Marxist Crisis Theory & the Falling Rate of Profit - Questions and Answers

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syndicalistcat's picture
syndicalistcat
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Nov 21 2012 06:27
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I was deliberately ignoring your claim about the ROP in the 1830s

as usual you mistate what I said. I said that G & P made a claim about the period 1830 to World War 2. Are you saying there are no worthwhile data about that whole period?

You see, you continue to mistate things. You see why I don't bother engaging with you?

you're a fucking fundamentalist.

S. Artesian
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Nov 21 2012 12:11

It's not your claim, you just endorse G&P's claim, but it's not your claim? I apologize for not recognizing the subtlety of your position. I'm not distorting anything. You reproduce the claim, it's your claim in your post. You cite G&P to make an argument against the LTFROP.

Last time I checked G&P haven't posted here.

No, I'm not saying there is NO worthwhile data about the whole period. I am saying that calculating a rate of profit for a period that includes a significant portion of time when the data are spotty is a speculative exercise at best, and is probably best ignored.

And I can certainly see why you don't bother engaging with that, just as I can see why you keep claiming Kliman commits errors in his refutation of Okishio's theorem but never both to engage with your own claim. Or is it not "your" claim, but the claim of your radical economist friend?

andy g
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Nov 21 2012 15:21

getting back to ultraviolet, the problem with your suggested model of crisis is that it makes the rate of interest the determining factor rather than the rate of profit. This in turn defers the question of the "cause" of crisis to the question of what determines the rate of interest and why it should rise relative to the rate of profit in the "upswing" phase of the accumulation cycle.

IIRC Marx was keen to argue that the rate of interest was not an independent variable but was itself determined by the accumulation process. Roughly (he says, bracing himself for the inevitable flurry of corrections) Marx argued that the rate of interest was determined by the relation between the supply of and demand for loanable money capital. hoards of money capital emerge as a necessary part of the reproduction process - Marx's accumulation fund, for instance. this is concentrated in the hands of banks and other financial agents and made available to productive capital along with forms of credit-money....

Have completely lost track of where I was going with this but am convinced it was very profound!

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Nov 21 2012 17:27

thank you, S. Artesian & andy g. for responding to my most recent post!

ok, so if it's not the interest payments on increasingly huge costs of constant capital, then what is it about the falling rate of profit that causes recessions?

because as i've been told, it's not the numeric profit that's going down -- this might even go up. it's just the ratio of profit to the cost of constant capital.

but profit is what's left over after paying wages, buying materials, and buying constant capital. so as long as profit is being made, this means costs have been covered with a little extra left over. so what's the problem? why the recession?

is it that the "little extra left over" (profit) after covering costs is eventually not enough to buy the next upgrade on their machinery / constant capital?

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Nov 21 2012 17:34

Hi UV.

First, just one point which isn't central to your question, but is important overall for understanding the questions around the developmental tendencies of the TCC and the VCC, which underlie the argument of the FROP (whether you accept it or not)

ultraviolet wrote:
Time period 1
constant capital = $10 million
other costs (labor, raw materials, etc.) = $10 million
[...]

I thought you were doing this in your previous post, but this confirms it. You are confusing constant capital and fixed capital. Raw materials, auxiliary materials and other material inputs (included in your second item here) are all constant capital as well as the fixed capital in your first item.

Constant capital is divided into fixed capital - that lasts for multiple production cycles and only imparts a corresponding fraction of its value to the results of each cycle - and circulating constant capital* which is entirely consumed within the production cycle and passes on all its value to the end product.

This matters in terms of the technical composition (and, albeit mediated, the value comp) in the following way. Assume labour productivity increases, but that any new machinery costs no more (in inflation adjusted terms) than the original machinery - i.e. the value of fixed capital imparted to the total output of the cycle remains constant. Assume also that wages and the rate of exploitation remain constant. With the important assumption that the unit value of circulating constant capital is unchanging, then both the TCC and the VCC will have gone up. Because increased labour productivity means more units of output, meaning more units of input - i.e. more value outlay on the increased raw materials, etc needed to make more widgets (or whatever). More stuff produced per unit labour hour, generally means more input stuff and a higher stuff to labour ratio - even if the new machine is cheaper than the old one was. Tendentially, you could argue, its more likely that the necessarily increased volume of circulating constant capital, has more of an effect on the tendency to rise of the TCC & VCC, than any potential rise of the value of new technology fixed capital.

I could say that I was surprised that the "FROP faithful" didn't correct you on this basic element of the theory, but that would be transparently faux-naif.

ultraviolet wrote:
OK, I've taken some more time to think this over. Of the four questions I asked, the one that I'm most stuck on is #3, but I think I may have figured it out(?). I'm not sure if my analysis is correct, so I'm hoping others will be able to either confirm that I'm correct or point out my error.

Here's the question again for review:

Quote:
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?

Thinking this over, here's the answer I came up with:

As more and more is spent on constant capital (machines, tools, etc.), debt owed for financing the buying of constant capital becomes increasingly high, which means the interest owed is increasingly high. But meanwhile, profits -- although they may rise -- do not rise fast enough to keep up with the rising costs of constant capital, and hence keep up with the rising debt+interest owed. So eventually a point is reached where profits cannot cover interest payments. There are mass defaults on loans, businesses go under, unemployment jumps, demand falls, banks freak out and become stricter with loans -- and it all spins down into a recession.

Is this on the right track?

.

Well, if increases in fixed capital are funded out of the replacement fund accumulated by holding back a portion of profits, then it's not necessarily that case that firms need to increase their debt to increase fixed capital (or circulating constant capital). Also remember that increasing production can sometimes be achieved just by making the same amount of circulating capital (wages, circulating constant capital) go round the cycle more times (quicker) without necessarily investing in additional fixed capital. Plus there's no guarantee that the latest technology machines won't only be quicker, more efficient and capable of greater capacity, but they may themselves be cheaper (specifically, contain less value) than the equivalent plant produced by the previous decades tech.

In practice, sufficiently large and sophisticated firms manage their actual "capital structure" to take best advantage of the anticipated interest rates in the coming period - and can hedge against unanticipated movements of the rate, via IR swaps or other derivative instruments.

Where you are right, is that the Small and Medium Enteprise (SME) firm sector, which actually employs most people, does have a problem with accessing operating credit - once we're in a recession or depression period. But that is more by way of effect rather than initial cause.

The QTM theory of monetarist policy believes that the central bank can control the rate at which finance moves from savings into investment (or vice versa) via setting short-term interest rates using Open Market Operations. The theory is that as the ROP falls towards the interest rate (IR), investors will shift money out of the stock and corporate bond (credit) market, and into treasuries, etc. Vice versa, if the economy is slowing, then dropping the interest rate should encourage financial capitalists to liquidate low-return savings instruments and buy into the stock market, etc, to fund investment in productive capital. By extension, it could be argued that as the rate of profit drops towards the IR, the slowing down effect will take hold and eventually the state will run out of room (that zero bound) to drop the IR any lower to re-invigorate productive investment.

But even the monetarists accept that the state (or central bank) can't control anything other than the short-term rate, and the endogenous folks dispute (rightly imo) even that. Witness the current spectacle of zero interest rates, near-zero growth and central bank "quantitative easing" measures that push out base money into bank reserves, in the forlorn hope that that will achieve anything - what Keynes called "pushing on a string". But I digress... The point is, the drying up of capital market liquidity for firm operating credit, is a result of the crash, not its cause.

Having said that, the US did jack its IR down to 1% to fund the invasion of Iraq in 2003, and when it finally jacked it back up to 5% in 2006, that did lead to the bursting of the housing bubble. But then the bubble was driven by MBS - up until 2008 seen as a savings instrument, so much so that the Fed accepted them as counterparty assets for their OMO, alongside gold, treasury bonds and forex. The housing bubble was driven by a flood of credit occassioned by a huge demand for savings instruments with high liquidity or "money-ness" (not unrelated to that $3 trillion the Chinese state had to find somewhere to put), not a charge into the capital market.

That doesn't feel like a very satisfactory place to wind up, but I'm out of time.

* actually the circulating/fixed and variable/constant distinctions refer to different aspects of capital, so variable capital is actually part of circulating capital as well - hence the clumsy three-hander "circulating constant capital"

S. Artesian
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Nov 22 2012 02:01

Yes, I did notice that UV had conflated raw materials with variable capital, but it was kind of immaterial for the central point he was trying to make.

Yes, indeed the US Fed did drop interest rates in the attempt to mitigate the recession that had started in EDIT: 2001, but the real story of that recovery, or one of the real stories, is the push-back against wages in the US and draconian restrictions on capital spending. As I never tire of repeating, for a period the fixed asset replacement rate for US industry dropped below 1, as fixed assets were used up more quickly than they were replaced.

And in fact this restriction on capital spending impacts the financial network, as the mix of assets in US banking changes from 50/50 consumer/industrial to 30/70,EDIT: with the 70% being consumer... that's what built the bubble.

Wages, and capital spending, do recover in 2006/2007 in the US, just in time to catch the downturn in profitability.

I think one of the best examples of what happens can be found in the maritime shipping industry, dry; bulk, tankers, and container fleets. The rate of expansion was pretty breathtaking, and hire rates simply could not be sustained at a level to offset operating costs, given the overcapacity, much less capital costs.

The UN produces an annual Maritime Review which, for the years 2006, 2007, 2008 was really illuminating.

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Nov 21 2012 19:43

thank you, ocelot, for pointing out that mistake! it's one of those little slip ups with big consequences as continuing to count circulating constant capital as in a different category than constant capital would create problems and confusion in my analysis. so i'm lucky that you cleared this up! smile (for the record, i didn't think circulating constant capital was part of variable capital, i just lumped them together to separate them from fixed constant capital.)

you say that the falling rate of profit can occur even if prices of fixed constant capital stay the same, because expanded production means increased quantity of circulating constant capital is purchased. but i wonder, though, couldn't the price of total circulating constant capital stay the same even as it's purchased in ever greater volumes? because the more efficient machinery and production methods will bring the cost of this circulating constant capital down. i.e.: if in 2012 production is twice as efficient as in 1990, then in 2012 buying twice as much circulating capital as was bought in 1990 could in theory cost as much as it did in 1990 to purchase half the 2012 amount.

p.s. i was called he, but i'm a woman... no problem, though, i usually also unconsciously assume posters on here are males. (currently most anarchists/communists are men, and i've heard that most users of internet forums are men, so probably a fair guess!)

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Nov 21 2012 19:50

redundant comment

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Nov 21 2012 20:33

sorry, i'm confused... are you saying my last comment is redundant? or did you think you did a double post and then edit one of them to say "redundant comment"? you didn't do a double post... the "redundant comment" post is your only new one.

btw, ocelot, i've figured out that VCC means value composition of capital, but what is TCC?

andy g
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Nov 21 2012 22:34

TCC = technical composition of capital, the "physical" or use-value make up of the means of production

Stan Milgram
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Nov 21 2012 22:37

S. Artesian, thoughts?

http://critiqueofcrisistheory.wordpress.com/historical-materialism-and-the-inevitable-end-of-capitalism/

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Nov 21 2012 22:44
ultraviolet wrote:
p.s. i was called he, but i'm a woman... no problem, though, i usually also unconsciously assume posters on here are males. (currently most anarchists/communists are men, and i've heard that most users of internet forums are men, so probably a fair guess!)

Whhaaaatt? A female anarcho-communist?

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Nov 21 2012 22:56

BTW, the above is just a joke. As she said, most anarchists/communists are men, unfortunately.

S. Artesian
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Nov 22 2012 00:12

Going to take some time. But right from jump street, just let me state (1) it's a bit more than just a bit too teleological for me (2) I don't think that bourgeois political economists think capital's social organization is always in concert with the growth of the productive forces, rather their arguments always sooner or later come down to the "free market" being in concert with our, human, "nature." (Some) bourgeois economists will freely admit to overproduction taking place in sectors, among sectors. "Capitalism isn't perfect, it just works better than the alternatives" is the argument. (3) not too sympathetic to the notion of monopolies garnering super-profits, thereby undermining the general rate of profit, and the equalization of profits. "Super-profits" are IMO one of the mechanisms by which allocation of profits according to size of capitals, and thus the motion toward a general rate of profit is established... think of the oil industry post 1998, after oil broke below $10/barrel, and OPEC had to ride to the rescue again. The author refers to GM's as an example, but when did GM have a monopoly on auto production in the US?

I don't buy into the "obsolescence" of capital being determined by capital's restrictions on the "productive forces," as if there's this mechanical, or digital, or virtual, or cybernetic Prometheus, here called "productive forces" chained to a rock, having his liver pecked out daily, and he/she/it is just waiting to be released so more productive forces can be created. I mean to some small degree that's true, but the presentation takes on the characteristics of a parable, or another iteration of god in the machine, god is the machine.

I think we need to concentrate on the conflict between value production and the reproduction of human beings as fully, social, human beings.

And, I also don't buy into the "inevitability" doctrine. What is inevitable is the struggle, the conflict, not the resolution.

But that's just for starters-- if we're going to continue, we should start a separate thread.

Stan Milgram
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Nov 22 2012 00:21

S. Artesian. You're right, it's more so concerning breakdown theory not necessarily crisis theory. I'll start a new thread when I have time.

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Nov 22 2012 05:47

so i'm still trying to understand the thesis of why the falling rate of profit causes recessions. after reading some of grossman's ideas, i think i might finally get it. i'll lay out my understanding of his arguments here, and if i'm wrong, i hope you'll do me the kindness of correcting me. smile

• Increasing automation and increasing efficiency in production displaces labor, because now the same number/type of commodities can be made with a smaller workforce. This results in layoffs.

• But if more commodities are produced than before, and this increase is high enough, this means no layoffs are necessary, or those who were laid off are quickly hired back.

• This means constant expansion is required. And not just that, but - even if population is stable - the expansion has to be as fast as the rate at which technology displaces labor. If population is growing, then expansion has to be as fast as the combined rate of both population growth and the rate at which technology displaces labor.

• But the falling rate of profit eventually makes it impossible to expand production at as fast a rate as labor is being displaced. Why? Because as the rate of profit falls it will take a larger and larger percentage of profits to pay for the additional capital required to expand as much as is necessary to avoid unemployment. Eventually the capitalists can’t afford to expand enough to counterbalance the displacement of labor by technology. So unemployment rises. This lowers demand, which means commodities go unsold, which means businesses cut back production or even go under, which raises unemployment even more. This cycle spins until it’s a full blown recession.

thoughts?

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Nov 22 2012 10:23
ultraviolet wrote:
sorry, i'm confused... are you saying my last comment is redundant? or did you think you did a double post and then edit one of them to say "redundant comment"? you didn't do a double post... the "redundant comment" post is your only new one.

btw, ocelot, i've figured out that VCC means value composition of capital, but what is TCC?

Sorry. I should've prefaced that with EDITED: or something. I had posted a correction on the she/he thing to S.Artesian's post, but when it published, it turned out that you'd already set the record straight on that, so my comment was redundant.

TCC is the technical composition of capital. Conceptually it is initially (mainly) used to distinguish between the cases of an individual firms profit increasing due to the cheapening of one or more of its inputs, or due to a transformation in its own actual production process that changes the proportions of the "mass" of labour to the "mass" of raw materials. "Mass" here taken to refer to a measure of each different component of productive capital, in its (incommensurable) material "thing-ishness" - i.e. hours of labour, kW of electricity, tonnes of plastic, etc.

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Nov 22 2012 12:11
ultraviolet wrote:
you say that the falling rate of profit can occur even if prices of fixed constant capital stay the same, because expanded production means increased quantity of circulating constant capital is purchased. but i wonder, though, couldn't the price of total circulating constant capital stay the same even as it's purchased in ever greater volumes? because the more efficient machinery and production methods will bring the cost of this circulating constant capital down. i.e.: if in 2012 production is twice as efficient as in 1990, then in 2012 buying twice as much circulating capital as was bought in 1990 could in theory cost as much as it did in 1990 to purchase half the 2012 amount.

In my opinion, yes, the value of the increasing "technical" mass of constant circulating capital could actually decrease - due to uniform productivity increase across all sectors - at a rate that balanced the increased quantity. In FROP parlance this is a "counter-tendency" - the implication being that, in the long run, the tendency is more powerful than the counter-tendency, and overcomes it. As a FROP-sceptic, I have to say that I've not yet seen any convincing demonstration of this. In the OCC thread, I looked at the effects that different rates of productivity increase in different sectors (considered by input-output chains, e.g. primary, secondary, tertiary etc) would have on the development of aggregate VCC. My initial impression was that for aggregate VCC to rise, the rate of productivity increase needed to be faster the higher up the chain you move, but this would have the contrarian effect that as production increased, labour would have to be reallocated down the chain to compensate - which is counter to the historical development of capitalism. Anyway, that's a digression. I probably need to write that stuff up properly some time and put it out there to invite some counter-criticism.

andy g
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Nov 22 2012 16:10

I did find ocelot's take on the VCC interesting - it was cast in a way I'd not considered before which is always good. Have lingering reservations about it but will have to think about it a bit more - concern is to do with the conflation of concrete private lavour and abstract social labour but I am not sure where it'll take me if I try and follow it through!

on the issue of rising productivity reducing the cost of constant capital - is it worth pointing out that the effect of this on fixed constant capital actually serves to exaccerbate the (alleged) FROP tendency for functioning productive capital, at least in the short term? In that as the cost of new fixed capital investment declines existing fixed capital is forcibly devalued at a loss to the capitalist.

Could well be stating the obvious, in which case just roll your eyes appropriately roll eyes

S. Artesian
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Nov 22 2012 22:09
Ocelot wrote:
My initial impression was that for aggregate VCC to rise, the rate of productivity increase needed to be faster the higher up the chain you move,

.

1. But isn't that what happens, except with a swapping of cause and effect, i.e. that the aggregate VCC, or OCC does in fact rise, and this rise increases the rate of productivity faster the "higher up the chain" (I assume you mean the size of the capitals deployed) you go?

I think this chain is a) what gives the more "asset heavy" sectors where labor is such a reduced portion the "pulling weight" in the overall system (think petroleum or semi-conductors); drives the price of the "final commodities" through such whipsaw oscillations (again think oil and semiconductors) as price is the mechanism by which the asset heavy sectors seek to claim the profit proportional to their sizes.

2. Andy G makes a crucial point, IMO, that the cheapening of the means of production is part of the constant devaluation of capital, or devaluation of constant capital that is at one and the same time a manifestation of the LTFROP and an offsetting factor

3. There is another aspect, and that is the more extensive the technical component deployed in production, then in general the longer the turnover period of the entire capital and the slower the rate of profit. I remember Marx talking about this in Vol 2 (? maybe?), pointing out that agriculture is not the only capitalist sector where the increased use of machinery lengthens the time of turnover.

Dave B
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Nov 22 2012 23:53

My take on it.

I don’t mind comparing bourgeois models to Marxist ones to see how they fit together.

I think Karl’s model is OK and better.

The model of large scale capital intensive industrial manufacturing is one model; but there are others eg cheap labour intensive sweat shops and assembly work etc, however.

Fixed Capital

Where I work over the last 15 years ‘we’ have doubled output, as a volume of use values, and reduced the labour force by a half through the introduction of more, in terms of value, fixed capital; faster, less labour intensive and better plant and robots etc.

It is the same across the group which includes about 7 factories in the UK.

My peers in other similar industries tell me the same thing.

So it happens and everyone knows it.

Constant Capital

Minimising the amount constant capital has also become a new ‘business model’ in itself, it is called the ‘Just In Time’ and ‘computerised stock control system’.

By reducing stocks of raw material and finished product, potentially to zero, it reduces C and thus increases the rate of profit, they know and understand it as it is; it is almost as if it is straight out the volume III manual.

In fact ‘for lucky us’; as the rate of profit is dependent on Fc+C +V;

C is much less than 10% of Fc, and V isn’t worth talking about, much.

It is not hard to get access to the data.

They are even starting to think of us, V, as capital, human capital, and are investing in us by sending us on courses to encourage us to cooperate, work as teams and learn to love each other, sensible fellows.

As handmaidens to their fixed invested capital.

[But as again it is a different situation in an Indonesian sweat shop.]

But that finds its Marxist paradigm in us selling stuff above its value and them below etc

Rate of Interest

On the rate of interest as it pertains to manufacturing industrial capitalism, as opposed to usury and ‘student loan’ debt peonage etc.

As a model, the finance or ‘money capitalists’ loan money to the ‘functioning capitalists’ or ‘profiteers of enterprise’.

Part V volume III.

The ‘functioning capitalists’ extract surplus value from the workers and split it with the ‘interest bearing capitalists’.

What the money capitalist or ‘interest bearing capitalists’ get, as a proportion of the surplus value, or profit if you like, is ‘interest’.

In fact there can appear to be a bit of tension, reflected in the media perhaps, between the ‘money capitalists’ (the ‘banksters’), and the ‘functioning capitalists’ as Karl predicted their could be.

It doesn’t all come from the, anti capitalism section, OWS movement.

In fact the pro capitalist and famous Max Kaiser of RT goes as far as to compare the ‘finance capitalists’ with the feudal aristocracy.

Anyway surplus value or total ‘profit’ is thus normally greater than ‘interest’.

Looking at it from just a perspective of different areas of production

I suppose if total ‘real profit’, potential ‘surplus value’ or whatever in one area is much greater than the rate of interest, you get ‘safe’ lending and borrowing for productive investment in that area, then an increase in supply; maybe even over production, and perhaps falling prices/profits etc etc.

Thus on the one hand it can cause crises in departments of production or, on the other hand, just result in an equilibration of the average rate of profit within capitalism as a whole.

Some crises of the 19th century appeared to have been produced by too much finance capital rushing into new areas that appeared to be making super profits, or potential thereof, to grab a piece of the action.

Fictitious Capital

With the introduction of the ‘joint stock’ system or shares/dividends in companies a new ‘problem’ arises ie with Karl’s ‘fictious capital’.

To follow this you have to think like a money capitalist.

If a company is making say a profit £4 million a year and the interest rate is 5% , then the question is; what is it worth as an investment opportunity to buy it up.

Well £80 million might seem like the top price, and £40 million a bargain.

A Marxist might want to look at the embodied labour time value of the fixed capital, and any constant there might be.

And seeing that it runs out of a rented building with a couple of 1980’s ‘mini computers’, a few dozen or so PC’s and 40 skilled but potentially fickle computer programmers, you might think it is worth jack shit.

But £40 million is what it sold for in a real life example; they wrote software for Just In Time computer stock control systems as it happens.

The new owners learned what fictious capital was later on ; and should have read their Marx.

On the stock exchange low interest rates on money capital versus higher returns on dividends encourages finance money capitalists, perhaps through intermediaries, to buy ‘shares and stock’ and that drives up the nominal prices of shares, even though the actual real ‘Marxist value’ of the enterprises remains the same.

The difference is Karl’s fictious capital.

Even ‘bourgeois economists’ sort of understand that and it is written into their popular Price–earnings ratio and share price paradigm;

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

Although the inverse ratio is perhaps more interesting.

P/E ratio is flawed a bit though as it doesn’t necessarily take into account internal reinvestment and plowing back surplus value back into Fc.

It can be viewed as just a measure of the consumption fund of the capitalist class; views differ.

In the past if some bods were making super profits the temptation for finance capitalists would be just to set up a new enterprise in competition with borrowed money and hired specialized ‘profiteers of enterprise’ who knew the game; rather than buy them out at inflated fixed capital prices.

But finance capitalist are just lazy short sighted gits out for a fast buck.

Also some areas of manufacturing require massive amounts of concentrated capital and might involve only a few players. So if you are going to go in you are going to have to go in big and play the long game.

And face up to a potential over production or for them supply problem.

The big players making ‘super profits’ can also come to some mutual understanding and form cartels, as they do, to price out the ‘little people’ entering the market; Karl covered that in volume III as well.

You can get situations where interest rates are above the ‘rate of profit’; but that is when the money capitalists think things are going to go pear shaped.

Cash out and won’t lend for love, fictitious capital or profit.

There is a thesis by others that they are deliberately trying to lower the rate of interest on money capital by quantitative easing and printing free money to flush out hoarded money capital, albeit paper, back into circulation and into investment in productive fixed capital.

[Karl, as explained by Deville, saw the withdrawal of money from circulation as ‘symptomatic’ of economic crisis.]

With interest rates on, albeit fictitious paper, money capital at near or less than zero (when you take inflation into consideration), if you have a good AAA rating, then it is a temptation.

Over the last five years they have been really splashing at ‘our’ AAA rated place with borrowed productivity enhancing ‘free money’, originating from Japan.

Also new scientific inventions and technology, which can come out of thin air almost, can wipe out the value of fixed capital by making the labour time that it is intended to utilize, socially unnecessary, and the labour time embodied in it doubly unnecessary.

So that is also a threat and an opportunity.

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Nov 23 2012 06:58

(off topic post)

S. Artesian wrote:
BTW, I hate this whole business of "upping" and "downing" posts. But for the record, I upped Ocelot's because he poses relevant questions, provides a critical analysis, that deserves consideration and answer. What more could you ask for, or want, in a discussion?

finally found the time to read through this thread (before now i only found the time to read a few posts and skim the others). am about 1/3rd way through. before i continue reading, just wanted to say to s. artesian that although i also dislike the upping/downing thing, i upped your post for upping ocelot's posts! grin it's refreshing when people show appreciation for disagreement, especially anarchists/communists... sometimes we can be a bunch of haters.

Edit:
Now about 2/3rd done, came across this post:

Agent of the Fifth International wrote:
BTW, the above is just a joke. As she said, most anarchists/communists are men, unfortunately.

no problem, i thought it was funny! smile

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Nov 23 2012 07:02

(back on topic)

ok, new question for ocelot and other FROP skeptics. so you don't think that the falling rate of profit thesis is the cause of cyclical crisis. so what, in your view, does cause it?

Spikymike
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Aug 27 2016 15:55

And so for those of us who do consider the Marxist Labour Theory of Value and FRP theory to be central to an understanding of the capitalist crisis which is still raging today this short explanation and update is worth a read:
www.leftcom.org/en/articles/2016-08-23/there-is-no-capitalist-solution-to-a-deepening-economic-crisis

Spikymike
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Nov 2 2016 14:29

Also this short positive if critical review of a more recent book by Michael Roberts who was mentioned earlier in this discussion thread:
www.leftcom.org/en/articles/2016-10-31/is-capitalism-past-its-sell-by-date-review-of-michael-roberts-the-long
Kondratiev long cycles get another mention here as well.

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deathspiritcommunist
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Jan 1 2017 03:13

1: Inflation does not tell us much about the rate of profit itself. Inflation simply refers to the money supply rather than the profitability of capitalist industry.

2: The Falling Rate Of Profit implies that over time the amount of profit that the capitalist class is capable of making falls.

4: I would recommend Michael Robert's stuff on the falling rate. He graphs all this stuff out and explains it really clearly.

Spikymike
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May 11 2017 19:58

And for those not prepared to read the whole book there is a very good interview with Michael Roberts here:
https://soundcloud.com/novaramedia/novarafm-the-long-depression-michael-roberts-on-capitalism-and-crisis