing that capital accumulation
proceeds in a  *cyclical*  way and that in some time periods the rate
of profit grows and  in other periods it declines?  From that perspective,
isn't it a *tautology*?

The issues I raised (in my previous post and above) were not postmodern
Marxist inspired, btw.

I'll send another post shortly following-up on the issue of "capitalism
in crisis."

In solidarity, Jerry

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