[Marxism] Marxism] Why analyze the economic crisis

[Charles Brown <cdb1003@xxxxxxxxxxx>]

Greg McDonald: 

Â
S. Artesian wrote:

<When we point to stagnating or declining 
real wages we need to link 
that not
with underconsumption but with the
Âorganization of the means of 
production
as capital, with capital's need for profit--
Âthat the attack on workers
wages, living standards is not because
Âunderconsumption somehow has led
capitalism to an abyss, so that now 
it must attack even less 
consumption in
order to... in order to what? We need
Âto link it to the entire 
notion of
profit-- to capitalism's need for profit...
Â
^^^^
CB: In the infamous "one and only one"
quote from Marx, "poverty and restricted
consumption" does not refer to workers
wages only when they are being attacked
stagnating or declining. When wages
are at their highest, there is still exploitation.
So wages are _always_ restricted consumption
and impoverishing.
Most fundamental to Marx's theory is
_exploitation_. Exploitation is the source
of surplus value, which is the source of'
profit. What we must discuss with workers
is not just profit, but that exploitation
is the basis of profit.
Â
^^^^^^^
Â
because if the problem is
underconsumption then the nearest social democrat will absolutely 
agree and
say what we need is to "tame" capital, not replace it, to augment
consumption, to give capital a social, human, face and dimension.
Â
^^^^^
CB: I agree with this. But focussing on
the fact that falling profit rates are
the trigger cause of every crisis
doesn't not imply that we need to 
get rid of capital. It implies we
should try to do something about
raising the profit rate back up.
Â
^^^^^^^

And how does that get done? By feeding capital what it must consume in
order to reconstitute its mechanism of accumulation-- feeding bodies 
into
that great furnace of consumption called war.
Â
^^^^^^
CB: Yes, expose the real motives
of war.
Â
^^^^^

Bet on it. That's where this capitalism is going, and in a hurry. 
And to a
big one.>
Â
^^^^^
CB: It seems they may be running
out of cover stories. Especially, since
they got caught in a big lie last time.
Â
^^^^
^^^^

Greg McDonald :
Ok, so far I agree, having had the opportunity during these past few 
months to do some actual reading on Marx and economic crisis. Always, 
the driving force behind change under capitalism, is capitalism's 
need for profit. But could not underconsumption, or restricted 
consumption, as CB puts it, be a "second cut" contradiction? 
Â
^^^^^^^
CB: Actually, Marx terms
the poverty and restricted
consumption of the masses
the "ultimate reason". So,
restricted consumption is
the "first cut". Falling profits
areÂthe "second cut" , a more
surface reason. As, I say above
this is
because restricted consumption
is due to exploitation, and exploitation
of workers is the basis for profit.
We are discussing this with workers,
so it makes sense to put their 
exploitation first. It's ok because'you
get to say that workers are the source
of all value, and workers are the source
of all the capitalists' profit.
It's a bit of a paradox, but:
Â
Exploitation is the source of
profit, but ultimately, that
exploitation undercuts profit
Â
Then , the replacement of
workers by machines ( rising
organic composition of capital
Explained here by Marx
Â

Karl Marx. Capital Volume One


Part IV: Production of Relative Surplus Value
Chapter Twelve: The Concept of Relative Surplus Value
http://www.marxists.org/archive/marx/works/1867-c1/ch12.htm)
Â
Â
is a second basis that profit
rates fall. Our solution is use
machines to cut work time, toil,
but keep the same rate of pay, 
wages. Our solution is cut
profit (See Marx's _Wages,Price
and Profit_, a very popular presentation
of Marx's ideas by Marx himself)
Â
^^^^^
Â
Â
In other 
words, if the restricted consumption of the masses is caused by the 
exploitive extraction of surplus value during the production process, 
could not then this effect further exacerbate the original cause, 
becoming in and of itself a second order causal factor?
Â
^^^^^
CB: Yes, only Marx himself calls it
the first order cause, or "ultimate reason".
Â
We want to say "profit is caused by
exploitation, yet exploitation ultimately
undercuts profitÂrealizationÂrates. "
Â
^^^^^
ÂCapitalism 
needs to make a profit to survive, and it can only realize a profit 
in the process of exchange. It has to sell its commodities on the 
market. If it cannot sell, (due mainly to overproduction but also to 
the lack of purchasing power by the workers)
Â
^^^^^
CB: Yes, but "overprofuction is the same
thing as lack of purchasing power
by the workers. The "over" in "overproduction"
is producing over the amount that
workers can buy. The "over" in "overaccumulation"
is accumulationÂofÂtoo much constant capital (
means of production,instruments of production) in
proportion to the variable capital (labor) of the
total capital. It's too much , because, constant
capital is not a source of surplus value, which
is the basis for profit. The reason the capitalists
accumulate "too much" constant capital is 
explained in Vol. I here
Â
http://www.marxists.org/archive/marx/works/1867-c1/ch12.htm
Â
Chapter Twelve: The Concept of Relative Surplus Value
Â
The reason this overaccumulation causes a tendency for
the rate of profit to fall is explained here.
Â
Capital Vol. III 
 
http://www.marxists.org/archive/marx/works/1894-c3/ch13.htm 
Part III. The Law of the Tendency of the Rate of Profit to Fall
Chapter 13. The Law As Such
Â
Assuming a given wage and working-day, a variable capital, for instance of 100, 
represents a certain number of employed labourers. It is the index of this 
number. Suppose Â100 are the wages of 100 labourers for, say, one week. If 
these labourers perform equal amounts of necessary and surplus-labour, if they 
work daily as many hours for themselves, i.e., for the reproduction of their 
wage, as they do for the capitalist, i.e., for the production of surplus-value, 
then the value of their total product = Â200, and the surplus-value they 
produce would amount to Â100. The rate of surplus-value, s/v, would = 100%. 
But, as we have seen, this rate of surplus-value would nonetheless express 
itself in very different rates of profit, depending on the different volumes of 
constant capital c and consequently of the total capital C, because the rate of 
profit = s/C. The rate of surplus-value is 100%:
If c = 50, and v = 100, then p' = 100/150 = 66â%;
c = 100, and v = 100, then p' = 100/200 = 50%;
c = 200, and v = 100, then p' = 100/300 = 33â%;
c = 300, and v = 100, then p' = 100/400 = 25%;
c = 400, and v = 100, then p' = 100/500 = 20%. 
This is how the same rate of surplus-value would express itself under the same 
degree of labour exploitation in a falling rate of profit, because the material 
growth of the constant capital implies also a growth â albeit not in the same 
proportion â in its value, and consequently in that of the total capital.
If it is further assumed that this gradual change in the composition of capital 
is not confined only to individual spheres of production, but that it occurs 
more or less in all, or at least in the key spheres of production, so that it 
involves changes in the average organic composition of the total capital of a 
certain society, then the gradual growth of constant capital in relation to 
variable capital must necessarily lead to a gradual fall of the general rate of 
profit, so long as the rate of surplus-value, or the intensity of exploitation 
of labour by capital, remain the same. Now we have seen that it is a law of 
capitalist production that its development is attended by a relative decrease 
of variable in relation to constant capital, and consequently to the total 
capital set in motion. This is just another way of saying that owing to the 
distinctive methods of production developing in the capitalist system the same 
number of labourers, i.e., the same
 quantity of labour-power set in motion by a variable capital of a given value, 
operate, work up and productively consume in the same time span an 
ever-increasing quantity of means of labour, machinery and fixed capital of all 
sorts, raw and auxiliary materials â and consequently a constant capital of 
an ever-increasing value. This continual relative decrease of the variable 
capital vis-a-vis the constant, and consequently the total capital, is 
identical with the progressively higher organic composition of the social 
capital in its average. It is likewise just another expression for the 
progressive development of the social productivity of labour, which is 
demonstrated precisely by the fact that the same number of labourers, in the 
same time, i.e., with less labour, convert an ever-increasing quantity of raw 
and auxiliary materials into products, thanks to the growing application of 
machinery and fixed capital in general. To this growing quantity of
 value of the constant capital â although indicating the growth of the real 
mass of use-values of which the constant capital materially consists only 
approximately â corresponds a progressive cheapening of products. Every 
individual product, considered by itself, contains a smaller quantity of labour 
than it did on a lower level of production, where the capital invested in wages 
occupies a far greater place compared to the capital invested in means of 
production. The hypothetical series drawn up at the beginning of this chapter 
expresses, therefore, the actual tendency of capitalist production. This mode 
of production produces a progressive relative decrease of the variable capital 
as compared to the constant capital, and consequently a continuously rising 
organic composition of the total capital. The immediate result of this is that 
the rate of surplus-value, at the same, or even a rising, degree of labour 
exploitation, is represented by a
 continually falling general rate of profit.
Â
Â
Â
Â
Âthere is no profit to be 
made, regardless of the surplus value embedded in the commodity 
itself. This exacerbates the original causal factor of 
overproduction, making the crisis worse. Or am I just trying to have 
my cake and eat it too?
Â
^^^^^^
CB No you are correct.
As I just said to Lou, it's
both.

Greg McDonald

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