Heinrich Contra Law of Falling Rate of Profit

When I say that temporalism and TSSI, are distinct, what I mean by "temporalism" is the view that the profit rate that is really relevant in the functioning of the capitalist economy (namely in terms of regulating the rate of accumulation) is the historical cost rate of profit (rather than the current-cost rate of profit used by simultaneists).

One can be a "temporalist" in this sense, while disagreeing with the TSS interpretation of Marx, and one can agree with the TSSI of Marx while disagreeing with temporalism (in the sense I defined above).

Apropos of nothing except how little Heinrich understands capitalism, this from David F. Nobles Forces of Production: A Social History of Industrial Automation, Oxford, 1984:

Now to anyone who has ever worked in an industry that actually makes capital investments, and big ones, this is not news. This is ABC. That Heinrich can pretend to be a "scholar" of Marx without having the slightest grasp of capitalism is another index to the impoverished condition of Marxism, of class struggle, in the modern world.

Here's my recommendation-- nobody should waste a second reading Heinrich or Harvey or anybody else who cannot and does not demonstrated the historical truth of their assertions in the actual movement of capital.

Found this interesting interview of Heinrich from last year.

Heinrich says:

my emphasis added

Wow. I truly am all for people having different interpretations; but this seems to be going way too far. Do we really need Heinrich telling us what to think about nearly every single sentence Marx wrote in the first couple chapters of Capital? Are people so dumb that they need this Master Interpreter, Heinrich, to explain Marx's every sentence to them?

To kingzog:

Thanks. Yes, 2 and 4 are wrong. It had been stated earlier that TSSI and temporalism were logically distinct and I don't think it is that straightforward.

I have read Kliman's first book and much of everything else online so I am conversant with TSSI and temporalism - if struggling with some aspects of it. I'm sure I'm not alone in that.

Kingzog, this is ridiculous. You act like Heinrich's in the K-12 curriculum. Nobody's forcing Heinrich on you – obviously, since unless you can read German you couldn't have read the book he's talking about in that bit. Which makes the fact that you comment on that book even stranger.

Obviously Jura is right - if you don't like Heinrich's work, don't read it! My knowlege of the value -form theorists is limited but they do seem preoccupied with exegesis. I quite like this so am looking forward to reading more Heinrich when translated.

To mikus:

No. TSSI - an interpretation of Marx - and the correctness of Marx in itself (i.e. TROPF) are logically distinct. That's true. But your further claim that TSSI and temporalism (as you have explained it, using historical cost) are logically distinct does not hold.

I guess it may be possible to conceive of rejecting TSSI but accepting a historical cost ROP but not the reverse. If you support TSSI - i.e. in it's entirety - you cannot get away from supporting a historical cost ROP. Does anyone in practice accept (reject) TSSI and reject (accept) temporalism?

That's the way I see it. One cannot consider the correctness of Marx without an interpretation of Marx. The empirical bit is to measure a "Marxist rate of profit" but you have to first define it somehow. Hence we all debate both the data and theory.

If one wants to make grand logical statements, absolute precision of definitions is needed to avoid confusion.

You're making this waaaay more difficult than it needs to be and it's hard not to think that you're being purposefully obtuse.

Not true at all. You can think that Marx calculated rates of profit using historical costs (i.e. you can agree with the TSSI of Marx) and however think that this is an incorrect procedure (i.e. you can disagree with temporalism). You can just as easily think that Marx calculated rates of profit using replacement costs (i.e. you can disagree with the TSSI of Marx) while thinking that one should in fact use historical costs (i.e. you can agree with temporalism).

The issue of whether or not the two concepts are distinct has nothing to do with whether anyone "in practice" accepts (or rejects) TSSI while accepting (or rejecting) temporalism. The fact of the matter is that one could in principle do this while being logically consistent.

It's as simple as this: Believing that Marx said x (i.e. having a certain interpretation of Marx), and believing that x is true (or false), are two totally different things. And that's all there is to it. I don't know why this is so confusing to you. If you disagree with this, then you must think that believing that Marx said x somehow requires you to believe that x is true (or false), which is self-evidently ridiculous.

Furthermore, I can think of examples of both cases. Robert Vinneau, a Sraffian economist, is at least sympathetic to the TSSI of Marx (I don't think he firmly stated a position either way), yet he remains a Sraffian economist and therefore is a simultaneist (i.e. he rejects temporalism). On the other extreme, there are people like Steve Keen who definitely don't accept the TSSI of Marx (Steve Keen is extremely dismissive of it) and yet have their own sort of temporalist theory (albeit not based on the labor theory of value).

The most grand logical statement I've made is the simple statement that one can have a certain interpretation of Marx, and yet disagree with what Marx said. I don't think that anyone besides you is having difficulties understanding this basic point, so we really probably don't need to be any more precise than that.

I think it's fine that Heinrich wants to provide commentary on Capital. I think it's fine for Heinrich. We need to recognize however that where Marx develops and deploys the critique of capital, utilizing the abstract, the distilled, the determinants free of external mediations, he does so to "bridge" the gap so to speak from that abstract to the concrete movement, transitions, expressions of capital.

If economics is for Marx concentrated history, and I believe it is, and if history is the history of the social organization of labor, then it behooves us to take Marx's "models" and "methods" and test them against the concrete rather than reverse Marx's critique and make it just another philosophy of the abstract.

To mikus:

I agree with everything you said after the first substantive paragraph. There is no need for condescension and I haven't got a problem with this "basic point", not least because I've made the same point myself more than once. An interpretation of Marx and the correctness of Marx are distinct. Or, if you prefer, defining x does not make any claims on x being True or False.

If you agree with the TSSI of Marx then you have to use historical costs to calculate a Marxist Rate of Profit. This is all I was trying to say and I didn't understand what you meant by "temporalism". Subsequently, based on the evidence, you are at liberty to accept or reject the procedure. If you reject it there are consequences: either you reject your interpretation of Marx, or you come up with another measure of the ROP that differs from Marx to some extent, or you conclude that Marx was wrong.

Self-evident or more likely plain wrong. But hey.

And yet you keep debating my statement that that the Temporal Single-System Interpretation of Marx and temporalism itself are distinct.

You must have missed my post #122 earlier, where I clearly defined what I meant by "temporalism":

(Except, you responded to it, so you couldn't have missed it.)

Your misunderstanding wouldn't have been so annoying if you hadn't tried to chastise me (immediately after giving you a clear definition!) for supposedly not supplying you with clear definitions and for supposedly making "grand logical statements."

I could respond to the points you have made but it's obviously futile and I'll leave you to your clear definitions. They may not be clear to others but that's OK as I'm stupid.

I'm familiar with this style of debate around the work of Andrew Kliman and find it depressing.

Jura said:

It's okay for him to give such commentary, but I think it's excessive. I'll read it if and when it's translated because I'm interested in issue's of interpretation, but I think people shouldn't use interpreters of Marx, generally speaking. I don't think it's all that necessary. There are some general principles and basic historical contexts to take into consideration but I'm suspicious of what Heinrich has been doing so far. Sorry, I am quite biased against Heinrich I'll admit, obviously.

I don't see an issue with the way Mikus described temporalism. Certain Marxist academics agree with using the historical cost rate of profit but not accept the TSS interpretation. I guess the issue is that there are multiple elements to temporalism as well.

You haven't seen the fucking commentary, how can you say it's excessive?

Heinrich says that he gives commentary to "nearly every single sentence from the first two chapters of Capital." You don't think this is excessive? It seems excessive to me. But that is just my opinion.

...unless Heinrich is lying about the excessive amount and nature of (nearly every sentence..) of his commentary...

Maybe he just has a lot to say. Maybe some of it is right; some of it is wrong; some of it is interesting; some of it pedestrian. Those who want to read Heinrich's comments on "almost every sentence" can let us know.

Hey, I know that when I re-read the Grundrisse, each time I find more things to note, more things to extrapolate, more things to comment upon in my personal notebooks, I've got 3 sets of notebooks each with different comments on the same pages I've read the other two times (if my memory weren't so poor, I could save on notebooks and ink) so who am I to criticize the effort? What counts is the content.

Who knows, I might agree with it. But that consideration is besides my point. Although I understand where you are coming from Artesian and I respect your opinion. I also think it's great for people to take personal notes!

But, overall, I am weary of interpreters and academic Marxists who go to such great lengths. I guess I really do disagree, tout court, with the truly extreme amount of interpretation (IMO) Heinrich book suggests. I just want to warn people against using these books as a crutch towards their own understanding and studying of Marx.

Sorry, Jura, that's what I think.

I only skimmed this thread, gotta read it properly later. Someone cited Kliman saying Marx said the tendency of rate of profit to fall was the most important law of political economy, as part of an objection to Heinrich. I looked on marxists.org for the phrase "most important law" and it doesn't appear there in Marx's writing after 1861. Does anyone know of a later appearance of the term in Marx's work?

Economic manuscripts 1861-1863. Or do you mean you found it there and you want a later date?

Yeah, I wonder if there's a later date where Marx says that or uses similar terms. I had the date wrong BTW. This is what I found -
http://www.marxists.org/archive/marx/works/1861/economic/ch57.htm

Which marxists.org says was written in January 1862.

I'm behind on a lot reading-wise and am not sure I've understood what I've read/skimmed, but my sense here is that some of the argument is about whether or not Marx changed his mind, and how much, and about what. As I understand it, Heinrich seems to be saying Marx rethought some stuff that Kliman says he didn't rethink. I took Kliman's point about Marx saying the falling rate of profit was the most important law to imply that Marx didn't rethink that. 'Marx says repeatedly that the falling rate of profit is a really important law' is diferent from 'Through January 1862 Marx says repeatedly that the falling rate of profit is a really important law' - especially because the argument seems to be about whether or not Marx changed his mind in later manuscripts.

Marx called it "the most important law of political economy" in Grundrisse. Maybe in the 61-63 manuscripts where there is a significant amount of writing (40 pages or so?) on it he say's something similar, but idk.

One point is that there isn't evidence that Marx actually did change his mind even though Heinrich implies some mystical manu from the MEGA project is evidence ( and he provides few, if any, direct passages from unpublished works in the MEGA). But, again, no evidence from MEGA exists to lead us to believe this. I, and many others I'm sure, patiently await any revelations from MEGA, btw. So that's one reason why this MR article was such a disappointment-- it's highly misleading ( as well as unoriginal, I believe Simon Clarke wrote the exact same things years before Heinrich wrote this piece, and many others during the Okishio era too).

So why should we assume he changed his mind if he never said so? No reason to disregard the work Marx did do on the LTFRP. At least not for those of us who are interested in it.

I also don't understand why Heinrich virtually ignores the 61-63 manuscript-- except for a short footnote about Ricardo on ground-rent in Marx's critic of Ricardo's "diminishing profit" theory in Theories of Surplus Value.

He called it that in the bit I linked to in 1862 as well.

If I understand correctly, Heinrich thinks Marx rethought his stuff on the FROP and abandoned that idea. He also thinks it's not a very good idea and so when/if Marx abandoned that idea, Marx made a good move in doing so. As such, it doesn't seem to me a surprise that he wouldn't say much about the places where Marx talked about that idea. And if Heinrich thinks this rethinking happened after 1862 then it's no surprise he'd not mention stuff before the rethink much. And what Marx said before that supposed rethink happened wouldn't be evidence that the rethinking didn't happen.

That's the crux of the issue, what the evidence is for Marx rethinking that idea. I don't have an opinion the matter currently though I intend to develop one.

First, Heinrich in the MR article wants to establish the argument that the categorical foundations of the Grundrisse are not established-- "insufficiently secure" and "unclear" is how he puts it. He is not about to, then, search through the rest of the Economic Manuscripts for that sufficient security.

Regarding the manuscripts of 1861-1863, and later, he focuses on Marx's changing view of crisis, from the apocalyptic collapse and abolition, to the "normal" course of capital.

Then after discussions of the difference between Marx's various notebooks, the mathematical "uncertainty" of Marx's analysis of the FROP, and the usual blaming of Engels for having the audacity to do what actually needed to be done-- make sense out of Marx's manuscripts, notebooks, fragment and try to arrange them as Marx might have-- we get to the end, and the end is this:

How that relates to anything specifically that Marx had written about crisis, overproduction, surplus value, the rate of profit etc etc. is unsaid, unspoken and unclear. So what we are left with is........speculation.

I mean, really, maybe Marx was having second thoughts about this whole use value vs. exchange value thing. Who knows? So why not choose that as something to be changed "in the way I should have done at present under different circumstances."?

The issue, IMO, is clearly, are the categories Marx developed and utilized in the Grundrisse, in his manuscripts "insufficiently secure"? I think we answer that in the concrete-- determining if capitalism here and now can actually be analyzed, critiqued, explained, apprehended, measured by those categories.

Note that in Heinrich's article there is nothing that indicates Marx ever had second thoughts or questioned if the categories he had developed in the early works were sufficient, sufficiently secure, to undertake any expanded and more detailed analysis of capital. He doesn't say "wage labor" is insufficiently secure. Nor does he say that about his category of fixed capital, nor turnover, nor rates of surplus value, etc. etc.

It seems to me Heinrich is really grasping, grasping at straws, and missing.

Response to Heinrich's MR piece, co-authored by Andrew Kliman, Alan Freeman, Nick Potts, Alexey Gusev, and Brendan Cooney.

http://kapitalism101.wordpress.com/2013/07/22/the-unmaking-of-marxs-capital/

Wow. I think only the genuine "true believers" could find this convincing.

And now Kliman has written a solo response to Matthijs Krul's critique of that paper:

Critique: http://mccaine.org/2013/07/22/kliman-vs-heinrich-an-exercise-in-marxology/

Response: http://akliman.squarespace.com/storage/A%20Defense%20of%20Pluralism%207.24.13.pdf

This is super entertaining. I'm still waiting for Heinrich to respond to Cockshott.

The law of the falling rate of profit, IN CAPITALISM.

We should start therefore with some concept of Marx’s capitalism.

Capital Vol. III Part VII
Revenues and their Sources
Chapter 51. Distribution Relations and Production Relations

.

http://www.marxists.org/archive/marx/works/1894-c3/ch51.htm

What does that mean?

Capitalism, by definition, converts surplus value, unpaid or unremunerated labour time into ‘productive’ or working capital.

The net surplus product of capitalism after all the buying and selling is more ‘productive’ capital.

The TOTAL or ‘MASS’ value of capital increases.

That is the ‘objective’ of capitalism; which is why it is called ‘capitalism’.

Other exploitative surplus labour systems eg feudalism don’t do that.

We can leave the why’s and the wherefores out of it for the moment for simplicity.

That is predicate and premise number 1

[Actually a change in the TOTAL or ‘MASS’ value of capital doesn’t have to alter the rate of profit; even if the rate of surplus value stays the same or not.]

The second predicate, number 2, is the Marxist definition of the rate of profit, P’; which is, at any one moment in time the total surplus value, unpaid and unremunerated labour time divided by the value of the capitalist invested or 'working capital' which I shall bunch together and call capital C.

C = Fc +c + v*

So;

P’ = s/C

[And we are dealing here with total s and total C, s is total surplus value and C is total working capital- that is what it means.]

But this is not a mathematically correct expression because; we are about to examine how the process changes with time?

We scientist have a way of dealing with this kind of thing.

We are dealing with what we call a 'series' of ( t -time related- turnover) mathematical expressions or equations and we thus redefine it as;

P’(t) = s(t)/C(t)

Or in other words in week one or t=1

P’(1) = s(1)/C(1)

Then in week 2

P’(2) = s(2)/C(2)

And week 3

P’(3) = s(3)/C(3)

Nobody knows or cares yet what s(1) or C(3) is relatively or absolutely.

We start in week 1; t= 1 and;

P’(1) = s(1)/C(1)

Then we move to week 2, t= 2

P’(2) = s(2)/C(2)

Brilliant!

Now mathematicians use a trick called ‘substitution’ into parallel equations, or whatever.

So in week (2); s(1) has augmented C(1); ie the predicate of capitalism so;

P’(2) = s(2)/{C(1) + s(1)}

“Lets” briefly ignore P’(2) for the moment; as something that is going to be ‘determined’.

And lets mathematically, for the hell of it and for the moment.

“Let” total s(1) = total s(2).

We will investigate what that means in the non mathematical world later.

Then

P’(1) = s(1)/C(1)

Goes to

P’(2) = s(1)/{C(1) + s(1)}

Because in week 2;

Total s(1) so happens to = Total s(2).

As;

s(1)/{C(1) + s(1)}

is smaller than;

s(1)/C(1)

P’(2), must be smaller.

But what if total or mass of s(2), total unpaid or unremunerated labour time, in week 2 or in later weeks in general is greater than s(1)?

That would tend to reverse the fall of P’(2) and later P(t)'s!

How can total s(2) or s(558), or whatever, be greater than total s(1)?

Well more workers?

If 10 million workers produce a total of s(1).

Then 20 million workers produce total surplus value of 2 x s(1).

Then you can just theoretically double the number of workers AND 'perhaps' double the value of capital that they work with (from previous surplus value) and the rate of profit remains the same.

The extra workers theoretically come from population expansion or extant coexisting simple commodity producing Scottish highland peasants being dragged into the orbit of capitalism etc.

[NB This limited scenario does not yet involve, to that extent, the rising productivity of labour by utilising the labour saving and value reducing advance of technology etc etc.]

It merely reproduces and expands, as it is, quantatively ( the mass) of working capital and workers.

One steam powered loom and 50 workers goes to two steam powered looms and 100 workers.

But what if there is no increase in total s(2) or total s(t), due to more total workers; as is required to stop the fall in the rate of profit?

Well total s(2) would have to be increased at the expense of n(1), or necessary labour time.

Or in other words the rate of exploitation, (or the working day- easiest to forget that), will have to increase.

Both can no doubt happen simultaneously; Chinese sweat shop workers and first world worker overlooking robots,

But we are ignoring the other variable, C, and making presumptions about it.

Whilst C should rise, that is what capitalism is all about, it can fall.

Albeit scientific technology drives the process forwards it is a fickle thing and can bite back.

Scientific innovation can make the embodied socially necessary labour of Capital unnecessary redundant and ‘valueless’.

The technological depreciation of the ‘value’ of advanced capital runs at 10-20% per annum these days.

That is not to say that a 150 year old steam engine or 10 year old computer can no longer do what it used to.

V* is the amount of ready cash that the capitalist has to have in the safe to pay his workers at the end of the week; it can in fact be zero, or less than zero, as with capitalist restaurateurs who receive the wages for their workers before the pay them.

As with fast circulating industrial capitalism.

Some of the stuff I make is sold before I get paid for it.