Crisis of declining profit

[brawler5k2]

Hello again, I have another question. In many posts throughout this forum, I see posts talking about this theory, and although I have a basic grasp of it, I would like some more details about it. Books/papers on the subject, statistics proving its validity, historical precedents that help prove this theory, things such as those would help.

[ckaihatsu]

[23] A Business Perspective on the Declining Rate of Profit

http://s6.postimage.org/c0b0m6i25/23_A_Business_Perspective_on_the_Declining_Rat.jpg (http://postimage.org/image/c0b0m6i25/)

[The Garbage Disposal Unit]

Basically, the gist is that the return capitalists get on their investment (generally, not individually) tends to decline over time because the composition of capital in terms of constant capital (machines, raw materials, and incidental expenses) tends to increase as the means of production are revolutionized, relative to variable capital (labour).
I know that's pretty jargon-heavy, so let me break it down a bit:

1. To survive on the market, you need to be producing goods in a way that more-or-less conforms to what other capitalists are doing. So, for example, if your factory has a machine that lets you produce 100 chairs per employee per hour, and factory is still doing it by hand, you can bet you're going to run me out of business pretty fast. Consequently, I either need to pony up to buy the machines, or I'm SOL.

2. If me and every other capitalist are mass-producing chairs, the price of chairs is going to plummet. Consequently, the return on my machine-made chairs isn't going to be better than the return on my hand chairs even though I'm making a lot more of them.

3. Therefore, if I'm dropping more money on machines, the same on labour, and getting the same amount of money back for my chairs, my profits are going to be smaller. The only immediate way around this is attacking wages/working conditions - ie boosting my profits at the expense of labour.

Of course, this is really general, and there are a whole bunch of other factors involved: like, there are lots of ways to, if temporarily, get the rate of profit back "up" - blowing up a shit tonne of constant capital is one (aka war), straight-up stealing (for example, colonialism), the cheapening of constant capital, among other things. This also doesn't really grapple with financialization; all the ridiculous shell games and pyramid schemes that characterize the current capitalist economy (and periodically collapse to reveal the ugly truth - eg 2008).

[argeiphontes]

Here's a link to Marxist economist Andrew Kliman's paper (https://akliman.squarespace.com/storage/Persistent%20Fall%20whole%20primo%2010.17.09.pdf) on this, showing empirical proof.

It's also talked about in this video (https://kapitalism101.wordpress.com/the-falling-rate-of-profit/) on the kapitalism101.wordpress.com blog, which also has other excellent videos on Marx and Marxian economics.

[Alan OldStudent]

Here's a link to Marxist economist Andrew Kliman's paper (https://akliman.squarespace.com/storage/Persistent%20Fall%20whole%20primo%2010.17.09.pdf) on this, showing empirical proof.

It's also talked about in this video (https://kapitalism101.wordpress.com/the-falling-rate-of-profit/) on the kapitalism101.wordpress.com blog, which also has other excellent videos on Marx and Marxian economics.

That video from Kapitalism101 is especially good. I remember my father explaining a lot of that to me when I was about 10 or so.

Regards,

Alan OldStudent
The unexamined life is not worth living--Socrates

[ckaihatsu]

[T]here are lots of ways to, if temporarily, get the rate of profit back "up" - blowing up a shit tonne of constant capital is one (aka war)


I'd like to add that this step requires a fair amount of international cooperation and coordination -- as for world war -- because the question of which industries and companies stand to benefit from post-war reconstruction contracts could easily get out-of-hand.

This is precisely why private interests *require* a nation-state -- both to formulate war policy *and* to fund the military apparatus for the common good of the largest favored corporations.