[lbo-talk] Fw: Concerning your submission to *Science & Society*

James Heartfield Heartfield at blueyonder.co.uk
Fri Dec 18 01:27:26 PST 2009


Pete,

these are the comments, appended to the bottom of the email

let me know what you think

James

----- Original Message ----- From: "Science & Society" <info at scienceandsociety.com> To: <Heartfield at blueyonder.co.uk> Sent: Monday, December 14, 2009 3:17 PM Subject: Concerning your submission to *Science & Society*

December 14, 2009

Dear James Heartfield,

The S&S Manuscript Collective has completed its reading and discussion of your paper, "A crisis of under-accumulation: The rate of profit is falling, but not for the reasons that Marx said it would." I appended below two written comments from readers, which fairly reflect the consensus among all readers.

In the light of these comments, I must report that the decision is against acceptance of the paper for publication in S&S.

Despite this outcome, I hope that the content of the reports will prove useful to you going forward; I thank you for sharing your work with us, and for your interest in our journal.

All good wishes,

Dr. David Laibman

Editor

================================================================== There is nothing wrong with questioning any of Marx's theoretical claims, or developing new approaches to replace old ones, when that seems warranted in our effort to understand today's capitalism and explain, e.g., the current crisis. This paper, however, rests on a magnificent non-sequitur. Evidence of a rise in employment worldwide, and of shortfalls in *investment*, simply does not bear at all upon the question whether or not the (organic) composition of capital is rising or falling. If one wishes to claim that the rise in that measure foreseen by Marx is no longer occurring, one needs an appropriate empirical proxy for it. Briefly, one would have to show that productivity has been rising more rapidly than the ratio of physical (mainly fixed) capital to labor. The author actually cites data showing a productivity slowdown, without apparently realizing that this would tend to support a traditional view of the composition of capital and its dynamics. Evidence for the

shift to services in the advanced capitalist countries, as part of a changing international division of labor, is also simply not relevant here. But should it emerge that, in some given period such as the present, the composition of capital *is* falling, this would require explanation, in the same terms as those in which the original projection of a rising composition of capital was developed. What *does* determine this, and other, macro trends? Here the author goes elsewhere, and launches into a fanciful, unoriginal and entirely descriptive discussion of financial matters. The claim that subjective factors predominate as ultimate explanatory variables is quite strange, to say the least, and not supported by argument or evidence here. The idea that the financial community was over-cautious rather than risk-taking is based on the mere observation that many of the financial instruments involved have the form of risk-spreading or -averting instruments. This, however, is

another non-sequitur: the author ignores the massive evidenc!

e for th e existence of a classic boom, in which the expectation of expanding markets and rising asset prices makes it irrational for investors *not* to take increasingly exposed positions and assume ever-higher debt ratios. In any case, none of this has anything to do with structural trends in the real economy, as, for instance, in the composition of capital, whose rise *or* fall is unrelated to the stories about the financial sector told here.

But the core issue is the author's understanding of the rising composition of capital as somehow "good" for growth, because it is associated with industrial development. To repeat, this is completely fallacious. The trend in the composition of capital is separate from the issue of industrial vs. non-industrial growth, from the rate of growth, and from the balance between non-financial and financial activity. The idea that Marx's theory of crisis "make(s) a virtue out of austerity" by blaming industrial growth for the crisis, when actually more growth is needed, simply does not begin to understand what the classical theory consists of -- let alone how that theory has been expanded and developed in more recent times.

============================================================= The thesis of this piece is interesting: The ongoing crisis is not the result of a decline in profitability caused by an increased (value) capital composition. Instead, the cause is under-accumulation resulting from a massive shift of resources from production to non-productive activities. However, the piece doesn't even get close to resolving the issue it addresses. It lacks a clear structure. It meanders superficially about too wide a range of topics, from "objectivism" to the Marxist treatment of nonproductive labor to "financialization" to risk aversion, with no visible attempt to deepen the reader's understanding of any of them. The author makes categorical claims that are far from obvious without much effort to support them with logic and/or factual evidence.



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