Capitalism's Fatal Flaw, and the Way Forward: Part 6.: Karl Seldon on Karl Marx Series. In Capital III, Marx Revised/Further-Concretized his Profit-Rate Model.

In Capital III,

Marx

Revised/Further-

Concretized

his

Profit-Rate

Model.

Part 6.:

Karl Seldon on Karl Marx Series.

GLOBAL STRATEGIC HYPOTHESES.

Dear Reader,

It is my pleasure, and my honor, as an elected member of the Foundation Encyclopedia Dialectica [F.E.D.] General Council, and as a voting member of F.E.D., to share, with you, from time to time, as they are approved for public release by the F.E.D. General Council, Karl Seldon’s commentaries on the world-historic breakthrough work of Karl Marx.

This 6th text in this by now long-running series is posted herewith, together with supporting text-images and diagrams [Some E.D. standard edits have been applied, in the version presented below, by the editors of the F.E.D. Special Council for the Encyclopedia, to the direct transcript of our co-founder’s discourse].

Seldon –

“In volume three of Marx’s “Capital: A Critique of Political Economy”, in Part III thereof, “The Law of the Tendency of the Rate of Profit to Fall”, at the end of Chapter XIII , “The Law as Such”, Marx revises, or rather, further concretizes, his profit-rate metric and model, bringing it a step closer to “the surface of [capitalist] society” [Marx].”

“Marx wrote: “The rate of profit must be calculated by measuring the mass of produced and realized surplus-value not only in relation to the consumed portion of capital, reappearing in the commodities [K.S.: e.g., Marx’s “c”], but also to this part plus that portion of unconsumed but applied capital which continues to operate in production [K.S.: let’s call this ‘f’, for the remaining, so far wear-and-tear undepreciated value of “fixed capital” for the give round of production].”*

“At this point in Marx’s argument, the profit-rate ratio is no longer just (s/(c + v)), but has developed/- ‘thought-concretized’ to s/(f + c + v).”

“Thus, at this stage in his systematic-dialectical exposition of the critiqued categories of classical capitalist “political economy”, Marx is no longer abstracting from the reality of “fixed capital”.”

“The latter ratio is not a question of “mixing up flows with stocks”, with f denoting a “static stock” of capital-value, and (c + v) denoting a “flow” of capital value. In any given round of production, a certain value of the wear-and-tear-still-undepreciated fixed capital “stock”, and the [“flow”] part of that fixed capital-value that was wear-and-tear-depreciated in that specific round of production, the c_d portion** of c, as well as the value of the wages paid out to the workers whose labor-power was consumed in that round of production, v, need to be considered as components of the total input that caused/enabled the commodity-capital-value output of that round of production. They need to be combined, and can be added together, because they are all commensurable in value-terms, i.e., as quantities of capital-value.”

“The principle informing this reformed form of profit-rate metric is this: all the capital-value that causally participates in the production of commodities and of their value, including their component surplus-value, must be included in the denominator, and measured against a numerator which represents the gain of value result of that production, i.e., of that causal participation; the gross gain, s, or, better, the net gain, s’.”

“The profit-rate ratio is to be a “gain ratio”, analogous to an “amplification factor”, a ‘value-effect divided by its value-cause ratio’, measuring the upper bound of the potential rate of accumulation of capital-value. It is to be an input-over-output ratio. If I denotes the capital-value Input to the production process, and O its capital-value Output, then the ratio (O/I) is the gross gain-rate ratio, and ((O – I)/I) is the net gain-rate ratio. Both are ‘causal gain-rate ratios’.”

“In terms of the value-components of Marx’s model of commodity value, namely (c + v + s); in Marx’s earlier-in-the-exposition, more abstract profit-rate metric, the s/(c + v) metric, with O = s taken as the, commodity-capital, value-output of the commodity production process, and with

I = (c + v)

taken as the capital-value input to that commodity-capital production process, Marx’s profit-rate metric arises as [commodity-]capital-value-output divided by capital-value input –

((c + v + s) – ( c + v))/( c + v) = (s)/( c + v).”

“To reformulate the above ratio-metric in terms of Marx’s two other key ratios, namely “the rate of exploitation of labor”, (s/v), and the “organic composition of capital”, (c/v), we can multiply the ratio above by 1, in the specific form of ((1/v)/(1/v)). But note that this ratio, to produce a defined multiplicand, presupposes that v is never equal to 0:

((1/v)/(1/v)) x (s/( c + v)) =

((s/v)/( (c/v) + 1)).”

“The, now a component-ratio, of this ‘ratio of ratios’, (c/v), is an imperfect index/proxy for the level of the social forces of production. The component-ratio (s/v) is an imperfect proxy for the resulting rate, increasingly, of “relative surplus-value” as opposed to “absolute surplus-value” [Marx].”

“With the concretization to s/(f + c + v), the above transformation produces, instead, the ratio –

((s/v)/( (f/v) + (c/v) + 1))

– implying a more ‘thought-concrete’, less-imperfect version of the “organic composition of capital” to be, instead of just (c/v), the ratio (f + c)/v.”

“Note that capitalists’ measure the, ‘thought-concrete’, “surface of society” profit rate, typically, as “ROI”; “Return On Investment”, R/I, but in an ideological and delusory way. They do not include labor-costs, wages, v, as part of their Investment. They denigrate labor costs as a mere “expense of doing business”, along with raw materials, auxiliary materials, power expenses, rent expense, interest expense, and taxes expense, etc. They deny human labor as a directly causal agency in the creation of their “Returns”. Their profit-rate metric, in terms of Marx’s variables, is something like (s/f).”

“There is much discussion today about recent accelerated progress in the development of the social forces of production, and of “fixed capital”, in the form of AI Android Robots, and the potential of such robots to replace human workers.”

“Elon Musk, and others, have even speculated about a tendency toward a complete replacement, in social production, of the human workforce, by such robots.”

“Were that to become possible, we would experience what we call ‘The Elon Musk Singularity’ –

Lim_v_à₀((s/v)/( (f/v) + (c/v) + 1)) à

((s/0)/( (f/0) + (c/0) + 1)) =

((¥)/( ( ¥) + (¥) + 1)) =

(¥/¥): “indeterminate”/“undefined”.”

“In future discussions, we will see how such a ‘robotization of production’ does not, as some today are wont to say, invalidate Marx’s “labor theory of value”.”

*[p. 229 in the New World paperback edition of 1967.].

**[Marx typically decomposes his “constant capital” category into three sub-categories – (1) wear-and-tear depreciation of fixed capital value, plus (2) the value of raw materials consumed in producing the commodity output, plus (3) the value of “auxiliary materials”, consumed in the process of that production, which can be conveniently notated as c_d, c_m, and c_a, respectively, such that –

c_d + c_m + c_a = c ].

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