Just for Moonofalabama.org commenter vk, I would like to present an argument against the Marxian tenet of the „tendency of the rate of profit to fall“ (the genuine text on eceonomy in general starts below the double line):
vk | Aug 28 2019 16:31 utc | 256
There are many reasons why the rate of profit can decrease, the pure fact of an episode of such a decrease in itself does not confirm that very general explanation (or only with additional assumptions). That said, I cannot understand the argument for that „tendency“; because the sector of capital which is (re)producing means of reproduction (in other words, what is being paid for by the so called „constant capital“ fraction) is no less exploitative according to Marx’s own theory than the sector which is (re)producing the goods for consumption of the wage labourers (paid for by wages, or the variable capital portion of the entire capital…). Now let us consider a period of such duration that even the capital fraction with the longest period of circulation has completely returned (this will be some portion of the constant capital). Sometime within or even only in the end of that period until complete return, portions of the means of productions paid for by that fraction of c, had to be reproduced. And that reproduction is performed by labour which is exploited with the usual exploitation rate: It contributes to the overall surplus value during that time as well as any other portion of the entire capital. And so for every other fraction of c which returns in shorter periods.
(It is Marx’s version of a fallacy of composition; single capitalists would just pass the value of the means of production paid for by their investment of c (even c fix) but the entire society cannot simply „pass“ such a value but has to reproduce the means of production as well as the means for reproducing labour power. Hence the „organic composition“ of the entire capital has no influence whatsoever on the rate of profit. This, however, was the tenet the arguments in vol 3 of Capital were based on. Btw and afaik, the according manuscripts were written (ie in the early or mid 1860ies) long before the theory (schemes) of reproduction in vol 2 originated (basically in the 1870ies).
End of argument related to the „Fall of rate of profit“ law.
This started as a reply in a brief discussion with a commenter on an open thread („Hitzefrei“) on the site moonofalabama.org.
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Here we go:
Formerly T-Bear | Jul 29 2019 17:33 utc | 282
„Metatheory“ is no more than examining, thinking about, trying to frist of all understand the basics of seemingly contradicting theories – how do they relate to each other. Sounds like not so high an ambition, although it is rather difficult to perform.
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My first remark on your presentation 265 explained in 274 2) refers to the term „consumption“; in 265, it (the „new kid“) is a match to „production“ (associated with Keynes)(the latter often being called „productive consumption“). Now you say in 274.2: income is used for consumption. Let me start here.
1. On „Capacities“
Consumption paid by income is above all used for being able to repeat the process, even by parties which receive „rent income“ (owners of land and/or everything „scarce“ derived from that): all must be able to reproduce themselves AND the source of their income: By every unit (maybe: unit per time) of what they are able to sell or rent, they must receive enough for to buy the according „reproduction factors“ for to (re)produce that unit. Let us call that the inner condition for reproduction. In order to realize that, their very contribution to the reproduction circle of the entire economy must be part of a circular flow which finally must lead into those reproduction factors (the inner exchange rate: x+y+z units of reproduction-goods produce 1 unit of whatever to (be able to) sell or rent (goods necessary for to keep on surviving over a certain period of time and be able to sell one’s labour power or to act as landlord etc during that period). The 1 unit sold/rented etc in the end must be able to contribute to reproduce x+y+z (that is the exterior condition for the inner exchange rate to be realizable; and hence the reproduction circle is closed). „Income“ does operate as such only if flowing in the opposite direction of this flow (and its manifold splits), and station for station at least realizes the condition of 1 sold/rent unit must be able to at least buy x, y and z. So far, so trivial.
It gets a bit less trivial if we consider „surplus“: The reproduction circle may yield more than is necessary for „its own“ reproduction (and that of all the immediate participants and owners-of-reproduction-factors). Such that providers of services can be reproduced as well, or servants of the state.
The difference is based on that their reproduction may need some instruments (armament!), buildings, maybe even some „means of production“ – but no „capital“ in the sense of „means of production needed for to reproduce with the help of labour on the same scale themselves (and their owners and the owners of everything „non-reproductive“ but scarce and necessary) and the necessary labour power for to be used up in the next cycle“.
Similar to a wording of Marx, we can say: The entirety of „economic or productive activities in general“ splits into these two portions: Those which involve those means or production (and labor) which reproduce themselves-and- labour(power) by-themselves-and-labour(power) including a certain surplus; and those involving everything else productive, means of production (particularly scarce goods) and/or labour which and/or the owners of which are (re)produced by products originating in the basic reproduction circle.
So activities being parts of that basis circle are „productive (or basic) in the proper sense“ whereas the others (the „non-productive“ ones) are dependent on those basic ones, being either „services“ (pure labour without needing „real“ capital for to be „productive“) in the reproduction of something in the basic circle, or being produced by using surplus goods.
Note. This concept is an attempt to GENERALIZE what Marx said about labour as producing „value“. Even in the 1850ies or 1860ies, it was true: It was labour and only labour which was reproducing itself-by-using/consuming-itself. And consequentially up to this time, all serious economists were Ricardians and supporters of labour value theory. That changed, however, as soon as heavy manufacturing came into play, and machines were made by labour and steel, and steel (and still labour, of course) was necessary for to produce huge containers for the huge smelting furnaces needed for to produce steel in the usual quality and quantity – or, railroads and locomotives were necessary for to transport these steel products and the masses of coal necessary fo to produce all of that. And so on, with mechanisation of mining (machines made of steel) or that of the production of basic industrial material like cement etc.
Marx himself had an idea of the capacitive nature of the reproduction base – it can generate surplus to a certain rate (relative surplus), in using a certain portion of the entire time available (absolute surplus) – with having running all machines available 24 hours a day as the absolute limit (besides adding further machines) which would be a workload of 100%.
Of course, this capacity can be reduced or, more frequently, expanded by using… itself (note: same idea and term again!) – with more or less delay. So capacity is immediately related to what is available for to run machines faster without having to expand the capacity for doing that, ie the machines… or the machines for to (re)produce those machines… or for to supply all those raw materials and energy necessary for all this.
Expansion of capacity and making comprehensive use of it hence is a bit self-contradicting. (Same is true of increasing productivity: You may use the already productive production capacities in producing „cheap“ goods in huge masses – or, you can use such producitivity to generate even higher productivity. Using the productivity already achieved for to achieve more of it… same self-referring formula at work..)
In fact, every production factor involved in the actual reproduction and production of surplus, acts as a capacitive limit as far as it is not available but at a certain quantity of demand for it, it has to be supplied by additional efforts and hence investments, costs etc
In other words, supply (in a given time, a limited flow) and „scarcity“ or rather „cost for expansion of additional supply“ is what defines „capacity“. So every production factor in a given reproduction system has a capacity to reliably reproduce itself and all the others in consuming itself and the others; a capacity to do that in an accelerated manner (more consumption of it in time; wheras other factors remain the same), or be part of the „surplus“ portion of its output (compared to the non-accelerated way to use it up); and capacities of being expanded in certain periods of time, at least if the expansion is appropriately being „shared“ by an expansion of further goods which otherwise would limit the ability to be expanded of the aforementioned production factor.
Marx in his reflections on surplus value (the abolute and relative one) was not really clear about the form of capacity he was talking about, his expression for the capacitive nature of the decisive production factor from his pov was: labour POWER. According to him, production of 1 unit labour power per, let’s say, one day, opens an option to use and consume it; this option has a minimum, and that is the amount of labour set free out of that potential that is part of the necessary self-reproduction of the entire workforce on that scale of productivity: It is that portion of the day the wage earners would only have to work for to reproduce themselves if they were owners of the means of production and would collectively decide to ONLY reproduce themselves, without any surplus. Although… when and how is your „reproduction“ secure enough, all risks taken care of etc? Not so easy to determine…. The maximum… well, this all the more is not so certain and specified. In the end, you should be able to repeat your performance the next day… next week etc – and how long in life, with how many time for to recover, in vacancies etc, with options to have a family (or doing „care“ work there)… all these questions are involved when talking about the precise range of this „capacity“ – at least if it is related to the individual workday. Things are a bit different, if the concept is not considered on the basis of individual needs but as a relation of how much food etc is available – at least if more workers are employed in food production than before, and these can feed significantly more workers in other industries than they themselves are. So in some regard the capacity to produce surplus on a societal level depends on how many workers can be reproduced in- and outside the consumer industry by what a given number of workers within that industry is producing (considering what has to be detracted for their own consumption).
On a collective level, Marx‘ concept of exploitation hence can be reconstructed as a statement on the wage earner class in its entirety: They would not have to work longer than necessary for to collectively reproduce all of them – if there was not that force to work longer than the time necessary because owners of means of reproduction can dictate a length of the workday way longer than that, and though enforce wages per hour which add up to an equivalent in terms of commodities which to produce in terms of labour would only take a fraction (mostly no more than the minimum necessary for reproduction, according to Marx).
In Marx‘ theory, the concept of capacity would have been to be explained within Capital vol 2, where he describes in detail the reproduction cycles of the entire capital on societal scale: The output of commodities when sold is used to again buy labour, raw materials, energy, intermediate products – these being used up unit by unit in making single commodites or small portions of them, as well as machines and buildings which have to be re-purchased, renovated etc after they have been worn down and „used up“ in that sense (maybe this wearing down is by introducing more productive machines and methods by competitors such that the lifetime of such an „unproductive“ machine ends sooner than its physical performace would last. So the cycle of the overall capital breaks up in sub-cycles such that the return from selling commodities can already buy next labour(power) for next workdays (or -weeks), raw materials, auxiliary material etc whereas some part of the achieved income has to be saved (write-off) as a fund for repair and replacement of machines and buildings. Prices per unit are calculated by adding all these costs per unit – whatever a unit of the commodity will earn on the market, it must not be less than the unit cost. (remember the inner exchange value of the initial paragraph above…)
Now the idea of having production factors produce „more goods per unit time than was necessary inorder to reproduce them“ can be expanded onto every other element of the production process, and actually it even MUST be: because the necessary as well as the enforced additional worktime require the according means of production (raw and intermediate materials, instruments, time of machine operating and usage of buildings) to work with; and so the entire mass of production forces break up in these two portions. the minimum quantity which must be produced and sold per unit time such that this quantity can contribute to the necessary reproduction of the production factors used up during that unit time. And a second portion which is more than that: the surplus quantity. – You see: the idea is nothing but the repetition or necessary generalization of Marx‘ presentation of the necessary and surplus labour per unit time (usually workday). The reason for that break up being the same as in the case of labour in the early days of industrialisation: Self-reproduction of the entirety of production factors in advanced industrialized societies is productive to such an extent that per unit time it can produce everything necessary for to reproduce itself – and even more: The surplus per unit time can be taken away without damaging the underlying reproduction process; what is reproduced is a production power (as in labour power) or capacity that can be used to reproduce itself and a permanent flow of surplus.
Surplus can be produced but need not. So there is scope for expansion and reduction. And it is this scope (% utilization of capacities) the Keynesians are talking of in using terms as income, savings (and propensity to save), demand etc because here is where money comes in – being more than „representing the flows of products=commodities within reproduction circles (and out, as surplus)“. Because money can be used to buy surplus and change the productivity of the system, hence its capacity. And that… changes a lot.
To be continued