Gee, come back to ope-l after stepping out for 6 hours and you don't know what
is going on any more!
At the risk of anticipating some of my response to Duncan's latest posts on
the FRP and the Okishio theorem, I want to state my agreement with what Jerry
said in ope-l 2863:
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Marx was pretty clear in stating in V3, Chs. XIII + XIV that the
LTGRPD will occur with a constant or *rising* (up to a point) s/v and that
the same mechanism that causes the rate of surplus value to rise also
causes the general r to decline.
Let me add the following. Also in Ch. 15, Marx writes that the development of
productivity raises the rate of surplus-value while simultaneously "it reduces
the number by which the rate of surplus-value has to be multiplied in order to
arrive at its mass. Two workers working for 12 hours a day could not supply
the same surplus-value as 24 workers each working 2 hours, even if they were
able to live on air and hence scarcely needed to work at all for themselves.
... therefore, the compensation for the reduced number of workers ... has
certain limits that cannot be overstepped; this can certain check the fall in
the profit rate, but it cannot cancel it out" (Vintage, p. 356).
Similarly, in Ch. 24, he writes: "in order to produce the same rate of
profit, therefore, if the constant capital set in motion by a worker increases
ten-fold, the surplus labour-time would have to increase ten-fold as well, and
very soon the total labor-time, or even the full twenty-four hours of the day,
would not be sufficient, even if it were entirely appropriated by capital" (p.
523). This implies a fall in the profit rate even if necessary labor and thus
the value of wages equal zero, and the rate of surplus-value is infinite.
It also may be worth quoting a passage in Ch. 14:
"The tendential fall in the rate of profit is linked with a tendential rise in
the rate of surplus-value, i.e. in the level of expoitation of labour.
Nothing is more absurd, then, than to explain the fall in the profit rate in
terms of a rise in wage rates, even though this too may be an exceptional
case. Only when the relationships that form the rate of profit have been
understood will statistics be able to put forward genuine analyses of
wage-rates of different periods. The profit rate does not fall because labour
becomes less productive but rather because it becomes more productive. The
rise in the rate of surplus-value and the fall in the rate of profit are
simply particular forms that express the growing productivity of labour in
capitalist terms."
>From the above evidence, and more like it, I think the following conclusions
necessarily follow:
(1) Marx's initial formulation of the FRP in terms of a constant rate of
surplus-value is not the whole of his law, since that assumption is later
dropped. Probably he held the rate constant initially in order to focus on
the impact of the rising organic composition of capital.
(2) Marx's theory of the FRP does not depend on the assumption of a constant
rate of surplus-value. He contends that the profit rate can fall even if
wages decline to zero, and certainly when the rate of surplus-value rises but
remains finite.
(3) Because of this, and because Marx considered a theory of the falling rate
of profit based on a falling rate of surplus-value "absurd," no theory of this
sort vindicates the logic of his theory of the falling profit rate (whether or
not he was right to call it absurd).
(4) To vindicate the logic of Marx's theory of the falling rate of profit,
one needs to show that the rate of profit can fall *precisely because*
productivity rises (as a consequence of the rising composition of capital).
One needs to show this to be possible even under the assumption that rising
productivity leads the value of wages to fall to zero.
To elaborate briefly on (4): It is not enough to show a falling rate of
profit resulting from a situation in which a rise in productivity
*accompanies* some other change, such as rising real wages. It might be these
other changes that cause the fall in the profit rate, while rising
productivity partly counteracts the fall. This latter possibility, in fact,
is what the Okishio theorem says *must* be the case if the profit rate falls
when productivity rises, given profit-maximizing behavior and an equilibrium
profit rate. I also think these assumptions of Okishio are not accidental,
but correctly model the following propositions in Marx's theory: (a) "No
capitalist voluntarily applies a new method of production ... if it reduces
the rate of profit" (p. 373). (b) As a result of innovation that initially
raises the innovator's profit rate, a "fall in the profit rate then ensues -
firstly perhaps in this sphere of production, and subsequently equalized with
the others" (p. 374).
Andrew Kliman