Thursday, April 11, 2013

Oh You Kid

Michael Heinrich has written an article in the latest Monthly Review, and you can read it here . You should read it, because I'm not going to summarize it.  Basically, Heinrich argues 1) that Marx never proved that the tendency for the rate of profit to decline is in fact a law, in that Marx's mathematical rendering does not show that"C" must grow at a rate faster than the rate of surplus value and 2) the Marx himself, after the publication of Capital, had grave doubts about the "law."

However, as I think is clear from Heinrich's text this is not about proving an equation.

 From Marx's work it should be clear that this is about the inherent tendency of capital to reduce "v," replacing it with fixed assets, transforming the increased "fc" (fixed capital) into increased circulating capital in order to (1) reduce its cost of production and (2) appropriate a larger share of the total socially available surplus value to achieve an average rate of profit.

Now I think that is what will, must, drive the average rate of profit down; I think this can establish a link between overproduction and the growth of the means of production as capital (linking overproduction to declining profitability in exchange as opposed to insufficient consumption or lack of "effective demand"), and declining profitability to slowing turnover time of the capital invested in production.

My objection is not that the Heinrich is denying the possibility that the rate of profit will fall, is likely to fall, is even very likely to fall; but rather that he asserts the decline is NOT inherent in the growth of the means of production as capital.  Marx is providing the immanent critique of capital, where the very determinations of capital became the basis for its negation.  That's what  Marx's  "immanence" is all about . And immanence does not mean "permanent." There is no "permanent" decline in the rate of profit as capital is quite capable of incinerating productive capacity and living labor in the millions (of whatever units you want-- people, dollars, labor hours); and there is no permanent crisis as crisis is necessary to capital and is a countervailing tendency.

But there is the inherent tendency of the means of production to outgrow their organization of capital, the relation of production which is wage-labor, and that "overgrowth" is pretty well identified by a declining profitability.

Momentary digression:

Back in the day, and I'm sure many have heard this story or versions of it before, (but maybe not my explanation for it)... anyway Henry Ford had a section of the Rouge Plant (IIRC) given over to R&D, with the purpose of creating a completely automated assembly line. He took Walther Reuther on a tour of the facility and supposedly said: "When this becomes reality, Walter, who are you going to organize?"

Supposedly, Reuther, always the empiricist and the wannabe social democrat said, "When this becomes reality, Henry, who's going to buy your cars?"

Well the answer is-- "everybody else" and the lower price of the Ford cars will in theory serve to transfer the profits from the other auto manufacturers, so that Ford will achieve the average rate of profit, which it has thus driven down.

Now imagine that all production in capitalism is automated-- in all sectors. Where then is the surplus value? Nowhere. There is no necessary labor-time that can only be satisfied through the alienation of surplus labor time.  Surplus value cannot be transferred, or allocated when its basis for existence-- necessary labor-time-- has disappeared. While Heinrich may laugh or refer to the absurdity of those who, as a matter of fact, do tease out the conflict between necessary and surplus labor-time by reducing wage-labor zero, such a conflict, revolving around a zero-point, or approaching it even asymptotically, is made explicit by Marx in some of his manuscripts, and is implicit throughout some others, including IMO, The Poverty of Philosophy. "Time is everything; man is nothing. At most, he is time's carcass."

I just want to add, I think Heinrich is historically wrong when he refers to the "crisis theory" of the 20th century as being concentrated this issue of the rate of profit. Much has centered on overproduction vs. underconsumption. Pavel Maksakovsky in his The Capitalist Cycle contends that Marx did indeed provide us with a crisis theory, and Maksakovsky says it's in volume 2. Today we know it as disproportion.

I truly recommend Maksakovsky's book-- it is brilliantly written and brilliant, so brilliant I wish I could agree with him [hell, sometimes I wish I could just agree with somebody]. But I don't because,  at core, in my opinion, disproportion theories become underconsumption theories.

Somewhere along the line we have to come to grips with the necessity for the emergence in the reproduction of capital the reason for declining profitability, overproduction, and disruptions in circulation. I don't think the answers for each, or any, can be achieved without integrating them as a whole.

S. Artesian
April 11, 2013


  1. You are approaching, IMHO (and I mean the "H") the most basic thrust of Waistline30's writings, that the time has come that capital has written "v" out of the equation. I'm not trying to be an asshole. I am genuinely interested in this as a possible end point of capitalist accumulation and a possible explanation for what has happened with finance capital, which seems to be all that capitalism in the US cares about these days.

    David McDonald

  2. Never thought you, nor Waistline were

  3. Agreed on Heinrich and TFRP. He hardly presents an argument, just hand waving. (Just finished reading his Marx-Capital "primer") I agree on Heinrich's take on Marx's formal value analysis, and on his disposal of the so-called "transformation problem" as a non-problem, except for the conceptually impaired. That's basically it.

    However Marx *did* contribute to creating the appearance of a "problem" with the specific form of his presentation here. It's another reminder that "Volume III" is a collection of *unfinished manuscripts* with parts at different levels of unfinishedness. Hence inconsistencies and aporias should not be surprising. This is particularly true with regard to the parts on the theory of credit money and the theory of (capitalist) rent.

    On another note, checked out the U.S. intermodal rail stats lately? Out of pattern for this time of year?

  4. Agree re vol 3-- particularly capitalist rent.

    I think Heinrich gets some things right-- that Marx wasn't very satisfied with what he had written; and he gets some things wrong-- namely that that dissatisfaction meant or indicated that Marx was ready to jettison the FROP.

    Plus, I'm getting a little bit tired of the implications that Engels is a culprit here. I mean I disagree with Engel's treatment of the law of value too, not to mention "dialectics of nature" but I don't think he had an agenda to change Marx's work, and I certainly think he was right in trying to put volumes 2 and 3 in publishable form.

    Re intermodal stats-- yeah I've been following them (in Railway Age magazine) and I think the intermodal stats are a bit of an anomaly, particularly given that overall car loadings are down.

    However, the reduction in car loadings is clearly a result of the slump in coal hauling (coal making up more than 40% of rail car loadings).

    Manufacturers shipments are still strong, and there are even some portions of commodities that used to ship bulk (on both rail via hoppers, at maritime via dry bulk carriers) that now ship in containers (grain for example), but I'm not certain what is behind this.

    What I should do is look at container unloadings at the major ports, particularly Long Beach/Los Angeles to see how much is due to a pick up in imports.

    Anyway, good to hear from you

  5. Forgot to a related issue, GE announced it reducing production at its locomotive plant in Pennsylvania account reduced bookings.

    The Wall Street Journal reported that about 10% of the US railroad fleet has been laid up (probably due to the decline in coal haulage), and that doesn't bode well.