A Problem in Marxist Economics?

[marx_was_right]

Any comrades who post on the Che-Lives forum will know of the Anarchist guy Redstar2000 and his lengthy posts, I have been known to call him a 'windbag' from time to time, although sometimes he speaks sense (he's an ultra-left though)

Anyway, he wrote this short critique on Marxist economics, what do you all think?

A Problem in Marxist Economics, The Labor Theory of Value

[richard]

Dear Igor,

I managed to login to this forum. I am disappointed that this is the only recent post on Marxian Economincs, but you have to start somewhere I suppose.

I don't think RedStar is an 'Anarchist', but is probably a Dutch Left-Communist ("Council Communism" - Pannekoek, Gorter etc).

That is what I have got from reading his posts.

I have written a reply to him, which I post below.

Someone wrote that: "But the idea that capitalism could exist forever is pretty absurd if you only remember Dialectic Materialism. It must give way to something better eventually".  The person who replied to it has to get applause: "...not if we are all dead..." - which is exactly the point.  Socialism may be the way forward, but society has reached the poin that it can either go forward to Socialism or backward to barbarism.  But this is not due to capitalism collapsing due to some 'law of the falling rate of profit' but would be due to capitalism being unable to sustain itself due to the lack of resources, and also due to the destruction caused by nuclear wars and environmental destruction.

I hope all is well with you and do keep in touch.

Best Wishes
Richard/rcpnz

[richard]

REPLY 1:
Red Star's problem would appear to be that he is a collapsist:
"Take away the labor theory of value, lose the tendency of the rate of profit to fall over time, and you lose the "inevitability" of capitalist crises...including the final one."

It is true that the tendency of the falling rate of profit is derived from the Labour Theory of Value (see Capital Vol.3, Part III), but it is only a tendency, not a law.

Marx, in Capital Vol.3 Part III pointed to several counter-acting tendencies to the falling rate of profit, you should read this part.

There is no 'final crisis' as Red Star talks about. Capitalism will not collapse but must be done away with by the conscious action of the working class.

So capitalism can endure indefinetely, as long as the environment permits.

Red Star's post seems to be mainly about trying to show that capitalism is not 'infinite'. It would appear he is one of these 'economic determinists' who thinks that Socialism is inevitable.

The problem with Red Star is that he thinks the case for Socialism is based on this collapsist nonsense - trying to scare workers into becoming Socialists. The case for Socialism is based upon the theory that the working class are a subject class and in the law of social evolution, the next stage is for their class liberation.

When John Maynard Keynes came forward with his theory of getting rid of recessions, the Communist Party of Great Britain supported him. The Socialist Party of Great Britain refuted his views, and said even if they had not refuted them, and he was able to solve recessions, it was irrelevant AS IT WOULD NOT FUNDAMENTALLY ALTER THE RELATIONSHIP OF WAGE-LABOUR AND CAPITAL.

Those who think the working class are incapable of scientific thought need to make use of scaremongering tactics like Collapsist theories.

Red Star then wrote a reply, whicn can be views on the link Igor gave.  I replied as follows:

Dear RedStar,

Thanks for your reply. I am the individual who wrote the reply to your original post.

You ask me why the workers should get rid of capitalism if it is a "success". I never said it was a success, but only that it would not collapse.

Even if it were a success, the question is posed as to what class it is a success for. Certainly not the working class.

You say: "As a rule, we don't just sit in our armchairs and, pondering the abstractions of history, decide that we should be the next ruling class."

Do I advocate sitting in an armchair? No. Of course we need real material reasons for establishing Socialism. What do you suppose class emancipation is if not a material reason? What do you suppose getting rid of the social problems of poverty, environmental destruction, war etc is if not a material reason?

Marx's view in Vol.1 was put forward as a preliminary argument. It was not a detailed analysis of the "collapse of capitalism", as was presented in Vol.3.

Consciousness is derived from material conditions. Am I denying that? To deny that would be to reject the theoretical system of karl marx. But what you are saying is that we should support Socialism because "capitalism will collapse" when you say "Otherwise, why bother? More specifically, why take a big chance on an unknown future when "after all", things are "not so bad" with what we have now?"

Just because the system is not collapsing, does not presuppose that things are "not so bad". This is capitalism. Things are always "bad" for the working class. They are a subject class. To argue that capitalism is collapsing to convince people to become Socialists is scaremongering. Workers cannot be scared into becoming Socialists, they must be, as Marx said "of a sober disposition".

You say Communism cannot be achieved without the collapse of capitalism. Why do you think this? Lenin's argument in Left-Wing Communism that Socialism can only come out of an economic crisis is erroneous as it bases its theory on scaring workers into becoming Socialists. The Socialist case does not rest on the view capitalism will collapse.

" Does the Socialist Case Depend on Depressions Getting Worse?

The case for Socialism does not rest on the worsening crisis theory at all, and it simply is not true that Socialist propaganda is impossible during booms any more than it is during depressions. The case for Socialism exists at any point in the trade cycle based on the recognition that the cause of the problem facing the working class is that the capitalist class own and control the means of production for the sole purpose of making profit and not for meeting human need. The SPGB membership did not grow in leaps and bounds during the depression of the 1930's not in the last three decades of the 20th century. In fact, depressions are usually associated with the growth of racist and fascist politics.

The belief in ever worsening slumps, a doctrine as we have seen which is held by political organisations like the SWP, is inevitably tied up with the "collapse of capitalism" theory. It was never logical for the Socialist Party of Great Britain with our insistence that Socialist knowledge and organisation are the only road to Socialism, ever to have depended on depressions getting worse and worse until one became so great that Socialism would be forced into being. Socialists reject both fatalism and economic determinism.

Nevertheless it is clear that in the early years the SPGB had taken over some of this theory from earlier writers as for example the Kautsky material, which the SPGB published as a Party pamphlet under the title THE CAPITALIST CLASS. Another influence was Louis B Boudin, author of THE THEORETICAL SYSTEM OF KARL MARX AND SOCIALISM AND WAR who held a collapse theory similar to the one advocated by Rosa Luxemburg cited above.

To hold on to an untenable theory is doctrinaire and dogmatic. The SPGB is a party of Scientific Socialism. If a theory is invalid then it has to be dropped. In 1932 the "collapse" theory was explicitly repudiated in the Socialist Party of Great Britain pamphlet WHY CAPITALISM WILL NOT COLLAPSE which was issued after being fully discussed and endorsed by the Executive Committee. This is the only tenable case. And it is republished now to set out the continuity of thinking between the old SPGB and the reconstituted SPGB. That is, until a Socialist working class majority takes positive action to establish Socialism there are no crises from which capitalism cannot recover. "
(SPGB, Capitalism's Future, SPGB 2001).

You say that the view that capitalism will collapse is a prediction. What if that prediction was proven to be erroneous? Would you still retain it? There is no problem just because capitalism will not inevitably collapse. Workers are convinced of the socialist case on the basis that it is their material interest to establish Socialism – they will be emancipated as a class and their consumption won’t be restricted by what they can afford.

What I meant by the ‘law of social evolution’ is that capitalism has not existed for all time but is part of a process. We have achieved a state that there are only two economic classes – and the next stage is the elimination of these classes as classes – the resolution of the class struggle through class emancipation.

You say workers are ‘radicalised’ by depressions. But the question is whether they become Socialists. Perhaps more people become Socialists during recessions, but this is not our case for getting rid of capitalism. It isn’t about ‘making lives better’, but is about class emancipation as part of the process of social evolution – the negation of the negation etc.

“What I want to be able to say to people...is that capitalism by its very nature will inevitably reach a point at which it can no longer function...If that cannot be truthfully said, the alternatives look extremely grim.”

Well you can’t truthfully say it, and the alternatives do not look grim. Socialism will come when a majority of the working class are class-conscious and not before. The task is for Socialists to convince workers of the Socialist objective and the necessity of taking political action to achieve it. I would like to point out that the Socialist Party of Canada (which used to be a companion party of ours) used to obtain large numbers of votes and had seats in several State legislatures. In Australia in 1932, the SP of Australia (our companion party at the time) stood in a constituency against the Leader of the Labour Party, who became the Prime Minister, and he obtained 32,000 votes against 12,000 votes.

The Canadian and Australian comrades did not stand saying, “capitalism is about to collapse” – the exact opposite. In 1932, the revolutionary SPGB issued a pamphlet entitled “Why Capitalism Will Not Collapse”, which you should read, see http://www.spgb.org.uk/futuresbook.htm

They stood saying that the only tenable way forward was the abolition of the wages system. No reform demands, no palliatives. The reason we have much less support now is that we have all these trendy “left-wingers” walking around offering palliatives – claiming to be “doing something now”. What they forget is that Socialism can happen now – what we need to do is to convince the mass of workers of the necessity of it.

Best Wishes,
Richard

[turnoviseous]

Here are recent articles from IDOM on the issue of the tendency for the rate of profit to fall.

http://www.marxist.com/Theory/mb_newintro_glyn.html


http://www.marxist.com/Theory/rate_profit_glyn.html

[marx_was_right]

The reason we have much less support now is that we have all these trendy “left-wingers” walking around offering palliatives – claiming to be “doing something now”. What they forget is that Socialism can happen now – what we need to do is to convince the mass of workers of the necessity of it.

I do agree with you here to an extent, I think if every socialist or 'socialist' was to come out and get straight to the point it would make things a hell of a lot easier.

But I think struggling for better conditions is a dialectical part of the class struggle, and I think it's the best way of raising consciousness and engaging people. As long as the problem is constantly linked to capitalism, and sadly many fail to explain this (the SSP for one)

[richard]

Hi Igor,

"I do agree with you here to an extent, I think if every socialist or 'socialist' was to come out and get straight to the point it would make things a hell of a lot easier.

But I think struggling for better conditions is a dialectical part of the class struggle, and I think it's the best way of raising consciousness and engaging people. As long as the problem is constantly linked to capitalism, and sadly many fail to explain this (the SSP for one)"

The problem if that most of those who call themselves 'socialists' simply support capitalism with state control.  Lenin even defined 'socialism' are state capitalist monopoly made the serve the interests of the whole people.

Of course it is part of the class struggle.  Why do you think trade unions exists?  People don't like explaining how capitalism is the actual problem because it scares potential recruits off.

Bernstein's view summarises the attitude of the SSP and others:
"the aim is nothing, the movement everything".

This was the attitude taken up by the Labour Party when it was founded in 1906.  Kier Hardie, when he stood for election on behalf of the ILP in 1893 actually said that he supported the program of the Liberal Party.

Hope all is well with you.

best
Richard

[turnoviseous]

There is another good article defending Marx´s position on the tendency of the profit rate to fall:

http://www.marxists.org/subject/economy/authors/miller/frop.htm

[richard]

The view that capitalism is destined to collapse is a view used by the capitalist left to scare workers into becoming Socialists.

In 1932, the Communist Party of Great Britain, and the Independent Labour Party, were making claims that capitalism was about to collapse.

The SPGB challenged the CPGB to a debate over this issue, and the CPGB accepted, only to refuse a week before the debate on the grounds that by the time it were held, capitalism would have collapsed!

History vindicates the position taken up by the revolutionary Socialist Party of Great Britain.

We published a pamphlet entitled "Why Capitalism Will Not Collapse", which is available at the link below.
http://www.spgb.org.uk/futuresbook.htm

[mir]

I still hold that capitalism will collapse.  Maybe not anymore in the advanced countries, like Great Britain or France or especially America, but in some of the countries that have just recently been switched from stalinism to capitalism.  Wouldn't it be ironic if the second communist revolution were to take place in Russia?  The reason I believe this is because of the system of neo-colonialism.  If such a thing had not existed, then surely capitalism would have ended by a revolutionary uprising.  Today, workers in W. Europe and America in terms of material and financial wealth would be considered very rich in most countries in Africa and Asia, which is where most of the exploitation of neo-colonialism takes place.  After the collapse of stalinism, the capitalists predicted giant gains in the E. European countries, but today those countries are stagnant, just like countries over the world in Africa, S. America, C. America, and Asia.  And most E. European countries are not better then the state they were in 1989.  But it must be said, that the communists cannot simply wait for this big collapse to take place, they must constantly educate the working class and provide them with guidance, and when the time is right, then the people will rise up and finally overthrow capitalism.

[turnoviseous]

Originally posted by richard
The view that capitalism is destined to collapse is a view used by the capitalist left to scare workers into becoming Socialists.

In 1932, the Communist Party of Great Britain, and the Independent Labour Party, were making claims that capitalism was about to collapse.

The SPGB challenged the CPGB to a debate over this issue, and the CPGB accepted, only to refuse a week before the debate on the grounds that by the time it were held, capitalism would have collapsed!

History vindicates the position taken up by the revolutionary Socialist Party of Great Britain.

We published a pamphlet entitled "Why Capitalism Will Not Collapse", which is available at the link below.
http://www.spgb.org.uk/futuresbook.htm

You are TOTALLY MISSING the point.  No offence, but you seem not to read the links I posted above at all. Otherwise you could read:

"How the tendency for the rate of profit to fall works

Marx said that the law for the tendency for the rate of profit to fall was "the most important law in modern political economy" (Grundrisse, p. 748.) Why? Speaking about Ricardo and economists like him, Marx said (Capital, Vol. 3, p. 242) "But the main thing about their horror of the falling rate of profit, is the feeling that capitalist production meets in the development of the productive forces a barrier which has nothing to do with the production of wealth as such, and this peculiar barrier testifies to the limitations and to the merely transitory historical character of the capitalist mode of production; testifies that for the production of wealth it is not an absolute mode, moreover, that at a certain stage it rather conflicts with its further development." In other words the law of the tendency for the rate of profit to fall, shows that "the real barrier of capitalist production is capital itself" (ibid. p. 250.)

Let's be clear. We have already pointed out that the tendency for the rate of profit to fall does not manifest itself in a smooth downward decline—perhaps reaching a point where the rate of profit reaches zero, whereupon the capitalists all hang themselves. Actually the tendency for the rate of profit to fall manifests itself in periods of a rising rate of profit followed by periods of a fall. The ebb and flow of the rate of profit is bound up with the trade cycle of capitalism. We do not intend to deal exhaustively with the connections between the tendency for the rate of profit to fall and capitalist crisis here. The main points are dealt with in the chapter of Capital Vol. 3 'Exposition of the Internal Contradictions of the Law'.

Neither do we in any way want to be interpreted as attempting to mechanically present the tendency for the rate of profit to fall as being the main or exclusive cause of every actual capitalist crisis. There is an unfortunate tendency in popularisations of Marxist economic theory such as Sweezy's Theory of Capitalist Development to devote different sections to 'Overproduction' (and perhaps 'Disproportion') as alternative possible causes of crisis to the 'Tendency of the rate of profit to fall.' The author selects his own favourite cause of crisis. Contending schools of thought then set themselves up in the academic world and berate each other. The whole business is thoroughly undialectical.

Both the law for the tendency of the rate of profit to fall and overproduction are bound up together as aspects of an anarchic commodity economy where production is for profit. The tendency for the rate of profit to fall would lead at a certain stage to a crisis of overproduction. Overproduction in turn is overproduction only in relation to profitability. As AG points out, overproduction further hits the rate of profit.

"The real crisis can only be deduced from the real movement of capitalist production, competition and credit" (Theories of Surplus Value, Vol. 2, p. 512). A whole number of intermediate steps have to be taken in our analysis before we can pass over from the abstract general laws laid down by Marx to the concrete reality of a particular economic conjuncture."

[richard]

Hi,

I don't think I am missing the point.

Karl Marx, the one to whom you claim to agree with, argued that there was a TENDENCY for the rate of profit to fall.

The reason it was not a law was because of the rising rate of surplus value.

"The rise in the rate of surplus value...causes that law to act rather as a tendecy" Capital Vol.III, p234

He said that "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, REMAINS THE SAME" Capital Vol III, p213

He said the depression of wages "is one of the most important factors checking the tendency of the rate of profit to fall" p235 and that relative overpopulation "paralyses it's effects" p237

The post you have made seems to be composed of some else's writings!

The rate of profit does not continously fall, as Marx and you agree, but rises and falls with recessions and booms respectively.  

In recessions, the capitalist class destroys cc, and raises the rate of profit.  One of the causes of recessions is the falling rate of profit itself, as we know this being caused by the rising organic composition of capital.

Their are at least 6 counter-acting tendencies to the falling rate of profit.  

Capitalism can only collapse if these counter-acting tendencies are not in place, and of course this is impossible.

The qustion of whether capitalism would collapse is raised by the capitalist left in order for them to be able to claim that they don't need to convince the majority of workers of the necessity of Socialism.

Lenin actually said that capitalism could not collapse of it's own accord but would require revolutionary action to overthrow it.

"In contradiction to those who hold this theory of an automatic collapse of Capitalism, the Socialist Party of Great Britain has never deviated from opposition to that view. Our knowledge of past history and of the way in which the social system develops, convinces us that no crisis of Capitalism, however desperate it may be, can ever by itself give us Socialism. Socialism cannot come by stealth. It can only come by the deliberate act of workers who understand Socialism, and are organised politically to obtain it through control of the machinery of government. The blind revolt of depserate workers would cause great distress and destruction. It might prove troublesome to the capitalist authorities, who would have to exert themselves to suppress it, but the outcome would not be Socialism. "
Why Capitalism Will Not Collapse, SPGB 1932

"
Some of the communists have indeed just begun to recognise the unsoundness of their theory. In THE LABOUR MONTHLY (January 1932), Mr Dutt quotes with approval a statement of Lenin's-that no situation for Capitalism is "without a way out", and says:-
We know that the overthrow of capitalism... requires the most titanic and long-drawn struggle, action, organisation, and victory of the working class; and that until this is attained, caitalism will still drag on from crisis to crisis, from hell to greater hell. "
ibid

I hope this helps.  Sorry if this sounds vicious but I am kind of tired (not of you).

All citations from Capital Vol III are from the Lawrence and Wishart 1972 Edition and are direct citations, not derived from secondary sources.  As are the citations from the SPGB 1932 pamphlet.

regards,
Richard

[turnoviseous]

Hey comrade Richard,

The post you have made seems to be composed of some else's writings!

Of course my last post was not "mine". I hoped the quotation marks would show its a quote...I guess I forgot to add a link to the article. so sorry... here it is:

http://www.marxist.com/Theory/rate_profit_glyn.html

In recessions, the capitalist class destroys cc, and raises the rate of profit. One of the causes of recessions is the falling rate of profit itself, as we know this being caused by the rising organic composition of capital.

Their are at least 6 counter-acting tendencies to the falling rate of profit.

Capitalism can only collapse if these counter-acting tendencies are not in place, and of course this is impossible.

The qustion of whether capitalism would collapse is raised by the capitalist left in order for them to be able to claim that they don't need to convince the majority of workers of the necessity of Socialism.

Lenin actually said that capitalism could not collapse of it's own accord but would require revolutionary action to overthrow it.

I never said that capitalism will collapse on its own. This was never my position. I know the falling of rate of profit manifests itself in cyclical crisis. What I wanted to say is that constant capital indeed costs much more than 100 years ago, making exploitation of working class less profitable. Banks and corporations don´t have anymore notepads and pencils, but big information systems worldwide, which is way more expensive.

Maybe you can read this article and we can discuss about it, what do you think?:

http://www.marxist.com/Theory/rate_profit_glyn.html (mainly the second part entitled REPLY TO AG by MB).

comradely,

Luka