Re: Imperialism : was Arms production + Dept III

[Adam Rose <adam@xxxxxxxx>]

> Adam Rose wrote:
>
> > The tendency of the rate of
> > profit to fall would predict that even though the total amount of
> > capital increases, there is an increasing tendency to crisis.
>
> Increasing tendency for crisis? What do you view as the relation between
> the LTGRPD and cycles?
>

Well, a graph of the rate of profit would look like a gently sloping
saw tooth.

The rate of profit would be relatively high to start with, and
decline as the cyclical boom proceeded. Each individual capitalist
invests, so the organic composition of capital tends to rise, and
the rate of profit falls.

At the high point of the boom, the rate of profit is at its low point.
The destruction of capital during the slump means that the rate of
profit goes up very steeply, but not quite as high as before.
And so we start again.

One of the problems modern capitalism has created for itself is
that it cannot allow large units of capital to go bankrupt. So
the rate of profit cannot bounce back as far as it might
otherwise during the cyclical slump.

The angle of the saw as a whole, ie the long term trend in the
rate of profit, determines whether we enter a period of crisis.
In a period of crisis, there are still booms + slumps, but the
booms are short, and the slumps long + deep. To people
experiencing it, it seems like one long crisis.

If there is a low rate of profit even after the slump, there
will not be a great deal of investment. A lot of the profits
will go into paying off debt ( there's a whole argument )
rather than investment. Because there's little new investment,
the cut off point at which the boom turns to slump will come
sooner. [ I think an explanation of why this is so would have
to look at interest rates - because of the low rate of profit,
not much ( in relative terms ) surplus is being produced. Yet
a boom has started, and capitalists want to invest, so the
rate of interest goes up. This causes bankruptcies in
sectors of the economy particularly sensitive to interest rate.
? ]

Adam.

Adam Rose
SWP
Manchester
UK

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