Re: The Fall in the Value of Labor-power as a Contributor to the Tendency of the Rate of Profit to Decline

[Jim Devine <jdevine03@xxxxxxxxx>]

> This is an introduction to an article by John A. Imani that can be read
> in its entirety at http://www.marxmail.org/Imani.htm
>
> The Fall in the Value of Labor-power as a Contributor to the Tendency of
> the Rate of Profit to Decline
>
> 1:  THE RATE OF PROFIT AND THE VALUE OF LABOR-POWER
>
> The Tendency of the Rate of Profit to Decline
>
> The tendency of the system-wide average or general rate of profit (P')
> to decline has been attributed (esp. by Marx) to, on the one hand, the
> growth of the organic composition (that is the relative growth of
> constant (c) capital (materials, machinery, buildings; or, 'dead' labor;
> or, value-transferring) to its variable (v) capital (workers; 'living'
> labor; or, value-adding) complement.  This, the organic composition (OC)
> of capital, is often written as (c + v).

No, the OC is c/v or c/(c + v) or c/(s + v), depending on who you ask.

It must be remembered that mechanization and technical change cheapen
the means of production (MP) and lower their value.

Let c/v = (the value of MP)*(the volume of MP) divided by (the value
of labor-power)*(the volume of LP)

= (value of MP/value of LP)*(volume of MP/volume of LP)

= value ratio * (the technical composition of capital).

If the value of labor power is constant (as Marx typically assumes)
then the effect on c/v of a rise in the technical composition (volume
of MP)/(volume of LP) would be counteracted by the fall in the value
of MP. If there is strong technical change in the MP-producing sector,
then the "value ratio" would a lot and thus c/v would fall.

> On the other hand, the competition between capitals, backed by trade and
> monetary policies of national states, has also been cited (esp. by
> Robert Brenner[i]) as being the invisible hand driving down rates of
> return.  Brenner's position has been summed as ".capitalism, innovation
> and competition enjoy a symbiotic relationship. Competition not only
> explains the global economic crisis of 1998, it also serves as a sine
> qua non for capitalism origins."[ii]  These first two, Marx' and
> Brenner's, are essentially complementary as it is the drive for the
> larger market-share resulting from prices lower than one's competitors
> that is the motive force for the development, acquisition and employment
> of machinery capable of raising the productivity (output per unit per
> unit of time) of the labor-power employed and thus lowering output
> costs, widening the spread between such costs and the existing
> market-prices and thereby raising one's rate of profit, if only
> temporarily as the enjoyed technological advantage dissipates as the
> innovation spreads and becomes the new standard returning the prime
> innovator's margin to the sector average.

> It should also be mentioned, as regards the former purported cause, that
> the relative growth of the constant capital ratio to variable is further
> augmented by, and somewhat obscured by, the tendency of the variable
> capital to become diluted by the growth of the segment of the work-force
> that is engaged in non-value-adding tasks (e.g. security guards,
> accounting, advertising, etc).  This enlargement of the potion of the
> variable capital 'v' allocated towards non-productive labor, or what
> might be called '~v', tilts the scales of the organic composition even
> more heavily in favor of the constant.  Effectively the composition of
> such capitals may be expressed as (c + (~v)) + v wherein the term (c +
> (~v)) denotes the value-transferring portion while v stands alone as the
> value-adding portion.   This observation (esp. by Fred Mosely[iii]) is
> not, however, the subject at hand.  Neither is Brenner's competition
> save in its role as complement to that which is, namely the tendency of
> the enlargement of the ratio of the constant capital to the variable and
> a little discussed associated consequence arriving there-from.

The problem is that labor productivity has risen enough to cover the
extra cost of unproductive labor-power.

> Neither, for that matter, away from the universe of Marxian economists,
> is J M Keynes' assertion that it is savings that is the culprit.
> Keynes' argument, if only for the sake of an argument not to be debated
> here, along this vein, might be interpreted as follows:  as a nation's
> economy matures (i.e. grows richer) savings pour at a faster and faster
> rate into its money-marketplace seeking to be turned into means and
> materials of production, competing amongst themselves for the 'right' to
> align themselves with labor.[iv]  These lower the rate of profit as the
> rate of increase of investment outstrips the rate of increase of the
> labor force lowering what Keynes termed the "marginal efficiency of
> capital."[v]  Keynes' argument, taking place in the sphere of the
> circulation of money-capital, as Brenner's foray into the circuit of
> commodity-capital, seems again an analogous parallel of Marx' analysis
> of productive-capital in the sphere of production.

I wouldn't take this description of Keynes' theory to the bank.

> However, as with Brenner and Moseley, this is again but a side-track, a
> 'feeder line', a trunk rail loading its cargo onto the runaway train
> that is a capitalism choking on its own regurgitations of bellows of
> smoke and sliding backwards down hill in spite of the earthshaking roar
> of its mighty engines.  There is another problem contributing to the
> double-double toils and troubles of the system's locomotive and that is
> the fuel its machinations gobble up in this vain quest to rise up an
> ever steepening mountain of the rate of profit.  That fuel, of course,
> is human labor; and, the problem with that fuel is the tendency of its
> value to decline.

Oh, shoot! I have to read the on-line explanation. No time!
--
Jim Devine / "Segui il tuo corso, e lascia dir le genti." (Go your own
way and let people talk.) --  Karl, paraphrasing Dante.