Conclusion (1)
The debate over Marx's Law of the Tendency for the Rate of Profit to Fall is largely based on false premises. The debate essentially has a number of aspects. Firstly, is there any such Law to begin with; secondly, is this Law a basis, or even the only basis of Marx's theory of crisis; thirdly does the Law mean that capitalism must increasingly become prone to crisis, as the rate of profit falls ever lower over time, so that it necessitates either the collapse of the system, or its revolutionary overthrow; fourthly, does the Law explain specific crises, such as that of 2008/9?
In what I have set out above, I have tried to show that the answer to these questions is respectively, yes, but its not the Law that some believe it to be; no and emphatically no; no, at least on the basis of the information we have currently; and finally no.
Part of the problem is that Marx was writing an analysis of capital, and attempting to present that analysis in a way that develops both historically and logically. Part of the method for that involved describing Laws in their most basic and pure form, so as both to elaborate their essential features, and to make it easier to understand them, without the complication of additional complexity, even though in order to understand how such Laws actually operate in the real world, it is vital to build the model in such a way as to introduce all of that complexity. That is why, Marx begins not by analysing capital, but analysing the commodity; it is why he starts not by analysing capitalist production and exchange, but simple commodity exchange by primitive peoples, and the necessary development from it, of simple commodity production and exchange by peasant producers; its why from this basis he analyses the development of the product into the commodity, and the simultaneous development of value into exchange-value as a result of the exchanges of these primitive peoples, but also continues this assumption of commodity exchange on the basis of exchange-value under capitalism, even though he states that he knew this was not the case. As Engels describes, they knew that from the start of capitalist production in the 15th century, it was no longer possible for commodities to exchange on the basis of exchange-value, because commodities produced by capitalist means sold at market prices determined by prices of production, so to the extent these commodities also comprised inputs for other producers, their cost prices were no longer simply determined by exchange value. Yet, it was not until Capital III, that Marx drops the assumption that commodities exchange at their value, and sets out the complexity of prices of production. Even then, for ease of explication, he still uses the assumption of exchange on the basis of exchange value, in many instances.
The same is true in relation to the rate of profit. As early as Capital II, Marx sets out the effect of the rate of turnover of the circulating capital, on the annual rate of surplus value, and consequently on the annual rate of profit. His analysis of that effect is extensive, and central to his analysis of the circulation of capital. Yet, having explained at length this actual basis of the annual rate of surplus value, he rightly does not complicate all of his further examples, and explanations by continually making a distinction between the rate of surplus value and the annual rate of surplus value. Perhaps, if he'd known the debates over the Law would have taken the shape they have, he might have done so. On the other hand, given his original intention, to have provided an economic work that was much closer to the real world, he may have been content to have left such a presentation until that time. But, then a look at what Marx actually says, in itself should be sufficient to uncover the real basis of the Law. I'll review that in the next part.
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