Hello hello comrades! Long time no speak. Have recently been reading up on Marxist crisis theory and the falling rate of profit. Here are some questions on it that I'm hoping some of you will be able to answer, and I think they will spark an interesting and informative discussion.
My questions are as follows:
1. Ongoing investments by capitalists in constant capital makes production methods more efficient, which then lowers the prices of commodities. This makes sense to me. But then I think about inflation. This seems totally contradictory to me, that commodity prices can be decreasing due to increased efficiency, yet we have a longterm trend of rising prices. How can this be reconciled?
2. Does the falling rate of profit mean that (a) profits decrease in the longrun, or (b) the ratio of profits to investment expenses decrease in the longrun?
3. If it is indeed "b" -- that the ratio of profits to investment expenses decrease in the longrun -- why does this cause a recession? Even if investment expenses are higher, as long as businesses are making as much overall profit as in the past, then why should this interfere with the Money-Commodities-Money cycle? Isn't profit what is left over after capitalists have paid all their expenses (wages, machinery repairs, etc.)? So if their profits are as high as ever, doesn't that mean that they have already been able to afford their costs of production, high as they may be? Sure, the ratio of profit to investment is lower, but why is this a problem as long as operation costs can be covered?
4. Does anyone know where I can find data and statistics which support the falling rate or profit thesis? Once I better understand this thesis, I'd like to be able to explain it to others, and having empirical evidence will help me make a more convincing case.
Thanks everybody!
Kliman's book The Failure of Capitalist Production has the statistical information, as does http://thenextrecession.wordpress.com/