> Roger Odisio wrote:
>
> >This creates a downward pressure on profits since the base for
> >creating surplus value, productive labor, is reduced and the value
> >on which a return must be earned, constant capital (plant and
> >equipment), expands. But this tendency for profit rates to fall can
> >be counteracted by the fact that surplus value can indeed rise
> >dramatically for several reasons (not all discussed by Marx or even
> >existing at the time he wrote) including some (technological)
> >production changes, Baran and Sweezy's "epoch making innovations"
> >(automobile, etc.) which foster new industries, products, etc.
> >Second, due to efficiencies in capital goods industries, the value
> >(cost) of that plant and equipment doesn't rise nearly as fast as
> >its mass, so that counteracts some of the pressure for profit rates
> >to fall. He mentions four other counteracting causes too, as you
> >know.
>
> Yup. I'm curious why so much more attention has been paid to the
> tendency than the countervailing tendencies. Capitalism has succeeded
> rather well in keeping the profit rate safely north of zero for
> centuries now. So what is the analytical usefulness of the FROP
> concept, beyond the obvious assertion that life is difficult even for
> capitalists. Why do we even have an acronym for it?
The FROP has the attention and the acronym because according to Marx it springs from the "central" tendency of capitalist development. Marx was saying that the downward pressure on profit rates is *inherent* to the laws of motion because capitalists' main way to expand surplus value was by introducing massive amounts of plant and equipment, mostly labor saving, causing that downward pressure as I described. That was fact when he wrote, directly observable by him.
It is true that the rising "technical" composition of capital (the physical of means of production relative the the quantity of labor power--in contrast to the organic composition, which is the same ratio in value, not physical, terms) carries with it seeds of countervailing forces, such as a rising rate of exploitation and cheapening means of production. And, as I said, given those countervailing forces, Marx never showed the necessity of falling profit rates. To say nothing of the fact that many new forces on both sides are now important. In short, anyone sitting around waiting for capitalism to collapse because profits dry up ain't no marxist.
But you can see the logic, can't you, of starting with the inherent tendency of profit rates to fall, and naming it as such, and then dealing with the factors that work the other way.
> >So let go of that crude empiricism that has you in its grip, the
> >force that has convinced you that the FROP is some statement about
> >the trajectory of profit rates that you can test to see if it is
> >"correct".
>
> Yes, that crude empiricism again. David Laibman told me, after
> hearing my criticisms of efficient market theory, that you can't
> refute a theory with empirical observations, only with another
> theory. I think that's silly, but I guess I'm just a crude empiricist.
That's not what I'm saying. I didn't say you are a crude empiricist; I said you were being one (crude empiricism had you in its grip) when you sought to measure profit rates as a test to see if the FROP was "correct". If you promise never to do that again, I won't make such a charge (at least on that issue!). Disclosure: my dissertation, which was on different marxian crisis theories, contained measures of profit rates, surplus value, and Baran and Sweezy's surplus. I'd probably do it a bit differently today.
And I disagree with Laibman. Are you sure that's what he said? Did he ever write that anywhere? Silly may be too kind of a word for such a statement.
RO