Saturday, 18 April 2015

Capital III, Introduction - Part 6

Finally, Engels turns to the solution provided by George C. Stiebeling, from the US. Stiebeling's solution seemed simple, but rested on a straightforward mathematical error. His model provides two enterprises with different organic compositions of capital. He designates total capital in each case (c+v), y, and the difference in the organic composition x. The rate of profit in the first is then s/(c+v), and in the second s/(c-x) + (v+x) = s/(c+v),

The obvious error is that he has assumed that the value of s in both cases is the same! But, the whole point is that the value of s will be higher in the second firm, where the organic composition of capital is lower.

The controversies and misunderstandings surrounding Marx's theories, on the tendency of the rate of profit to fall, and on the transformation problem, have continued to this day. Many of those who treat, for example, the falling rate of profit as some kind of philosopher's stone, to unlock the key of capitalist crises, repeat half understood ideas, put forward by Marx, as though they were in some way fixed and frozen laws. In doing so, they trample on the grave of Marx's scientific method. They would do well, rather than repeating those mantras, to follow Engels' advice.

“No doubt Dr. Stiebeling has the best intentions, but when a man wants to deal with scientific questions he should above all learn to read the works he wishes to use just as the author had written them, and above all without reading anything into them that they do not contain.” (p 21) 

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