Data on Rate of Profit

[BobKKKindle$]

In an earlier thread I made a brief note about whether Marxism could be classified as a Science. Surely if we can classify any scientific theory as offering a correct description and explanation of the behaviour of the natural (or, in the case of Marxism, human) world, empricial observation and recording should support the predictions of the theory in question? Conversely, If our findings do not support the theory and we are unable to revise our theory so that the evidence is compatible, that would suggest that the theory is wrong.

Given that the central contradiction according to Marx is the tendency of the rate of profit to fall over time, notwithstanding certain countervailing trends such as increases in absolute and relative surplus value, is there any data avaliable (preferably from a non-Marxist source) that supports this hypothesis - which shows a fall in the rate of profit over the course of Capitalism's development. In addition, is this correlated with an increase in the organic composition of Capital (again, if such information actually exists) which would enable us to assert the 'correctness' of our economic theory?

If such a tendency, based on empirical observation, does not exist - if, for example, the rate of profit has risen over time or remained stable - can this be entirely attributed to countervailing trends, especially those noted by Marx - or is this sufficient grounds to reject Marx's crisis theory and potentially - if information regarding the organic composition of Capital is also contrary to his predictions - the entire basis of Marxist economics - the LTV?

[JazzRemington]

I think this would be difficult because Marx said that while the absolute rate of profit was going down, the margin of profit could increase through cutting costs and increasing productivity. According to the Statistical Abstract (table 772) corporate profits before taxes rose from $718,270,000,000 in 1998 to $1,059,332,000,000 in 2005, with a slight drop off between 2000 and 2001. But it is unknown if this is the absolute rate of profit or a widening margin of profit.

[RebelDog]

I think it is likely that in this globalisation phase of capitalism we can at least see clear signs of the rate of profit being artificially maintained. Here in the UK we have something called the 'private finance initiative' which was first introduced by the Tories and has since been enthusiastically continued by New Labour. In short, (PFI) is a system of financing, building and maintaining public works/buildings such as hospitals, schools and major utility projects such as water systems. It is a system whereby politicians and councilors actually argue that public funded projects are no longer affordable and we must seek 'private investment' to ensure these services keep functioning. This system, which is also cynically referred to as the 'public-private partnership' has led to projects costing sometimes 10 times the cost of direct public funding. A very simple Marxist critique of this process clearly shows the simple 'engineering' of profit for the bourgeois class. A con artist would be jailed for a trick similar to PFI. Its the channeling of public funds in to private hands and its sheer, utterly conspicuous theft of public money. It takes a genius to convince rational people of the benefits of PFI and a madman to accept it. For me it shows the tendency of the rate of profit to fall and the state can only intervene for so long to artificially 'preserve' profit for the bourgeoisie. The bourgeoisie used to be content with the public works building contracts. They are now instances of public building projects such as new schools where the a new building is actually not needed or the new build is too big. This is madness, clearly, but we must remember PFI exists to get money from the public sector to the private sector and not to properly manage the efficient building of new schools.

One could seriously argue that a fundamental reason for the Iraq war happening is another, albeit sadistic, version of the British PFI. First flatten a country and boost arms manufacturing profits, but most importantly boost bourgeois profits by having them build it up again. The destroyed structures were, in pre-war, Iraq already built, solution, destroy them and reap the contracts for re-build. If it doesn't need built, destroy the existing infrastructure and profit from the re-build. It seems like madness to us but makes great sense for the bourgeoisie.

We have to ask ourselves what would the bourgeoisie do if they faced a profit crisis? They will invent ways of securing a greater share of the surplus value pool and look to the massive untapped profit resource that is state controlled sector of the economy. Piece by piece their state managers are telling us that the only way forward is to let private companies in to state sectors such as health and education. Institutions such as the world bank and the IMF ensure that this trend is repeated worldwide.

The organic composition of capital is, for me, an irrefutable sign of the rate of profit to drop. I work in a food factory for a huge company that has invested in machinery to the extent that a crude estimate sees 1 person producing what 10 people produced 10 years ago and I am being conservative with that figure. Profit must drop in the long run if this is the trend. It must take me a matter of days to produce the calories I would need for a whole year. We are well aware that workers produce their own wages and profit so we must draw the conclusion that, in the long run, with less workers a given process produces less wealth. For capitalism, as a whole, the concept is repeated. A worker who is made redundant by machines has the same commodity purchasing power as the machine itself, and that of course is none.

I believe that globalisation is the last phase of capitalism. It may take a while to die but through globalisation it has given up the possibility of regulating its dissent in to profitless economy. Capitalism is doomed and the whole concept of the rate of profit to fall is essential in its downfall.