Michael Roberts' Fundamental Errors, V - The Tendency For The Rate of Profit To Fall Is Not The Cause of Crises - Part 6 of 8

So, its possible to argue that, in this first flush of capitalist production, capital, slowly, spreads from these high organic composition/low profit spheres, into other spheres of production, where capital does not currently exist, and, as it does so, it moves into spheres of production where the rate of profit is higher, bringing an increase in the general rate of profit itself. Indeed, that continues to be the case, as Marx sets out in Capital III, Chapter 14.

“...new lines of production are opened up, especially for the production of luxuries, and it is these that take as their basis this relative over-population, often set free in other lines of production through the increase of their constant capital. These new lines start out predominantly with living labour, and by degrees pass through the same evolution as the other lines of production. In either case the variable capital makes up a considerable portion of the total capital and wages are below the average, so that both the rate and mass of surplus-value in these lines of production are unusually high. Since the general rate of profit is formed by levelling the rates of profit in the individual branches of production, however, the same factor which brings about the tendency in the rate of profit to fall, again produces a counterbalance to this tendency and more or less paralyses its effects.”

In fact, as I've set out, elsewhere, it need not be the case that in these new spheres, wages are low. Precisely because many of these new spheres of production, and services are high-tech/high value spheres, they employ relatively small numbers of highly paid/highly skilled workers, whose labour is itself complex, i.e. one hour of their labour is equivalent to tens, hundreds, or even thousands of hours of simple labour. Many of these spheres are those which, in Marx's time, were insignificant. Think of the billions involved in the media industry, in entertainment, including professional sports, the computer games industry and so on.

In addition to these new spheres of production, with low organic compositions and high rates of profit, which act to raise the general rate of profit, there is also, the investment of capital overseas, in economies where low levels of economic development, and capital accumulation, mean low levels of organic composition, and so higher than average rates of profit, which also acts, thereby, to raise the global average rate of profit. Moreover, as I have set out elsewhere, when Marx talks about the general rate of profit, he means the average annual rate of profit, and that annual rate of profit is determined not just by the organic composition of capital, but also, by the rate of turnover of capital. That expansion of global trade, involved the introduction of ever increasing amounts of technology to transport and communications, which speeds up the rate of turnover, and so, also, the average rate of profit. As Engels put it,

“[The two large centres of the crises of 1825-57, America and India, have been brought from 70 to 90 per cent nearer to the European industrial countries by this revolution in transport, and have thereby lost a good deal of their explosive nature. The period of turnover of the total world commerce has been reduced to the same extent, and the efficacy of the capital involved in it has been more than doubled or trebled. It goes without saying that this has not been without effect on the rate of profit.]”

(Capital III, Chapter 4)

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