[OPE-L:350] Re: Empirical and theoretical Transformation Problem

Paul Cockshott (wpc@clyder.gn.apc.org)
Thu, 26 Oct 1995 14:22:03 -0700

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Duncan
------
I don't think Marx was particularly committed to the idea that
competition in fact always equalized profit rates, but he did accept it
as the assumption under which classical political economy tried to
analyze capitalist social relations, so it was important for him to
explain how it fit in with the labor theory of value.

Paul
----
I am sure that you are right here. The source of the hypothesis
would have been the bourgeois political economy of which he was
attempting a critique. But this indicates something about the
theoretical raw materials available to Marx. He used both the
theoretical reflection of capitalist society by its own ideologues,
and also less ideological sources - factory inspectors reports etc.
By virtue of their sources, the components that derive from
political economy are the most suspect of ideological contamination
( the notion of the value creating power of capital).

If the discussion on the list earlier of Marx's order of writing
is right, the material in Vol III is earlier than that in Vol I, and
it is obviously in an unfinished state. It lacks the extensive
factual and historical background material that Vol I has. We
can not necessarily assume, that had he the time to complete Vol III,
substantiating the points in it with more historical data, that he
would have held fast to the presentation of competition in Vol III.
It is begining to look to me as if the prices of production theory
may be an epicycle, but an ill founded one. It is almost as if
on looking up at the heavens we found that the planets display
no retrograde motion, Ptolemy had accepted his Chaldean
sources too uncritically, and that Aristotle was right all along,
the planets are mounted on crystal spheres.

Duncan
------
If it turns out to be a robust empirical fact that profits are
proportional to number of workers or the wage bill, that is a fact that
needs theoretical explanation. In particular one would have to explain
why competition among capitals doesn't operate to eliminate the resulting
disparities in profit rates.

Paul
----
I agree that we need more work on more economies before this is
a robust result.

As to possible causes, as preliminary hypotheses try:

1. Why should it? One is not obliged to explain the counterfactuals
in false theories.

2. There may be a strong tendancy towards an equalisation of the
rate of surplus value in that workers are in a better position
to win wage rises in industries where manufacturers have a large
margin over wage costs.

3. Much capital is inherently imobile. Even if the rate of profit
in the fast food industry may be higher than in steel production
a steel mill does not lend itself to hamburger production.

4. There is the charge shielding effect, whereby, in the presence
of mobile charge carriers +ve or -ve charges are hidden by
complementary ones. The mobile carriers in this case being the
'capital markets', which obscure the disparities in rates of
profit on real capital by marking up or down the share prices
of the industries concerned. In consequence, the visible rate of
return on capital to rentiers will be the same in all industries,
irrespective of the real rate of return.

5. Industries with high organic compositions will by their very
capital intensity be less flexible, less able to accomodate to
changing market conditions than industries with low organic
compositions, and thus likely to be less profitable.

6. It is only where the organic composition is huge ( as in
electricity production ) that an natural monopoly is formed which
enables the industry concerned to earn an average rate of
return on its real capital.