Capital and The Falling Rate of Profit

The western capitalist States (and Japan) have taken over massive debts from the private economy to stimulate growth over the last ten years (especially last 4 years to bailouts), have thrown trillions at the banks to invest into the real economy, the FED and ECB have lowered central bank interest rates to historical lows (risking inflation), have taken over the debts from the banks, been the debtor of last resort, while even though the banks are having all this money thrown at them, corporations subsidised, capitalists gotten massive tax cuts etc.; no one is investing into the real economy. During 2010, there was a minuscule boom, small and very worrying to economists that this large crash in 2008 did not create a bigger boom.


While there already is high unemployment, the EU neo-liberal governments are cutting more jobs, social programs for people's basic needs and these policies causing/to cause a rising lack of consumer demand in the west. Until now, the Capitalists have gotten through the last ten years by using the profits they made from the (debt driven) Consumer production Industry to invest into the Capital Goods Industry in which they themselves control demand. But Machines do not buy machines, the consumer production sector is the basis of the economy; robots do not buy consumer items. An increased lack of consumer demand in the looming debt crisis means that the consumer production sector that has been been used by capital to invest heavily into the booming Capital Goods market, will crash. When the consumer production sector (which had always had [has in normal times] profits used for the Capital goods sector) sees defaults in a massive way (when this debt scheme collapses), the Capital Goods market will also crash. When the Capital Goods (machinery industry, cargo good etc.) market follows the crashed consumer economy, then the workers of that sector will be laid off and it is Exitus for Capitalism:

With the underlying Low Rate of Profit of the production process (such a low rate of profitability of the production process that Porsche makes 93% of its profits from financial speculation, "Hedgefond with car sales" as the german press called them; No Capitalists are investing into the real economy although there is massive subsidisation(!). VW has 97% of its "Kapitalzusammensetzung" on machines and only 3% on workers wages), it is unfeasible that the private capitalist economy can be revived. If the debt cycle is "renewed" (either in form of State Default, hyper-inflation [this on the most likely], austerity/privatisation, higher taxation or a mix of them) it still will not be profitable for capital to invest into the production process;
The production process in the most advanced capitalist countries such as Germany, Japan, USA etc. has nearly been fully automated, replaced machines with live exploitable labor, placing the Rate of Profit of the production process at 2% in the US (below the average banking interest rate since the last ten years), with only more piles of Debt, state subsidization, arms manufacturing from 9/11 and market bubbles having sustained the advanced economies, not to mention the "normal"-ised suppression of western workers' wages along increased productivity. According to Jeff Faux and his new book "The Servant Economy", the american and therefore hegemonic western, ruling class has set itself to to further lower workers' wages and rigidly hold on to this neo-liberal path.


The amount of machines that have replaced live exploitable labor, has spelled a near to complete automation of production in advanced capitalist countries' industry. Even if the old debts are rid, the Rate of Profit of the production process is too low for capital to invest into it, profitability has collapsed due to the advance of the productive forces. To quote Marx: "It is not what is made but how, and by what instruments of labour, that distinguishes different economic epochs. Instruments of labour not only supply a standard of the degree of development which human labour has attained, but they also indicate the social relations within which men work."

The looming crisis will be one in which the question will have to be asked why all the advanced means of production we have, should not be used to fulfill human needs, contrary to profits and capital, which do not function even for its own purposes anymore.

To be honest, I think, in general, production value is being held in a light that it shouldn't be anymore. Neo-liberalist policies, especially those of capital market liberalization and derivatives allow billions upon billions of dollars to be made out of money. Not to mention the moment it becomes less expensive to build automated assembly lines for everything, it'll happen. The technology exists, the price just has to be right. The concept of the political economy is more important now than ever as the economic and system and political system rely on each other to function the way they do.

Ridiculous! Live Labor is the Source of Capital! When the C constant capital replaces v variable capital, i.e Live Labor, the s/(c+v) Rate of Profit hits zero and Capitalism hits the wall! End, finished, exitus.

I'm not saying labor plays no role in capitalism, it plays a very large role at the moment, but we can't ignore that the current system of capitalism allows for billions of dollars to be made with out it. You can make millions of dollars on a derivative "betting" on whether or not it will be sunny tomorrow in NYC. What's the best way to stop a worker movement? Make the workers irrelevant. And as time goes on, it's going to become more and more true. Unless action is taken now when live labor still plays a major role in production and profit making there won't be a chance later.

I'm not saying labor plays no role in capitalism, it plays a very large role at the moment, but we can't ignore that the current system of capitalism allows for billions of dollars to be made with out it. You can make millions of dollars on a derivative "betting" on whether or not it will be sunny tomorrow in NYC. What's the best way to stop a worker movement? Make the workers irrelevant. And as time goes on, it's going to become more and more true. Unless action is taken now when live labor still plays a major role in production and profit making there won't be a chance later.

Ha! I am Loughing really hard now! OK: The function of a system is centrally to be able reproduce life itself, that means material production.

The US economy uses 25% of the world's oil to feed its capital-ist economy, which by its own internal logic needs to always grow, reproduce and expand societal value to survive. (Surplus) Value is only created by live exploitable labor. As the Constant Capital (machines) replaces Variable Capital (Live Labor) in the production process, the Rate of Profit (S/(C+V) of the Production process falls.

Now, the German Labor force is to 33% employed in industry while in the United States it is 29%. The Industrial production's economic welfare (that is reproduction and growth of capital) is central to the whole economy's welfare. The US for instance has over 3 Trillion dollars of its yearly GDP economy from Real Estate, Banking and Insurance; the real estate sector relies on growing material production of wood, steel, concrete, plastic etc. and on house building Companies' growth to be able to sell increasing houses to grow their company and keep getting investment in competition to other real estate agencies. Insurance agencies need to have growing amount of customers/companies that produce a surplus for them to insure more clients than the competition and rely on having enough surplus from companies in contrast to insuring failed companies/clients, Banks rely on companies that grow their wealth on bank accounts to further have enough/more money than the competition to invest into the real economy. If your company does not grow its capital, does not make profits, it will go under due to the competition, will go bankrupt, everyone fired. You see, the growth of material output is a necessity to a functioning economy/system, but since ten years the Rate of Profit of the Productionprocess in the advanced capitalist countries has been below the financial interest rate, leading to large scale financialisation of capital and declining investment into industry. The more machines replace live labor, the more Capitalism strangles itself, the last ten years have merely been cheating, the capitalists asking for trillions in tax cuts, subsidies, bailouts and now public property and social cuts. A Socialism of the Rich has been saving capital, but the debt scheme is soon to collapse and Capital defeated in the west.
Capital is doomed, i give it a few dozen months in the west.

By the way, when i write "Capital defeated in the west" i do not mean to say that we have won, no; merely that not only the existing reactionary form of capitalism will no longer exist, but capital, the basis of this system, be historically obsolete.