technology (Re: Horowitz's center)

Roger Odisio rodisio at
Tue Mar 16 08:35:12 PST 1999

At 05:19 PM 3/15/1999 -0500, Rakesh Bhandari wrote:
>Oh hell, a big mistake. I had written to Roger:
>>Of course that is true. The mass of surplus value rises though the rate of
>>profit on ever larger investments tends to fall. As Kevin Brien notes in
>>Marx, Reason and the Art of Freedom, Baran and Sweezy seem to have taken a
>>rising mass of surplus value as proof of a declining rate of profit.
>I meant they took a rising mass of SV as proof that the rate of profit does
>not fall.

Thanks, Rakesh. Your correstion has saved me time, which has considerable use value to me, far in excess of its exchange value.

If your characterization of Brien is correct, however, he is wrong. Rising surplus value, far from being proof of a rising profit rate, in fact tells you nothing, by itself, about profit rates--either the Marxian value rate of profit or profits realized in exchange. Rising s, and s/v too, are compatible with *either* rising or falling of either measure of profit rates. The value rate of profit depends on the relative movement c/v as well as s/v (and changes in both ratios depend on the value of c and v, not the physical quantity of new plant and equipment or wages). Changes in s/v are only part of the story. Money profit rates are further removed from changes in s because profits are only one way surplus value is realized today, and property income has been an ever shrinking share of realized s. A cursory reading of B&S (Monopoly Capital) shows you that.

So B&S never claimed a rising s was proof that profit rates weren't falling. Writing circa 1965, B&S in fact reasoned that the problems in realising s (underconsumption problems) meant the stagnation was now the general case, leading to continuous profitability problems. But that stagnation and those profitability problems were just the particular outcome of the laws of motion they observed (bold claims at the time, BTW, in the midst of the long expansion and high profit rates during the 60s, and bourgeois claims of the end of the business cycle), not the focus of their analysis.

Not only did B&S not say what Brien claims, their main purpose in writing Monopoly Capital was to argue for a shift *away* from analysing movements in the rate of profit, towards a concentration on the rate of exploitation. A brief summary of B&S's approach: B&S claimed a new analysis was needed because the central problem for capital had changed since Marx. No longer was it how to extract surplus value from the labor process, but, rather, how to realize the vast and growing potential surplus value created mainly be the monopolization of product markets. The tendency of the surplus to rise as a share of output, they said, had become the central law of motion of monopoly capitalism. The various forms of surplus absorption are consequent manifestations of the primary contradictions of that system. It is important to analyze both the forces that determine the amount of surplus generated, and those that govern its distribution in realization.

Moreover, monopoly capitalism produces a hierarchy of profit rates, not a tendency toward an average, as Marxian anaylsis assumed. One use of monopoly power, they said, is to try to prevent, or postpone indefinitely, profit rate equalization by restricting capital flows between sectors. So, while an average profit rate exists in a statistical sense, it does not impose itself on individual capitalists, nor does it govern the distributuion of surplus value throughout the system as Marx assumed. Hence it is movement in s/v and concomitant realization problems that are central to understanding the laws of motion.

Writing this now, you can see some obvious flaws in their analysis. I just wanted to emphasize that Brien, described as you indicate, not only misstates what they said, but seems to have missed the point of their book.

>"Just as Marx's reproduction schemata in the second volume of Capital do
>not claim to depict the concrete capitalist production and exchange
>process, so the transformation examples in the third volume do not profess
>to accomplish the impossible--namely, the actual transformation of definite
>prices--but serve merely as an insturment for the comprehension of the
>relations between values nad prices. Not searching for an equilibrium in
>terms of prices, Marx's mixture of values and rice relations suffices to
>illustrate the statement that prices and values will be altered through the
>competitive establishment of an average rate of profit. Whereas Marx's
>example of the transformation process has only an explanator function,
>Bortkiewicz aproaches the value relations as if they were acutally
>ascertainable in price relations...
>"The concern with the 'transformation problem' thus rests upon a profound
>misunderstanding of Marx's value concept. In Marx's conception there is no
>transformation, except as a mental construction based on the social
>production relations that underlie the actual market price and market
>relations. Because the transformation of values into prices is a fact not
>of experience but of theory, the idea arose that the law of value is itself
>a mere fiction, though perhaps a necessary one, and not a real phenomenon.
>For Marx however the law of value is as real as capitalism itself, even
>though it manifests itself only in market and price relations. The fact
>that value relations are not observable does not imply that the *results*
>of the law are also unobservable, but only that they are experienced in
>other forms, in the various contradictions of capitalist reproduction and
>its crisis-ridden development."
>Marxism: Last Refuge of the Bourgeoisie, p. 49

Great stuff, Rakesh. "What's essential is invisible to the eye", The Little Prince, Antoine de Saint Exupery.

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