Marxism: Marxian Economics

[Joso]

Very interesting, it is a shame it doesn't works...

[Petros Agapetos]

Formula for the Falling Rate of Profit:

i) the rate of Profit: Pr = s/C = s/(c+v) [formula 1]

ii) 's' (surplus value) must decline in this equation, because 's' may be derived only from 'v'; and thus 's' declines as 'c' grows larger in relation to 'v', even though the rate of surplus value ( s/v) may remain the same.

iii) the formula for the historical tendency may be expressed as follows:

s/ ( cx1---n + vy1---n) [formula 2]



where x > y

iv) Hence again the internal contradiction of the capitalist process, in the words of Marx (Kapital, III, 247-60):

'The nature of the capitalist process of accumulation ... implies as a matter of course that the increased mass of the means of production, which is to be converted into capital, must always find on hand a corresponding increase of labouring people for exploitation.' But that becomes increasingly difficult if the capitalist process necessarily means technological advancement and increased scales of production so that constant capital must inevitably increase at a faster rate than variable capital, and thus bring about an inevitable fall in the rate of Profit.

(d) Marx's suggestions as to how the falling rate of profit might be temporarily counteracted:

i) increase the intensity of the exploitation of labour;

ii) find means of cheapening the cost of subsistence of labour in order to depress even further the wage level;

iii) to reduce the costs of the elements of constant capital (to reduce its relative rate of increase): by technological change and by increasing the scale of production (increasing returns to scale);

iv) expand and widen foreign trade and secure colonies to facilitate achieving some of these objectives:

(1) to cheapen cost of necessities, foodstuffs, raw materials;

(2) to expand the scale of production by widening the market in this fashion. Indeed to sell goods at prices above their true exchange-value abroad, when competing with less advanced producers.

[Petros Agapetos]

The Concepts of Monopoly Capitalism, Impoverishment, and Crisis

(a) The creation of surplus value leads naturally to capital accumulation, which leads to amalgamation in the form of very large capitals, which through competition will gobble up smaller capitals, and so lead to the concentration of capital in few hands as monopolies. Monopoly capitalism must result, since the larger capitals with their superior economies of scale and superior technologies will cheapen commodities at a faster rate than will smaller capitals, and so drive the latter out of production, or simply absorb them through purchase.

(b) All of the attempts of large capital to counteract the falling rate of profit can be only temporary palliatives. And in this process the chief source of escape for the capitalist will be intensifying the exploitation of labour: that is to continue driving down wages to augment surplus value. Both the unemployment caused by technological change, by machines displaying labour, and the population growth stimulated by the economic development will create a 'reserve army of the unemployed' which will permit the capitalists to depress wages further and further to the point of immiserizing the working classes.

(c) Growth of monopoly capitalism, by hastening the expansion of constant capital at the expense of variable capital, will hasten this process of 'immiseration' and oppression of the working classes to the point of revolution, of sparking a revolutionary explosion by which 'the expropriators are expropriated.' Hence the ultimate internal contradiction of capitalism. [See Kapital, I, 685-703; III, 308-10.]

[Petros Agapetos]

Economic Theories:
Neoclassical (Capitalist)
Keynesian (Capitalist)
Marxian (Socialist)

Which of these Economic Theories do you subscribe to?