[lbo-talk] Austerity In The Face Of Weakness

Carrol Cox cbcox at ilstu.edu
Tue Aug 31 17:59:24 PDT 2010


Joanna, SA is talking about (what might be a mythical) the average rate of profit on capital as a whole. Discussion of individual firms is irrelevant here.

Many Marxist economists write history in terms of this average rate. It can also be used as an index to the strength of the working class -- greater working-class strength resulting in a lower average rate of profit in the economy as a whole, with resulting lower rate of accumulation. A crisis is then needed to discipline labor and restore the 'desired' rate of profit. Your post doesn't really bear on this at all.

Whether it is (merely?) a fetish or not I don't know, in part because I don't know how SA uses that term. When Marx uses it in the phrase "commodity fetishism" he is not naming a pyschological or logical error, he is naming the material force that drives the capitalist system (and he uses the analogy of gravity). It's probably unfortunate that he used the term since it has misled a lot of people.

Carrol

123hop at comcast.net wrote:
>
> Profit might indicate the rate at which capital expands itself, but if it is not reinvested, it's not necessarily a sign of "health." For example, if all capital is used for speculation, whether in real estate or art, the rate of profit at T1 might not say anything about the rate of profit at T2.
>
> Joanna
>
> ----- Original Message -----
> From: "Julio Huato" <juliohuato at gmail.com>
> To: "Lbo Talk Lbo Talk" <lbo-talk at lbo-talk.org>
> Sent: Tuesday, August 31, 2010 5:15:30 PM
> Subject: [lbo-talk] Austerity In The Face Of Weakness
>
> SA wrote:
>
> > Wouldn't this analysis suggest that the profit rate -
> > an indicator fetishized by Marxists - is a pretty
> > irrelevant indicator of the health of capitalism?
>
> I'm not sure I understand why the profit rate would be irrelevant. It
> seems to me that it's exactly the opposite. The profit rate is the
> rate at which capital expands itself. If a capitalist is (or we are)
> trying to determine how effective an individual particle of capital
> is, we need to look at its profit rate. If we are trying to determine
> how effective it may be in the future, we try to estimate its future
> profitability. Etc. That's why the entire disciplines of accounting
> and corporate finance exist.
>
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