Heinrich Contra Law of Falling Rate of Profit

As Angelus already pointed out, the challenge is not "a defense of the LTRPF on the basis of the OCC", but a systemic account of the immanent dynamics of crisis in capitalism. In that sense the attempt to ground a crisis theory purely on s/(c + v) is precisely an attempt to short-circuit an analysis of the total system - which requires a full theorisation of credit.

I have already made my arguments about why there is not only no demonstration as to why the VCC should rise, following the TCC, on the OCC thread, but that the basic historical development of production under capitalism is overwhelming evidence against rising social OCC/VCC. The attempts by some (including Kliman et al in that paper) to point to empirical evidence for FROP, as proof that Marx's OCC-based explanation must, ipso facto, be correct, is a monumental non-sequiteur. Such illogic can only be understood, imo, by the irrational faith position in the "Complete Marx" - a position, S Artesian, that I notice you fully supported in one of your comments on the Roberts' blog thread.

To reiterate, at the social level there is a basic contradiction between the development of the productive forces and the notion of a rising social OCC. But I accept that I will have to write up the ideas scattered throughout the OCC thread to make that argument more accessible (and open to proper critique). Nevertheless endlessly repeating "the TCC rises, therefore so must the OCC" like a mantra to ward off the evil "Marxists without Marx"* spirits, does not make it so.

Your contention that credit is merely distributive is merely that - i.e. your contention. Certainly Marx ascribes the bridging function to it, in relation to turnover, in vol II, but it does not follow that Marx therefore felt that was all there was to say about the credit system.

You seem to forget the implied assumption in the OCC-only "explanation" of the TRPF that capital can only be accumulated in the physical form of either c or v (or the "accumulation of the means of production" as I believe you prefer, iirc) but not M. Again, I'm not entirely clear what the justification for this physicalism is, because I've never really seen it made. It also strikes me that your position is effectively analogous to the neoclassical belief in exogenous money - i.e. that the growth of credit and its instruments (bank money, equity and other financial assets) is somehow external to the capitalist cycle and cannot affect its cycles of boom, bust, depression, etc.

I would like to hear how a "Complete Marx" explanation for a purely derivative credit function deals with the question of risk. What is the orthodox Marxist theory of risk again? How can you have a "Temporal Single System" without risk? I'd be interested to know the answer to that question.

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* Such transparently religious symbolism in that chosen term of abuse.

First off Angelus, I never was involved,participated in any union-busting activities. If you knew anything about US railroads you would know that employee organizations are protected under the Railway Labor Act.

I was the deputy chief of field operations, responsible for the safety and performance of the railroad and in that position I negotiated with the unions; opposed some of their initiatives; agreed with others; proposed my own, some of which were acted upon; disciplined employees; made day to day operating decisions and long term plans.

So you can either provide some evidence of union-busting or shut the fuck up. I expect however you'll do neither. So let me just tell everyone, I make no excuses nor apologies for what my profession was. Anybody is welcome to dig into the details and try and produce some evidence of "union-busting." Contact me privately, and I'll be more than happy to direct you to relevant sources of information with the Railway Labor Act Boards of Adjustment, and the unions that represented the railroad workers with whom I dealt.

Now, not to put too fine a point on it Angelus, but I was not responding to you. Ocelot made the comment :

That's what produced the question.

Just for clarification's sake-- public advisory-- I was a senior operating officer for a railway, and in that position actually rejected union claims for payment that were not justified according to the contract; actually issued mandatory directives to employees regarding the safety of the operation; and actually disciplined union members for violating the operating rules of the railroad.

And I did it all cheerfully, without regret. Never engaged in "union-busting."

.

Sorry, that's not what you wrote in the earlier post. And that earlier post was all I was responding to. I have no horse in the race about complete theories of crisis in capitalism, other than what I myself have written, which is hardly a complete theory.

Really? Can yo provide some evidence against rising social OCC/VCC over time in countries such as the US, UK, Germany, France... etc? I'd like to see that. Could you like take for example the S&P 500 largest non-financial companies and demonstrate that-- or the French 440 or the FTSE 100? Or is it your claim that the absolute surplus value extracted on a global basis offsets the increased OCC/VCC in specific areas.

I don't have "irrational faith" in the Complete Marx. I have no opinion, one way or the other about the complete Marx-- regarding Marx's own intentions to expand and deepen his work. In fact I wish he had.... I wish he had spent less time considering the Russian communal agriculture, and a bit more on the defeat of Reconstruction in the US, the transformation of agriculture under Juncker capitalism; the long deflation.

I do think is that it is very interesting, and I tend to agree with Kliman that Marx's correspondence means Marx thought Capital was complete, but only volume 1 was fit for publication. And I find it a useful antidote to the speculation Heinrich flogs regarding Marx's discomfort with the LTFROP.

I think Kliman raises a critical point, and then what Engels "did" to Marx, which Heinrich makes such a big deal of, was in fact the right thing, and Marx regards his own analysis of the LTFROP as complete.

Please do. And please account for the expanding value of the means of production, globally, over the last few years or so.

Correct. That is my contention. That it is a bridge, and that it functions in accordance with Marx's analysis in establishing the general or average rate of profit. I never claimed that there is no more to say about credit. What I am asking is how does the fully developed theory of credit prove or disprove the validity of a theory of the LTFROP based on the OCC?

I don't understand what you're getting at? Are you saying that I'm not accounting for the implied assumption, or that I haven't explained why capital is accumulated in the "physical"-- actually social-- forms of "c" or "v"? Both?

My opinion regarding this "M" theory vs. physicality:

Why can't it be accumulated as "M"-- well it can, to a degree and for a certain time; but as Marx points out, in so doing, in accumulating it as "M" and only as "M" what happens? Self-expanding value has been interrupted. A cash hoard has been generated-- useful at times, but ultimately not capable of expropriating more surplus value, of offsetting the tendency of profits to decline, of competition to increase. Concrete example? Well, we can use the period of recession and recovery in the US 2001-2004-- when cash was hoarded, when the fixed asset replacement rate dropped below "1" in the US. What was the result? Some nice pockets of cash. And then what happened? Machinery had to be replaced. Investment had to resume. And then what happened? Capital expenditures increased in everything from airplanes to railroad freight cars to petroleum extraction. And then what happened? Krikey Jack, looks like the rate of profit peaked and started down (But we're getting ahead of ourselves).

How about we look at today with all those cash hoards of industry-- about $2 trillion for US industries alone-- with enough cash on hand right now to make every debt payment due over the next five years. So bustling right along is the economy, you think? Or maybe that extra cash all came because the OCC declined and more labor was employed? Doesn't exactly square up, does it, since the US labor force participation rate is at a post WW2 low?

I know, I know, I'm being US centric, but look if you've got some data that says "globally X Y Z have happened" please share it.

And if you or our Angel want to explain Heinrich's monetary theory of value, please go right ahead.

Simple version of "why not M?" Because, in short, M is nothing. M' is everything. On Wall Street, they say "Cash is trash." And they aren't kidding. Until suddenly everything turns to shit and then "Cash is king." See for example 2008, 2009-- when the Fed had to open up unlimited currency swap lines with central banks all over the world, and Brazil's central bankhad to use its to augment its dollar reserves so it could step in and directly provide guarantees for Brazil's export/import trade.

Another example of the "not M" as value of course, is the actions of the banks throughout Europe in the US which, upon obtaining funds in exchange for various levels of collateral from the Fed and the ECB did what with the M-- oh, they put it right back into deposit accounts at those central banks. And how was the old rate of profit doing then in 2008 2009? How was the old accumulation of capital making out? Good? How was the old expansion of value going.?

What was it Marx said, somewhere something like "try as we might, we can come up with nothing that counts as capital that does not in the end resolve itself into either the means of production or the means of subsistence"??? Something like that.

So I wouldn't be surprised if I'm totally misunderstanding what you are trying to get at with M, but there it is. Have at it.

One other point I'd like to make on the physicality argument: Let's not forget what capital is-- it is a specific social organization of labor, a specific social distribution of labor time; it is a specific method of producing use-values. Without the use-value, the exchange value wither and dies. And money is only the abstraction of and from exchange value. That's fundamental to Marx's analysis, no? The accumulation of capital as M' is, as Marx makes crystal clear is only the beginning of another lap around the park.

Found the quote on Marx's "physicality" from volume 1:

“Accumulation requires the transformation of a portion of the surplus product into capital. But we cannot, except by a miracle, transform into capital anything but such articles as can be employed in the labour process (i.e. means of production), and such further articles as are suitable for the sustenance of the worker (i.e. means of subsistence)…In a word, surplus-value can be transformed into capital only because the surplus product, whose value it is, already comprises the material components of a new quantity of capital.”

Whilst I agree for once with the thrust of S Artisan’s 185 post and quotation as regards capitalism operating normally, or not madly.

The topic is of capitalism in ‘financial’, or money ‘circulation’ crisis, I think.

Normally the functioning capitalist, the personification of capitalism, the profiteer of enterprise, converts his surplus product with surplus value embodied in it for cash ie he sells it.

Only to buy more raw material and labour power (and fresh fixed capital).

That capitalist of course could just sell his surplus product for gold money and hoard it in a tin box and become a “miser”.

Or be a ‘merely a capitalist gone mad’.

Gold in a tin box has no power to expand in value or lay more 'golden eggs'; to do that you need to buy labour power and use it to employ or work manufacturing productive capital.

However not all capitalist who sell their surplus product for gold money are mad.

They merely become money capitalists.

They lend it at interest to ‘profiteers of enterprise’ or ‘functioning capitalists’; for them to ‘buy labour power and use it to employ or work manufacturing productive capital’.

The money capitalist has opted out of being a ‘functioning capitalist’.

The ‘profiteers of enterprise’ and ‘money capitalists’ then split the surplus value, into interest for the money capitalist and profit of enterprise for the ‘profiteer of enterprise’.

Part or all of the productive capital that a ‘profiteer of enterprise’ utilises may be his own or part or all of it may have been paid for and be de-facto owned by the money capitalist.

At least as collateral of the loan made by the money capitalist.

These loans ‘roll over’.

In other words a profiteer of enterprise capitalist might borrow £100,000 for a year and at the end of it renew the loan or if not; the profiteer of enterprise capitalist pays it off by borrowing £100,000 from another money capitalist and carries on.

In the old days when concrete gold money was limited and didn’t grow on trees.

When there was an economic crisis due to overproduction or whatever the money capitalists got spooked first and worried that that the capitalist enterprises that they have lent money to might go belly up and the value of the collateral ie the productive capital might become worth scrap value.

They wanted to cash out and sit on their returned money capital until things looked safer.

A shortage of willing money capitalists meant the rate of interest on money capital rose potentially above the current rate of profit; which might have been stressed already.

When a profiteer of enterprise, who might in fact have not been in trouble, couldn’t roll over a loan without paying out more interest than he can possibly make as profit he packs in and/or defaults on his loan.

Defaulting profiteers of enterprise and factories closing down etc spooked the money capitalists even more and interest rates demanded by those that still dared to loan increased further and you had a chain reaction.

Including fire sales and reduced ‘market value’ of bankrupt stock and productive capital etc.

The departments of capital that produced raw material, or ‘c’, collapsed as did the department that had produced consumables for employed workers.

As did the department that produces fixed capital.

And maybe in part even the department that produces consumables for the capitalist class.

The department that produces gold money may have got a boost as more surplus value got converted to that.

I suppose after the value or at least market value of productive capital crashes to a certain level some capitalists who got out early with cash can snap them up later for a song and resume production as before.

In other words make the same amount of surplus value as before on capital that is nominally worth less or cost them less.

Or in other words make a higher rate of profit than the former now bankrupt owners of that productive capital had.

The capitalists after all are not Marxists (much) and their rate of profit is profit divided by the ‘market value’ of capital as they see it.

With the innovation of quantitative easing and unlimited green money for the capitalist class at 1% ; all that has been ‘nipped in the bud’.

It will no doubt blow up later.

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The money capitalist can also be a usurer which is slightly different to being an ordinary capitalist.

The usurer is only interested in someone who has an income stream potentially greater than they need to for themselves.

We have a situation now in the first world were the workers are up to the eyeballs in debt and spend a considerable proportion of their working day to pay interest on loans, which is surplus value at the end of the day.

So for instance I know of a train conductor who earns about £40,000 a year working 60 hours a week or whatever and half her take home pay goes on interest only on a home loan.

As an example that person might be working say 20 hours a week for themselves as necessary labour time or whatever. 10 hours a surplus value to her employer and functioning capitalist, and 30 hours to a non productive usurious money capitalist.

To say nothing of the payday 2000% per annum loan sharking stuff.

That is an increase in surplus value from an extension of the working day accruing to the usurious money capitalists.

And where interest payments on usury is not paid out of working longer hours it no doubt gets squeezed out of necessary labour time and the ‘physical’ things it can purchase.

Which doesn’t slot in perfectly with capitalism proper, as Karl analysed it I think.

You can actually increase the modern working day to more than 60 hours if you include double income working families.

Where the ‘traditional’ working man’s necessary labour time puts the bread on the table and the working woman pays the interest on the mortgage, or the other way round.

The usurious interest on national debt comes from some form of surplus value or in other words ultimately the workers.

National debt is OK for capitalism when it involves productive infrastructure because that is like investing in productive capital.

Pushing money onto workers for consumption in order to get them into a position of debt peonage is another.

Usurers and beneficiaries debt peonage were considered by Karl I think as essentially parasites of capitalists proper.

Actually some of these Von Mises functioning capitalist people are getting pissed of at this kind of thing.

Ie too much of the workers surplus labour time and value gravitating to the gangster capitalists and new feudal aristocracy of the financial class.

Déjà vue!

http://www.marxists.org/archive/marx/works/1867-c1/ch04.htm

Karl defined economic crises as 'ultimately' a circulation of money crises.

I know the empirical question of whether or not profits are falling is slightly distinct from the theoretical/textual beef, but this may be of interest: Deloitte: On the Falling Rate of Profit. Seems to back up Kliman's empirical claims anyhow.

Yes, but, Volume II*.

Unless you don't accept that volumes I, II & III represent presentation at differing levels of abstraction, descending towards the more concrete? The Rosdolsky-style reading is pretty widespread these days, but not universal, for sure.

However I do get the feeling that a lot of orthos are more comfortable with a Vol I -> Vol III reading that kinda ignores the section on the circulating process of capital, as distinct from the immediate process of production of volume I or the process of capitalist production as a whole of vol III. (and in this, as I previously stated some while back, Heinrich imo, once again fails to break sufficiently from the ortho habits).

Anyway, out of time at this end. Will return to SA's previous post at a later date (tho I doubt anyone's actually still reading this thread at this stage, but whatever...)

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* The quotes from Vol II that justify the persistence of a portion of total social capital as money-capital are too many to choose from, and are implied in the entire logic of value-in-proces, but for the hell of it:

On the question whether Marx regarded the three volumes of Capital as basically finished, here's some interesting, if tangential, evidence – an article on Marx's interest in financial markets in the 1860s.

http://rrp.sagepub.com/content/45/2/162.abstract

Several randomish points.

1. Ocelot's claim that a rising TCC might go alongside a falling VCC is true in a general sense, but doesn't tell us anything about what actually does happen. Kliman's statistics show that the rate of exploitation (s/v) stayed roughly constant over the last 30 or so years, while the rate of profit fell. If this is the case, then it necessarily follows that c/v rose, since the rate of profit is simply (s/v)/[(c/v)+1]. So the possibility that the VCC of capital falls does not seem to have panned out. And this is where it's worth reiterating Kliman's point that the theory of the tendency of the rate of profit to fall is a claim about what does happen, not what must happen in every instance.

2. Red is still touting his own mathematical illustration as some sort of amazing point, but it doesn't advance the debate in anyway. Firstly, it shows that the rate of surplus-value might rise faster than the rise in the value composition of capital. True, but no one has ever claimed otherwise. Secondly, it shows that it might do so permanently, if capital is disaccumulated. True, but the theory is a theory of capitalist accumulation, not a theory of what might happen theoretically if capitalists disaccumulated their capital. Thus his maths show nothing about the theory of the tendency of the rate of profit to fall, which assumes constantly rising productivity over the course of capitalist accumulation.

3. There are two separate questions that I think might be getting conflated. The first is whether or not Marx himself thought that his theory was basically complete (and "completeness" is of course relative to what Marx himself wanted his theory to do -- it would obviously be possible to have a theory that attempts to explain more and more forever and ever, and thus it might be said that no theory is ever "complete"), and the second is whether or not the theory itself was in fact basically complete. It is quite possible to answer the two questions differently. In my opinion the answer to the first question is clearly "yes," given that Marx himself explicitly stated it in the letter that Kliman cites. My answer to the second question is "no", however, since there are certain issues with the theory, particularly surrounding the theory of money, that have to be corrected and updated to give a correct theory of finance.

Actually Marx continues that "theme" from volume 1 in volume 2:

I don't see how we ever get beyond the materiality; the material relationships that make up capital... and their earthly origins.

i thought Heinrich's article was about disproving the LTFRP? the title of this thread is Heinrich contra LTFRP. this sounds like either a major concession or some attempt to back-pedal Novous. EDIT: sorry this is a response to something further back, i somehow missed most of the new posts.

or even

If capital is not a relation between things, nor even a relation between things mediated by people, but a relation between people mediated by things, then there is no apriori prohibition on that relation being objectified not only in things (mop) but in the social constructs that govern people's relations to things (property titles, money, etc).

The whole significance of capital as value in process in part 1 of Volume 2 is that it makes no more sense to think of C or C' as "capital in itself" in isolation from the whole circuit. The blockage in one particular moment of the cycle of capital, the failure to progress to the next metamorphosis, means not the accumulation of capital in that phase (whether M or C) but the breakdown of the cycle.

Ocelot, you keep using opposing your understanding against this "orthodox marxism". What do you mean by "ortho" or "orthodox"?

I said the material relationships that make up capital-- that is to say the social mediation of the labor process.

The labor process is not about the making of money. The social mediation is. Certainly and always, a portion of capital exists as money-capital. That's not at issue. The issue is whether an existence in any form that does not engage labor, does not counterpose labor to the conditions of labor, to the means of production organized as private property can be sustained by capital.

Can capital accumulate without expanding the means of production as commodities, as values?

Looks interesting, but firewalled. Can anybody liberate a copy?

Yeah, I have a PDF. PM me.

While we're in the reports business, here's one from Forfás (Irish business research quango - kudos to GeorgeStapleton for finding this one). The tables of interest are 2.5 & 2.6 value added and payroll costs for Irish-owned businesses, and 3.5 & 3.7, the same for foreign-owned companies.

As in the eurostat structural business statistics (also worth having a play with, although sadly far too little historical data at this point - overview tables), the proposition would be to take turnover as a proxy for total product = c + v + s; value added (turnover minus goods & services purchased) as proxy for s + v; and payroll as proxy for v. The Forfás report only gives value added as % of turnover and payroll as % of value added, but eurostat has a convenient metric - gross operating surplus, which is value added minus payroll - i.e. a proxy for s. I leave you to look at the Forfás report, for e.g. which indicates, over the 2001 - 2010 period in Ireland, a rise in the value added as % of Sales/turnover, and a fall in the % of value added going to payroll - i.e. a rise in the rate of value added going to profit. Make of it what you will - but don't forget to marvel at the payroll as % value added for Chemicals (read Big Pharma making use of Ireland's tax haven status) in table 3.7.

edit: forgot to add, eurostat has a metric - general operating rate (INDIC_SB code V92110) - which is general operating surplus divided by turnover (i.e. s/(c+v+s)) which is not a perfect proxy for s./(c+v) but goes up and down correlatedly, if not matching amplitude (at least according to the spreadsheets I've played with so far).

US dept of commerce Census Bureau provides similar information at:

http://www.census.gov/manufacturing/asm/historical_data/index.html

Karl and Fred discussed the banking crisis of the 1860’s in some depth in volume III I think.

Eg chapter xxix to xxxv

I wasn’t interested in it at time and thus didn’t pay too much attention to it when I read it almost 10 years ago; which was a bit stupid.

The problem with the rate of profit is determining the real or actual value of the key component of fixed capital.

rather than c+v+s; or turnover

What the capitalist class do is to value their business or their capital according to how much profit they are making; what Karl called "fictitious capital".

Thus if the average rate of profit is 10% and a business makes £10 million profit the company is worth £100 million as far as the capitalists are concerned.

That is reflected in the earnings (profit) to price ratio and its inverse.

http://en.wikipedia.org/wiki/Price%E2%80%93earnings_ratio

The moderating affect on that is that if some capitalists are making £10 million profit on capital that can be reproduced or bought new for £10 million. Then they will move in and go into competition and drive down the 'real' non fictitious rate of profit to what it should be etc.

And the fictitious value of the capital will return to normal real value.

That should be fairly straightforward with small capitals.

If a large business with a necessary large capital is making too much profit on the real value of its assets etc taking them on and setting up a Boeing or Lockheed Martin of your own is more difficult and liable to lead to overproduction and a nasty struggle to the death and winner takes all.

I seem to remember Karl or Fred almost endorsing the Bank of England increasing the quantity of credit money above the legal limitation of 60;40 or 40;60 gold reserve requirement or whatever to alleviate the credit or interest rate crisis.

And that Fred had known Baron Overstone personally when he was his banker in Manchester.

I might be being a bit of a scientific pedant, like Karl was, but I don’t like this idea anyway of "proving Laws".

Or somehow a Law isn't a Law unless it is 'proven'.

http://en.wikipedia.org/wiki/Scientific_law

Some further debate on this if you haven't seen it:
http://thenextrecession.wordpress.com/2013/07/28/heinrich-a-small-rejoinder/

I mean this is just amazing coming from somebody who sits on a scientific committee!

That is what scientific laws are before they are ‘promoted’ to a “theory”.

There is a better example than gravity and that is the Gas Laws.

Early theoretical science that became the Rosseta stone to the whole subject of chemistry and much of physics

They were combined into the ideal gas equation or ‘Law’.

http://en.wikipedia.org/wiki/Gas_laws

The gas equations only work ‘as circumstances permit’ so much so that very few circumstances permit it at all!

I mean if we had been on a planet with an atmosphere 10 times denser than it is here it probably would have set back science 500 years.

Thus;

Are Boyle's law, Charles's law, Gay-Lussac's law and Avogadro's law “no laws” at all then because none of them were Germans?

They all led to the kinetic theory of gases that explained the 'circumstantial' gas laws.

The Kinetic theory of gases, as a theory is something proved, as much as anything is proved in science.

You can still theorize with laws under specified IF‘circumstances’.

If total surplus value in each successive turnover remains the same.

And if the second of the two definitive features of capitalism hold true and s accumulates or is added to C

Then

P(1) = s(1)/[C(1)]

P(2) = s(1)/ [C(1) +s(1)]

P(3) = s(1)/ [C(1) +s(1) +S(1)]

P(4) = s(1)/ [C(1) +s(1) +S(1) + S(1)]

And;

P(t) = s(1)/[ C(1) + {t -1}s(1)]

Divide numerator and denominator by s(1);

P(t) = 1/ [ {C(1)/s(1)} +t -1]

To tidy up a bit;

P(t) = 1/ [ {C(1)/s(1)} -1 +t ]

Bollocks to that as we say;

Let;

{C(1)/s(1)} -1 = k

It is a constant some never changing ‘given’ number.

Then;

P(t) = 1/ [ k + t]

Change that into standard format;

Ie

P(t) = y

And t =x

y = 1/ [ k + x]

and draw a graph with rate of profit as y or the vertical axis and t for turnover or time as the x or horizontal axis.

And you get a descending log curve, top RHS quadrant (you need to shift it to the left by k I think)

http://www.bbc.co.uk/schools/gcsebitesize/maths/algebra/furthergraphhirev2.shtml

Then you can ‘see’ what it looks like

You can differentiate or get the derivative to get the rate of the decline of the rate of profit;

ie dp/dt

or

dy/dt

as 1 /[ k +x] ^2

or in other words 1 over [k+x] squared or to the power 2.

Or

dp/dt = 1/ [ k +t] ^2

My algebra is rusty does anyone know of practising 18 year maths kid to check that standard differentiation?

That would have been like shelling peas when I was 18.

Karl and Fred weren’t that daft there never was a labour theory of value there was a law of value that only fully operated in the circumstances of simply commodity production in chapter one.

It broke down in capitalism as Fred reiterated in his supplement in Volume III.

The investigation of the law of value in chapter one led to a concept of value or at least an expansion of it as a ‘scientific object’ as the materialist Hegelian and Karl’s Mentor Fuerbach would have put it.

I did that on two bottles of wine so is bound to be something wrong with it.

Louis Proyect: Some thoughts on Michael Heinrich versus “the classics”

for info

Sorry for the belated response.

Nate wrote:

There is absolutely zero evidence that Marx did rethink the LTFRP---whatever "rethinking" means precisely. But, even if Marx recanted the LTFRP on his deathbed--- much in the same way that creationists like to say that Darwin did in regards to evolution... well, the LTFRP still stands as a coherent theory.

As far as the 61-63 manu goes; it was surprising only because Heinrich relies so much on Marxology otherwise. The MR article looks at only two instances of the LTFRP in Marx's work. It looks at Grundrisse and then skips to vol III. The 61-63 manu is the last unedited-by-Engels writing on the LTFRP we know about. However, your argument against "looking at places where Marx talked about the idea pre-1862" would apply to the Grundrisse just as much to the 61-63 manu. Why not just look at Vol III alone? And anyway, quite frankly, the argument that...

...is just absurd. The LTFRP is the very idea that Heinrich is critiquing---whether or not the argument about Marx giving up on it stands. And since there was no "rethinking" on Marx's part ---that we know of--- then your argument is even more absurd as it would seem crucial to search, in every instance of the LTFRP's appearance, for some sort of clue as to whether or not Marx had second thoughts about it. Also, my point isn't that pre-1862 work on the LTFRP disproves later "rethinks" (theres that vague word again) it's that in light of the lack of any solid evidence of Marx refuting or "rethinking" the LTFRP, why (re)think Marx refuted or re-thought it?

The assertion that animated this latest round of the discussion was Ocelot's:

That's the issue that requires clarification. Whatever Marx's preoccupation with the credit system, the issue is how does the credit system determine the validity or lack thereof of a LTRPF which is based on the OCC-- the OCC being itself a mediation, an expression of the correlation between the technical composition of capital and the volume of capital.

So if we can address that issue, that would be most helpful, Determining the validity of the LTRPF is quite a bit different than simply giving the tendency its fullest, most acute, etc. etc. expression.

After we get an answer to that, I'm more than happy to sort some other issues...

can capital accumulate as capital without expanding the value of the means of production which are themselves produced as commodities?

with the the real domination of capital amounting to a shift to of relative surplus value to reduce the cost of production, is it inherent in that shift that the capital accumulated as expanded value in means of production replaces living labor disproportionately?

is there a "law" as Marx refers to it in the Grundrisse regarding the accumulation of fixed assets?

is there historical evidence that the law of the tendential fall in the rate of profit is just that: a "law" of a tendency? Can a historical connection be demonstrated between accumulation of capital ; impaired profitability; "crisis"-- or economic contraction; restoration of profitability and resumed accumulation, and/or failure to restore profitability and destruction of accumulated capital?

We are, after all, talking about historical materialism when we're talking about Marx.

But first things first... that bit about the fully developed credit system being determinant being first.

The quickest way to demonstrate the incompleteness of any argument based solely on the OCC (a foundation I reject, as previously mentioned), is to ask the following question: "What role does the wage labour and means of production employed in the state/public sector play in relation to total social OCC?".

Now, I grant you, that in itself, is a slighltly different objection than the missing credit system, in that it points out that you can't analyse the dynamics of a national economy - even at a level abstracted from international trade and the world market - without a descending to a level of abstraction that includes the role of the state as employer (and, via central banking, of the banking/credit system).

Nonetheless, it points out how little thought through ortho positions on the OCC really are, that this point is not admitted (at least within the argument over whether Capital I-III contains a complete explanation of capital's basic dynamic and its immanent crisis*).

Heinrich argues that Marx's initial plan to take elements and categories of the capitalist system one at a time in isolation from others, before progressing down the "abstraction chain" to more concrete levels of determination, kept breaking down - he gives the example of Marx's initial idea of treating "capital in general" and "competition of many capitals" separately for e.g. Heinrich's claim then is that the attempt to analyse the immanent contradictions behind crises at a level abstracting from a full theory of credit (including credit money, banking, etc) and the state (in its macro-economic roles as employer and MoP consumer and central banking manager) is unsustainable. Which I agree with - as I say, with the added observation that you can't even calculate the social OCC without including at least the state. However Heinrich also proposes that it is not possible to abstract from the world market either, which I am less sure on. Which is not to say that I believe its possible to explain the epochal crises of the 1930s and the present without looking at the global picture, but rather that it seems it should be possible to have a macro level of abstraction between vol III and the world market. In fact, it may even be necessary to explore the two-way, mutually determinative relations between economic development at the state level and at the international one. Not to mention the more regular cyclical crises that national economies experience without necessarily being tied to global crises.

Also the reasoning that Heinrich gives for the impossibility of analysing actually existing crises so long as "An exhaustive analysis of the credit system and of the instruments which it creates for its own use (credit-money, etc.) lies beyond our plan"**, seems fair enough to me:

* in other contexts plenty of ortho-tradition authors have debated over what to make of the public sector, without coming to a consensus AFAIK

** Vol3Ch25

There is a basic Marxist analysis or analyses of the state intervention in production and the invested capital involved thereof.

Although within different nationalist capitalist classes there are different ideologies.

The Scandinavian and European capitalists class adopt the ‘Marxist’ interpretation; not deliberately of course.

“Generally” the products and services of the ‘state enterprises’ are universally and to a certain extent equally utilised or consumed by all the individual national capitalist enterprises and/or the workers that are employed in them.

The products and services that they supply can be sold at a level that makes an average rate of profit on capital.

[Although that might be worthy of further analysis it is not particularly interesting at this point.]

They can equally be sold below there ‘price of production’ ie at a price that doesn’t realise the average rate of profit on capital and obtain all the surplus value due to it.

Thus those state enterprises ‘give up’ to somewhere a proportion of their surplus value.

The beneficiaries are the ‘general’ national capitalist class that might have for instance their coal, electricity, water and road transport provided at a discount price ie at cost of production and thus minus surplus value.

Thus the surplus value of and due to the nationally owned state capital is transferred to and redistributed ‘equally’ amongst the individual capitals of the nation state that consume them.

These state enterprises producing commodities below the price of production can also provide products and services to the working class themselves.

That, in that case, can have the effect of reducing the necessary consumption fund of the workers and thus the nominal price of national wage labour.

Which the national capitalist class can take advantage of by paying them less.

So we could take the national healthcare and education systems as an example.

It is ‘formally’ the workers ‘responsibility’ to reproduce their own labour power and the labour power of little immature future workers out of their own necessary labour time.

That might necessarily involve for more modern advanced workers paying into some health insurance fund and paying for the kids to go school etc.

If all that is ‘free’ in one country the national capitalist class are not going to pay their workers the same as another lot on the other side of a river for whom it is not.

There was a classic example of two General Motors factories on either side of a river dividing Canada and the US.

The Canadian workers got less and their wages were ‘deducted’ due to the fact that the American workers needed more, for medical insurance.

Many of the less ideologically daft US capitalists actually are in favour of national healthcare systems as the per capita or per worker costs for necessary healthcare, which the bean counters are cognisant of, are lower.

That kind of ‘Marxist’ justification to the capitalist class for the welfare system was in the Beveridge Report for the introduction of such a system in Britain.

There is a kind of seminal example of this I think, under a slightly different paradigm, as with the price of bread from Fred.

But you might need a bit of intelligence and imagination to join the dots so to speak.

http://www.marxists.org/archive/marx/works/1881/07/09.htm

There was a ‘brilliant’, and it was, ultra orthodox Marxist pamphlet by the SPGB opposing the child benefit system in the 1940’s.

The efficient supply of some national products and services eg the supply of utilities eg water, power, transport and healthcare and education are best provided by ‘monopolies’.

But you can’t trust an individual capitalist, even a patriotic one, with a monopoly.

Any muppet in the UK without a degree in economics can recognise what a bloody disaster the ideological privatisation of such things has been.

That is not to say there are not tensions within a national capitalist class.

Some sections of a national capitalist class don’t need educated workers (or healthy workers, who you can get ten to the dozen from Mexico or Poland) so get no benefit from having them available and paid for at a discounted price.

Some key national and transnational industries that require concentrated massive capital have a strategic importance even amongst allies.

Thus you don’t want to be dependent on the US for all your planes SAT NAV or internet etc.

Re the "credit issue:" What's been presented in Ocelot's most recent post is pretty much the same as his original contention-- that without a fully developed theory of credit, we can't comprehend the real 'nature' or mechanisms of crisis. So we haven't moved the discussion very far along, since 1) the issue was how does the "fully developed theory of credit" determine the validity of the LTFROP which is based on changes in the organic composition of capital 2) I actually think the reverse is the case-- that without understanding the mechanisms of crisis, the functions served by crisis, the changes crisis introduces in the relation among c, v, s, there can be no understanding of the function of credit.

Re the state: 1) Many many Marxists have analyzed the role of the state in the reproduction of capital. The analyses of course vary in quality, accuracy etc etc but it's really a mistake to say that "orthos" (orthinologists?) have not even engaged the issue of the role of state employment and state owned production.

This by Heinrich:

just is NOT good enough. Yes, the credit system plays a role. No the credit system is not the source, the cause, the root of the realization of surplus value in either of its forms as money-capital, as commodity-capital.

Heinrich's quote from the Grundrisse is a fine thing......except he, as usual, misses the point-- which is that in a general crisis of overproduction the conflict between capital as it is directly involved in the production process and capital as it appears as money independently outside that process, is exactly that... the appearance, the manifestation of something other than a "conflict" between industrial and loan capital, but rather a conflict between the means and relations of production.

The conflict is not created by the distinction between capital in production and capital as money-- it appears that way given money's ascribed, apparent, exogenic status.

The cause of the generalized crisis of overproduction is no more between "industrial capital" and finance capital than it is due to the competition of capitals-- the competition of capitals only expresses, gives shape to, the inherent forces, dynamics, conflicts at the root of capital, which is of course the conflict between the labor process an the value process.

So, at the end, we have to engage Marx's fundamental contention-- which is that the conflicts, dyanmics, movements, accumulation, expansion, and contraction of capital are all the results of the originating determinant of capital-- its organization of the means of social production as commodities, as private property, as values through, by, and coincident with the organization of labor as a commodity, as value producing.

It is from that determination that Marx explores and analyzes the negation immanent to capital within capitalist reproduction.

Thank you S Artisan that was a useful post.

however it is not just pure, black and white, capitalist production versus the credit system.

The two do interact with each other although the accumulation of surplus value, capitalist production (and over production) etc is limiting or ultimately determining factor, I think.

Capital Vol. III Part V
Division of Profit into Interest and Profit of Enterprise. Interest-Bearing Capital

Chapter 27. The Role of Credit in Capitalist Production

http://www.marxists.org/archive/marx/works/1894-c3/ch27.htm