Thursday, 10 September 2015

Capital III, Chapter 15 - Part 2

Some Marxists have taken Marx's comment near the start of this chapter,

“On the other hand, the rate of self-expansion of the total capital, or the rate of profit, being the goad of capitalist production (just as self-expansion of capital is its only purpose), its fall checks the formation of new independent capitals and thus appears as a threat to the development of the capitalist production process. It breeds over-production, speculation, crises, and surplus-capital alongside surplus-population.” (p 241-2)

as the basis of their claim that the law of the tendency for the rate of profit to fall, is the basis of Marx's theory of crisis. That simply shows the problem of treating Marx's writings as though they were Holy Writ, and to treat every phrase, sentence or paragraph as though it stood on its own separate from the rest of the text. As has been seen throughout Capital, there are many occasions where Marx makes statements, which are merely an opening remark whose real meaning is only revealed in the unfolding of his argument. Taken on their own, some of these statements are, in fact, the opposite of what Marx goes on to describe. Some are simply badly formulated.

In fact, on the basis of what Marx has set out in previous chapters, its clear that he does not ascribe a central role to the law as a cause of crises, and in his further explication in this chapter, that becomes clearer still. Rather, Marx states, in fact, that the Law of The Tendency For The Rate of Profit To Fall is the means of resolving crises of overproduction, that become more acute, as labour supplies begin to be used up, as described, for example in “Value, Price and Profit”. It is the contradictions previously alluded to, for example, in Chapter 6 – which relate as much to the rise in the rate of profit and in the mass of profit as much as to the falling rate – that provide one cause of crises.

In this chapter, Marx also examines the other contradictions flowing from these processes, which provide the causes of crises. For example, the contradiction between the production of surplus value and its realisation.

“The conditions of direct exploitation, and those of realising it, are not identical.” (p 244)

There is also the fact that the causes of a falling rate of profit and a rising rate of profit,

“...may at one time operate predominantly side by side in space, and at another succeed each other in time. From time to time the conflict of antagonistic agencies finds vent in crises. The crises are always but momentary and forcible solutions of the existing contradictions. They are violent eruptions which for a time restore the disturbed equilibrium.” (p 249)

This description, also makes clear Marx's clear distinction between a crisis of overproduction, as something sharp and short lived, arising from exuberance caused by high profits, as compared with a period of stagnation, which is a period, not of overproduction, but, if anything, under production, due to prolonged low levels of investment, induced by low levels of profits.

In short, Marx's explanation of crises is far richer, far more complex than a simplistic and mechanistic model based upon a falling rate of profit. In this chapter, Marx also starts to bring into his analysis the division of the surplus value amongst the other exploiting classes, and class fractions. Having already demonstrated that the rate of profit can fall even as the mass of profit rises, he is now able to show that the division of this increased mass of surplus value into profit, interest and rent can take a number of different forms, in which the mass of each may rise together, or some may rise whilst others fall, and this may be associated with a rising or falling rate of each individually. In other words, the rate of profit may be falling while the rate of interest is rising and vice versa.

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