What Will Make Capitalism Seriously Decline

[Wolf Larson]

Falling rate of profit (http://en.wikipedia.org/wiki/Falling_rate_of_profit) and hence living standards of the workers? (right now the credit system has avoided this). When lower living/workplace standards manifest a revolution will be possible (when the market can no longer expand). Not until the first world becomes second can the capitalist class be overthrown. You cannot overthrow a thing most people in the west support (even if we could it would = cold war/mutual destruction). Capitalism was not done expanding in Lenins time and it may not be done for another 50 years? It will take a sharp decline (end of expansion)....capitalism must remain fluid (perpetual growth)....like a great white shark must swim to breath. Not until the shark stops swimming will it be ready to die.... when the capitalist system does halt capitalists will still have the ability to maintain power- this is why a class conscious population is necessary in order to facilitate a socialist revolution or fascism will probably prevail and human progress will be halted. People had been saying (in Lenin's time) capitalism was just about ready to peak. That it would no longer "support further progress" and was ready to be overthrown. Marx didn't see capitalism as a entirely negative thing- he saw it as a necessary step in human social evolution. A step up from feudalism/manorialism/ mercantilism but not the end of human progress.

Read no 9 below on the list (half way down the wiki page), I can quote Marx himself explaining this:

"No social order ever disappears before all the productive forces for which there is room in it have been developed; and new higher relations of production never appear before the material conditions of their existence have matured in the womb of the old society itself. Therefore, mankind only sets itself such tasks as it can solve" Marx



Social progress is driven by progress in the material, productive forces a society has at its disposal (technology (http://en.wikipedia.org/wiki/Technology), labour (http://en.wikipedia.org/wiki/Labour_%28economics%29), capital goods (http://en.wikipedia.org/wiki/Capital_goods), etc.)
Humans are inevitably involved in production relations (roughly speaking, economic relationships or institutions (http://en.wikipedia.org/wiki/Institution)), which constitute our most decisive social relations (http://en.wikipedia.org/wiki/Social_relations).
Production relations progress, with a degree of inevitability, following and corresponding to the development of the productive forces (http://en.wikipedia.org/wiki/Productive_forces).
Relations of production (http://en.wikipedia.org/wiki/Relations_of_production) help determine the degree and types of the development of the forces of production. For example, capitalism tends to increase the rate at which the forces develop and stresses the accumulation of capital (http://en.wikipedia.org/wiki/Capital_accumulation).
Both productive forces (http://en.wikipedia.org/wiki/Productive_forces) and production relations progress independently of mankind's strategic intentions or will.
The superstructure (http://en.wikipedia.org/wiki/Base_and_superstructure_%28Marxism%29) -- the cultural and institutional features of a society, its ideological materials—is ultimately an expression of the mode of production (http://en.wikipedia.org/wiki/Mode_of_production) (which combines both the forces and relations of production (http://en.wikipedia.org/wiki/Relations_of_production)) on which the society is founded.
Every type of state (http://en.wikipedia.org/wiki/Sovereign_state) is a powerful institution (http://en.wikipedia.org/wiki/Institution) of the ruling class; the state is an instrument which one class uses to secure its rule and enforce its preferred production relations (and its exploitation (http://en.wikipedia.org/wiki/Exploitation)) onto society.
State power is usually only transferred from one class to another by social and political upheaval.
When a given style of production relations no longer supports further progress in the productive forces, either further progress is strangled, or 'revolution' must occur.
The actual historical process is not predetermined but depends on the class struggle, especially the organization and consciousness of the working class (http://en.wikipedia.org/wiki/Working_class).



http://en.wikipedia.org/wiki/Historical_materialism


But anyway, (classical) falling rate of profit is just one way for the system to become stagnant-computer chip technology is the thing which keeps the market expanding now...this wasn't around in Marx's time. This is why things like Moores law are important. <b>Or it could be a crisis of overproduction</b> which sparks a revolution - the point is it (revolution) will happen at capitalism's weakest point (which wasn't in Lenin's lifetime) but only if the working class is ready- what do you think will set the ball in motion? Could capitalism persist and survive another 100 years?

http://en.wikipedia.org/wiki/Moore%27s_law

Why would I bring up Moores Law? Computer chips are the foundation of our modern capitalist economy. They must keep coming out with smaller and smaller chips every 15 months or so to keep the market going- at a certain point, unless they come up with nanotechnology, the market will cease to expand because of the inability to make computer chips small enough. This may be one avenue or road to revolution. What do you think will spark the ultimate decline of capitalism (revolution)?

http://www.youtube.com/watch?v=VxAB7iBz8JU

[Wolf Larson]

I'm laughing at the typo title. It was obviously suppose to say "What Will Make Capitalism Seriously Decline".

Fixed. - Rjevan

[Starport]

You are not wrong to bring up the issue and the short answer is that no one knows for certain what main events will trigger “revolution” which is a process and not a single event. The vast amounts of ‘surplus’ capital flying around the system which can’t be invested profitably enough and which will have to be destroyed in order to return to profitability, is what is driving this current crisis. This is on a scale far greater than the same kind of crisis which triggered the greatest destruction of ‘surplus’ capital, technology, and labour in the WWII.

You don’t have to be a trained academic to speculate about what is now happening and is going to happen in this greatest of all destruction now unfolding. All the ingredients are present for widespread war and revolution all over the world.

[Wolf Larson]

I thought Moores Law was interesting. They say as early as 2015 computer chips will no longer be able to advance. If true, that should be front page news. The entire modern capitalist economy is built around exponentially advancing computer chip technology.

[Adi Shankara]

I thought Moores Law was interesting. They say as early as 2015 computer chips will no longer be able to advance. If true, that should be front page news. The entire modern capitalist economy is built around exponentially advancing computer chip technology.

Exactly, Capitalism is a ponzi scheme that can only succeed (in the view of capitalists, at least) if exponential growth is maintained; if growth falls, thus profits fall, stocks fall, wages fall, living standards fall--no development can mean a serious think for the end of capitalism as we know it...but hey ,I'm not complaining.

[Wolf Larson]

Moore's Law will end 'commodity capitalism'

Michio Kaku, a futurist and professor of theoretical physics at City University of New York, said Moore's Law (http://www.zdnetasia.com/news/hardware/0,39042972,39224422,00.htm) has enabled the wave of technology which society enjoys today. Moore's Law states that the number of transistors on a chip will double every two years, exponentially growing compute power and shrinking the size of devices.
However, this trend signals the end of "commodity capitalism" as computers and robots are increasingly equipped to take over mechanical and repetitive jobs, said Kaku, who was in town Tuesday as a keynote speaker at a forum organized by Singapore's A*STAR (Agency for Science, Technology and Research).
Countries that want to remain relevant in the future must then move to become knowledge-based economies, he said.

Kaku's scenario bodes well for Singapore, since the country does not have natural resources or a large mechanical labor force. Its focus on technology could place the island-state at the cutting edge of "intellectual capitalism (http://www.zdnetasia.com/news/business/0,39044229,62040243,00.htm)", the physicist said.
"The winners of the information revolution will be people whose jobs need common sense," he said, referring analysts, investors and leaders as examples. Manual vocations such as garbage collectors are also "safe", Kaku said, because computers cannot differentiate between what is garbage and what is not. "Policemen are safe too, because every crime is different," he said.
The "losers" are therefore those that can be replaced by a mechanical process, namely, middlemen, brokers, tellers and low-level sales agents, he said. Workers with repetitive jobs, of which a great number are middle-class jobs, have to think of ways to add value in order to survive, he warned.

"The future belongs to common sense," said Kaku.

Future of Moore's Law
According to the professor, if Moore's Law holds up, chips in the year 2020 will cost a penny a piece. This has great implications on the way society uses technology.
Kaku drew several examples of how technology can applied to sustain life, for example, by growing new body parts to eliminate tissue rejection or in suspended animation, where a person's life can be "paused" after suffering massive blood loss. Technology can also be used to grow "super rice" that can weather harsh conditions and feed more of the world's population.

Technology for productivity will also look different, he said, where the Internet, for instance, can be accessed through jewelry, glasses or contact lenses. To take the concept of "cloud computing" further, data files could follow a user from room to room as they move through terminals, he added.

Kaku said: "All of this sounds like science fiction, but it is based on what we can already do."

The future, enabled by constant Internet access (http://www.zdnetasia.com/news/software/0,39044164,39237186,00.htm), will also push society closer to a state of "perfect competition" in the marketplace, he said. Perfect competition, he explained, is an economics principle that states no single party has the power to influence the price of a good it sells. With constant connectivity through myriad devices, consumers will be able to check the prices of any product, helping to flatten the power of sellers in the marketplace.

http://www.zdnetasia.com/moore-s-law-will-end-commodity-capitalism-62047486.htm

( ^if we are able to keep the chips coming smaller and smaller it still looks like a shit storm for the working class^)

[Muzk]

The future, enabled by constant Internet access (http://www.anonym.to/?http://www.zdnetasia.com/news/software/0,39044164,39237186,00.htm), will also push society closer to a state of "perfect competition" in the marketplace, he said.
True free market capitalism because of the internet?

Ha-ha!

I'm using pseudo science!



Michio Kaku, a futurist and professor of theoretical physics at City University of New York

That's what happens when you let a physician try economics. Anyways, didn't we have a thread like this before where a 100 year old professor said we will all be extinct by 2100?

[Wolf Larson]

True free market capitalism because of the internet?

Ha-ha!

I'm using pseudo science!

Ya, I'd say he's not coming from a socialist perspective. Obviously his realm is physics not economics. The point stands, computer tech will change our economic system soon because of moores law. It will either exponentially advance our technological capabilities or halt expansion. Moores law isn't pseudo science. Try actually reading what I posted. And don't let the 'negative rep' fool you into thinking I'm clueless, that was done by moderators who are reformist Technocrats.

You should understand how fast Moores law dictates computer chips advance. If it keeps going, as it has been, we're going to see some very quick advances in technology soon. Things that will indeed push technological unemployment to a crisis point and if we can't make chips smaller and smaller the entire system will crash. :) Either way we're in for a big change in the next 20 years. More the reason to be serious about socialism.

[Sperm-Doll Setsuna]

Perfect competition is obviously something that cannot exist at all, nor would it be desirable for capitalism.

That aside, the professor seems to be on a lot about automatic mechanisation of labour, which would bode well for any socialist future- though, I guess as we all know in capitalism, this will never be used for progressive purposes--

[Robocommie]

Under socialism, heavily automated labour wouldn't be that big a deal. It could be very helpful. Under capitalism, complete automation could be catastrophic.

[Crimson Commissar]

Capitalism will bring about it's own downfall. And that will be when the working class strikes the final blow, ending it once and, hopefully, for all. What we should be asking ourselves, is when will it happen?

[REVLEFT'S BIEGGST MATSER TROL]

Falling rate of profit (http://en.wikipedia.org/wiki/Falling_rate_of_profit)




Can you please explain the falling rate of profit in more detail?

I never really got the concept - why does labour have to the the only way capitalists can make money?

[Tablo]

Can you please explain the falling rate of profit in more detail?

I never really got the concept - why does labour have to the the only way capitalists can make money?
Without workers selling their labor they can not make money to waste on the Capitalists products. I think that is what you were referring to...

[Robocommie]

Without workers selling their labor they can not make money to waste on the Capitalists products. I think that is what you were referring to...

I don't know if the money is "wasted" on products. Commodities have a purpose.

[NGNM85]

I'd been privately musing about this, myself. In some ways, I wonder, if technology keeps growing by leaps and bounds, if the present systems of exploitation might just render themselves obsolete. It's all built on scarcity. Once resources become infinite, or simply sufficient to satisfy virtally everybody's needs, it might just fizzle out.


Incidentally, I posted a free e-book about this, called "The Lights in the Tunnel; Automation, Accelerating Technology, and the economy of the Future" in the Transhumanism thread. I've been neglecting it, but it seems pretty interesting, and it's free, so help yourselves.

[Tablo]

I don't know if the money is "wasted" on products. Commodities have a purpose.
Yeah, sorry. Didn't mean for it to sound like that. :blushing:

[Robocommie]

Yeah, sorry. Didn't mean for it to sound like that. :blushing:

Hah, you don't have to apologize, I was just quibbling. :)

[Nothing Human Is Alien]

Can you please explain the falling rate of profit in more detail?Basically capitalists are forced to continue to advance their technology. This means they invest more and more in machinery. The capitalists eventually invest a larger portion in tools, materials, etc., than they do in the labor needed to work them. The new machinery enables their enterprises to produce more with less labor. Fewer workers / fewer hours worked, means their is less surplus value being created (see below).


I never really got the concept - why does labour have to the the only way capitalists can make money?Because labor-power is the sole force capable of creating value.

Say I am a capitalist who owns a shoe factory. I buy a shoe making machine for $1,000,000. I buy the raw materials to make shoes (leather, rubber, etc.) for another $1,000,000. So I have $2,000,000 worth of tools and materials. It's not until I purchase labor power that new value is added.

Rather than receiving the full value of their labor, workers are paid only a portion of the value they create.

Say each worker in my factory puts together $240 worth of shoes in an eight hour work day. That means they create $30 per hour. But I only pay each worker $60 a day, so I've really only paid them for 2 hours of their labor. I take the value they created in the other 6 hours for myself. That is surplus value.

Profit is what's left of the total value after subtracting the costs of tools, materials, etc.

So, back to the original question, say I am forced (by competition, need for new products, expansion, etc.) to keep updating my shoe making machinery to the point where I have invested 99% of what I have in tools, warehouses, and the like. I only have 1% invested in labor -- the part that creates value. I have reached a point where I am not gaining enough to justify my total investment.

This is admittedly a very basic example. As this sort of thing happens in general, the capitalists seek to cut labor costs to increase the surplus value they reap (as can be seen in the U.S., where over the last few decades workers have received less pay despite becoming more productive). Still, I hope this has been of some help.

Further reading:

Value, Price and Profit by Karl Marx (http://www.marxists.org/archive/marx/works/1865/value-price-profit/index.htm)

Wage-Labor and Capital by Karl Marx (http://www.marxists.org/archive/marx/works/1847/wage-labour/index.htm)

Anti-Dühring Chapter VII. Capital and Surplus Value by Frederick Engels (http://www.marxists.org/archive/marx/works/1877/anti-duhring/ch19.htm)

Capital Volume III, Chapter 10. Equalisation of the General Rate of Profit Through Competition.Market-Prices and Market-Values. Surplus-Profit. by Karl Marx (http://www.marxists.org/archive/marx/works/1894-c3/ch10.htm)

[Niccolò Rossi]

Capitalism is in decline.

Nic.

[BAM]

Say each worker in my factory puts together $240 worth of shoes in an eight hour work day. That means they create $30 per hour. But I only pay each worker $60 a day, so I've really only paid them for 2 hours of their labor. I take the value they created in the other 6 hours for myself. That is surplus value.

Profit is what's left of surplus value after subtracting the costs of tools, materials, etc.

That's not quite right, and getting it wrong has an important bearing on the argument over the declining profit rate.

The total value C of a product = constant capital c (raw materials/machinery) + variable capital v (wages) + surplus value s.

Thus:

C = c + v + s.

It then follows that:

s = C - (c + v)

The surplus value is total value minus constant and variable capital.

By paying your workers $60, you are not only paying them for 2 hours of labour, because you haven't deducted the costs of raw materials. The raw materials/machinery also transfer their value into the final commodity, but only labour transfers more value than is required to reproduce it.

The rate of surplus value (rate of exploitation) is written s / v. It is the ratio of unpaid to paid labour.

However, the rate of profit is measured differently. Profit p is the ratio of surplus value measured against the entire capital advanced, not just the variable capital:

p = s / (c + v)

The ratio of c:v Marx calls the organic composition of capital, which necessarily increases over time as capitalists introduce labour-saving machinery. As the mass of constant capital is set in motion by a proportionally smaller amount of variable capital, the surplus value relative to the entire capital advanced will decline, hence the declining rate of profit.

NB, this is just a tendency and there are numerous circumstances that will work to modify this.

See Chapters 13-15 of Volume III.

[BAM]

I forgot to mention above that profit p is equal to commodity value C minus cost price k, which is equal to constant and variable capital (k = c + v). Thus:

C = k + p

and we can then say that:

p = C - k

The reason c and v are added together to form k is because that is how it appears in the everyday sense. Labour is not treated as the value-forming substance - it is just a cost - and there is therefore no distinction made between profit and surplus value.


The profit, such as it is represented here, is thus the same as surplus-value, only in a mystified form that is nonetheless a necessary outgrowth of the capitalist mode of production. The genesis of the mutation of values that occurs in the course of the production process, must be transferred from the variable portion of the capital to the total capital, because there is no apparent distinction between constant and variable capital in the assumed formation of the cost-price. Because at one pole the price of labour-power assumes the transmuted form of wages, surplus-value appears at the opposite pole in the transmuted form of profit.

[Robocommie]

oh my god, it's math, noooooo :lol:

[BAM]

The mathematics is not complicated. If you can add up 1 + 2 = 3, then you can understand C = c + v + s.

:)

[Nothing Human Is Alien]

You said the same thing I did symbolically. The original poster didn't ask for someone to reproduce the equations written in Capital, he asked for someone to explain it.

Simply put:

Necessary labor time is the time workers must work to produce the equivalent of what's needed to keep them alive and functioning. Surplus labor time is the time the workers put in but aren't paid for.

Profit is what's left of the total value after deducting the costs of labor, tools, materials, etc. (constant and variable capital).

The rate of surplus value is surplus value divided by labor costs. The rate of profit is surplus value divided by total capital invested.

"The value contained in a commodity is equal to the labour-time expended in its production, and the sum of this labour consists of paid and unpaid portions. But for the capitalist the costs of the commodity consist only of that portion of the labour materialised in it for which he has paid. The surplus-labour contained in the commodity costs the capitalist nothing, although, like the paid portion, it costs the labourer his labour, and although it creates value and enters into the commodity as a value-creating element quite like paid labour. The capitalist's profit is derived from the fact that he has something to sell for which he has paid nothing. The surplus-value, or profit, consists precisely in the excess value of a commodity over its cost-price, i.e., the excess of the total labour embodied in the commodity over the paid labour embodied in it. The surplus-value, whatever its origin, is thus a surplus over the advanced total capital. The proportion of this surplus to the total capital is therefore expressed by the fraction s/C, in which C stands for total capital. We thus obtain the rate of profit s/C=s/(c+v), as distinct from the rate of surplus-value s/v." - Marx (http://www.marxists.org/archive/marx/works/1894-c3/ch02.htm)

[BAM]

You said the same thing I did symbolically. The original poster didn't ask for someone to reproduce the equations written in Capital, he asked for someone to explain it.

no I didn't. You got it wrong - as you have done again (see below) and I corrected it.


Simply put:

Necessary labor time is the time workers must work to produce the equivalent of what's needed to keep them alive and functioning. Surplus labor time is the time the workers put in but aren't paid for.

Surplus value is the product of unpaid labor.

Profit is what's left of surplus value after deducting for tools, materials, etc. (constant and variable capital).

The rate of surplus value is surplus value divided by labor costs. The rate of profit is surplus value divided by total capital invested.

Surplus value is what is left of the total value of the commodity after constant and variable capital are deducted.

The reason I wrote it in an equation is because it exposes your very basic error.

If, as you say, profit is surplus value minus constant and variable capital, it would be:

p = s - (c + v)

which makes no sense.

[Robocommie]

The mathematics is not complicated. If you can add up 1 + 2 = 3, then you can understand C = c + v + s.

:)

Oh yeah, and actually the formulas are really quite simple (certainly easier to understand than explaining econ in words anyway) but they look intimidating as hell at first glance.

[Nothing Human Is Alien]

You're right. I made a mistake in my attempt at explaining it.

I should have said profit is what's left of the total value after subtracting the costs of tools, materials, etc.

I've gone back and corrected it.

Here's a basic example:

I own a shoe factory.

In one day, 1000 pairs of shoes are made in my factory.

The creation of that 1000 pairs of shoes costs me $10 in machinery use, $10 in raw materials and $480 in labor costs. That's a total of $500.

I sell those 1000 shoes for $2000. I have gained $1500.

2000 - 480 - 10 - 10 = 1500. That's the profit. It's the total value of the products minus the costs of labor (variable capital) and tools, materials, etc. (constant capital).

1500 / 480 = 3.125. That's the rate of surplus value.

1500 / (480+10+10) = 3. That's the rate of profit.

The rate of surplus value shows how much of the workers' day is given to the capitalist without pay.

The rate of profit shows how much the capitalist gained on his original investment.

[BAM]

You're right. I made a mistake in my attempt at explaining it.

that's cool. I realise I sounded a bit like a nit-picking bastard myself! Actually, I made a small error too. I put rate of profit as p = s / (c + v) when it should be p' that denotes rate of profit, to distinguish it from mass of profit p.

Just one further thing:


1500 / 480 = 3.125. That's the rate of surplus value.

1500 / (480+10+10) = 3. That's the rate of profit.

It would be better to express the rates as percentages, ie: rate of surplus value = 312.5% and rate of profit = 300%.

Needless to say, I don't want to work in your factory with rates of exploitation like that!

[BAM]

Oh yeah, and actually the formulas are really quite simple (certainly easier to understand than explaining econ in words anyway) but they look intimidating as hell at first glance.

Yeah, I'm not an expert in maths at all. I haven't studied any since I left school at 16. When I first picked up Capital I was intimidated by the formulas but Marx does a really good job of explaining where he is going with them and they are a very convenient way of quickly explaining what he's talking about.

I also think that that side of Marx's analysis gets downplayed because people have some kind of built-in aversion to mathematics, but they are absolutely necessary to the whole argument. After all, mainstream/"bourgeois" economics will justify itself mathematically and Marxist economics should also be able to argue on that terrain. Not only that, but the "qualitative" critique of capitalism in terms of alienation and so on can be shown quantitatively as a sum of unpaid labour that is turned against the workers themselves, invested as profits, and so on.

[Nothing Human Is Alien]

http://www.youtube.com/watch?v=9oXEgH4HzYk

http://www.youtube.com/watch?v=x7RjbEq_yxU

[berlitz23]

I think Gilles Deleuze and Guattari's Anti Oedipus projects a cone of light on the perpetual flux and trajectory of Capitalism: "Capitalism constantly counteracts, constantly inhibits, this inherent tendency while at the same allowing it free rein; it continually seeks to avoid reaching its limit while simultaneously tending toward that limit."
Since Capitalism is predicated on a falling rate of profit as well, it ultimately thrives on its self-induced crisis enabling it to maintain its rate of profit. Capitalism is conservative in its outlook, strictly embracing innovation when it does so therefore corporations manufacturing technological products that have greatly restricted our sphere of freedom, a freedom that is channeled towards social sanctioned avenues especially consumerism. Essentially, I don't know if we can label our contemporary socius as capitalist, yet something analgalous to more 'mercantile corporatism'. A Corparatism that is overbloated, cannibalizing and transmogrifying.