Capitalism’s Fatal Flaw... Part 1.

Dear Reader,

GLOBAL STRATEGIC HYPOTHESES.

Karl Marx, in his 1859 Preface to his book A Contribution to the Critique of Political Economy, wrote an ‘historically generic’ account of the process of human-social ...evolution/revolution/evolution/..., such as it had emerged from his exhaustive historical researches, as follows:

“The general conclusion at which I arrived and which, once reached, became the guiding principle of my studies can be summarised as follows.”

“In the social production of their existence, human beings inevitably enter into definite relations, which are independent of their will, namely, relations of production appropriate to a given stage in the development of their material forces of production. ... At a certain stage of development, the material productive forces of society come into conflict with the existing relations of production.... From forms of development of the productive forces these relations turn into their fetters. Then begins an era of social revolution ... .” [pp. 20-21]

[M. Dobb, ed., K. Marx, A Contribution to the Critique of Political Economy, NY: Internat’l. Publs., 1972 [text modified for gender-inclusivity.]]

The question for us herein is this: “How does the historically general “guiding principle”, described above, apply, ‘‘‘historically-specifically’’’, to the “historically-specific”, late-capitalist, state-capitalist epoch of the self-development of the human species within which we presently reside?

How does “the growth of the social forces of production” -- the growth of the society-reproductive self-force of the societal self-reproduction of the human species, initially promoted by industrial-capitalist social relations -- come into conflict with the primary “social relation of production” of the capitalist epoch, i.e., with the “capital[/wage-labor]-relation” itself?

[For more regarding the extended-Marxian concept of 'the human societal self-force of human-society expanded self-reproduction', see the following earlier entries to this blog --

part-1-of-4-heart-and-soul-of-marxian.html

http://capitalismsfundamentalflaw-wayforward.blogspot.com/2013/05/part-2-of-4-heart-and-soul-of-marxian.html

http://capitalismsfundamentalflaw-wayforward.blogspot.com/2013/12/part-3-of-4-heart-and-soul-of-marxian.html

http://capitalismsfundamentalflaw-wayforward.blogspot.com/2014/03/part-4-of-4-heart-and-soul-of-marxian.html]

Here’s how.

Early in the development of the social-reproductive self-force of human society, within, and by, the capital-relation, the physical mass, and, typically to a lesser extent, the ‘‘‘value-mass’’’, of the [non-human-bodily] means of production is small, relative to the physical mass, and to the ‘‘‘value-mass’’’, or “cost”, of the living human bodies, the workers, employed to produce the profitable commodity-capital that the capitalists appropriate, "own", and then sell.

E.g., workers produce commodities using relatively inexpensive hand tools.

But the interaction among capitalists, via their “individual capital” enterprises -- “the competition of capitals” -- drives a continuing increase in the relative physical mass, and, typically to a lesser extent, in the ‘value-mass’, of such means of production.

It does so because the productivity increases -- i.e., the increases in “productive force” -- driven by these advances in the means of production, and in the related skills of the workers who employ and apply those means of production -- including, especially, the development of “fixed capital” machinery -- means, in net terms, more profit.

Such greater productivity means more profit because higher productivity means that more of each worker's working day labor-time goes into producing commodities that accrue to “relative surplus value” -- to the portion of the aggregate value of the commodities output that converts, in part, into profits, when those commodities are sold at their value.

It does so because less of each working day goes into producing the commodities whose value is an equivalent for the wages paid to those workers -- a non-profit part of what the workers produce.

This profit advantage incentive drives the development of the means of production.

However, this drive, within the capital-social-relation-of-production, to grow the societal [[self-]re-]productive force, is, all along, but, especially, later on, a double-edged sword for the capital-relation itself, although, at first, the 'capital-cutting' edge of this two-sided blade is scarcely noticed by, or even noticeable to, the capitalists.

Productive force increase is double-edged for accumulated capital-value, especially for capital-value as accumulated in the form of means of production, and thus also for the economico-politico-social power which attaches to the ownership of that accumulating capital-value.

Advancing society-productive, [societal [self-]re-]reproductive force -- advancing “technology” -- technologically depreciates the capital-value of the capitalists’ means of production.

Technological advance devalues accumulated older capital-value, by technological obsolescence depreciation, or “moral depreciation” -- ‘technodepreciation’, for short.

Productive force increase in the form of productivity-increasing technological advance forces the "premature" retirement of "capital equipment" -- capitalist means of production -- that have been rendered obsolete by competition from capitalists wielding the more technologically-advanced, more productive capital equipment.

Productive force increase in the industries producing means of production also means that the "abstract labor-time" cost of producing again a new vintage of "the same" capital equipment is lower than that cost was in the past, so that the capital-value of "the same" capital equipment, old and new alike, falls.

The capitalists caught holding the older, more expensive equipment can be forced to reduce the prices of their output to meet price competition from capitalists wielding the newer, less expensive equipment.

In effect, the "old-holding" capitalists are, in such cases, forced to lower the "wear-and-tear" depreciation charge component of the prices of their output.

They are thus, in effect, in so doing, devaluing their old-vintage capital equipment -- writing off into their loss column part of the "original" or "historical" capital-value of that capital equipment, which it garnered at the time of its purchase, but which it garners no longer, since its cost of production has fallen via increases in the productivity of its type of machine-making.

They are thus forced to DIS-accumulate part of their accumulated capital-value, which, 'net-ing out' against their gross profits, will reduce their net profits, or even drive those net profits into negative -- loss -- territory, for the accounting period in which this devaluation of their capital-equipment is recognized.

What if the average rate of technological advance, hence of technological obsolescence depreciation of fixed capital, eventually exceeds the rate of “wear and tear depreciation” amortization of that same fixed capital?

If it does so, then the original cost of capital equipment will not have time to be recovered, by capitalists charging wear-and-tear depreciation expenses as a component of their commodity-output prices, before the equipment must be scrapped due to obsolescence depreciation, e.g., under competitive pressure from newer, etc., enterprises, that have installed newer, more productive equipment.

If so, then the “undepreciated portion” of planned future "wear-and-tear" depreciation charges on the older, competitively obsolete capital equipment, must be “written off” as a loss, a negative contribution to accounting period net profit -- subtracted from gross profits for the accounting period in which the partial or total “scrapping” of that obsolete, or devalued, capital equipment occurs.

If such technodepreciation-induced “write-offs” regularly continue, and, even worsen, if they accelerate, accounting-period after accounting period, profitability will fall secularly.

Moreover, if the periodic increment of relative surplus value, and of profits, gained by scrapping older equipment, and by replacing it with newer equipment, is small compared to the value of the [fixed] capital “written-off”, then this may manifest as a secularly declining rate of return on capital investment.

Later capitalism has -- more specifically, the owners of concentrated industrial capital in later capitalism have -- more and more to lose from further growth of productivity -- from further growth of the "productive forces" -- [more and more fixed capital-value, exposed to technodepreciation, relative to all other components of operating capital-value], and less and less to gain from further growth in the "social forces of production" [as the portion of the working day that reproduces wages -- the portion from which additional relative surplus-value can be wrested by further productivity increases -- shrinks asymptotically, approaching ever closer to zero].

For a vivid example of what this means, consider what would happen, to the social power of the core of the contemporary, concentrated capital-owning capitalist ruling class, much of whose economic, political and social power, is founded upon their “global dictatorship of petroleum”, if fusion power reactors were deployed world wide.

The capital-value of oil industry fixed capital plant and equipment owned by that core ruling class would plummet and, in proportion to this disappearance of the bulk of their accumulated capital-value, so would the power of this core ruling class -- their power to "buy" other people: other capitalists, military officers, politicians, legislators, judges, policemen, journalists, scientists, servants of all kinds, sexual subservience and other "perks" of their power, etc., etc. -- also disappear.

This is why every scientist, engineer, and inventor who has demonstrated a reactor attaining a successful fusion reaction has been swiftly done away with by this core ruling class faction.

This is why that ruling faction has funded the proliferation of anti-science, anti-technology, “neo-primitivist”, 'pro-mystoid', “back to nature”, “small is beautiful”, “zero economic growth”, “zero population growth”, “eugenics”, “global warming”, ‘pro-humanocide’ ideologies [not to mention their funding and other engineering of the global proliferation of Dark Ages neo-"religions" -- including "fundamentalist", theocratic-totalitarian, genocidal pseudo-Christianity, "fundamentalist", theocratic-totalitarian, genocidal pseudo-Islam, "fundamentalist", theocratic-totalitarian, genocidal pseudo-Judaism, and "fundamentalist", theocratic-totalitarian, genocidal pseudo-Hinduism -- all as a divide and conquer strategy against the working class, and as a "justification" for the reflation of their Military-Industrial Complex, otherwise threatened with collapsing funding due to the collapse of Stalinist, totalitarian, genocidal state-capitalism in Russia/Eastern Europe].

Again, this general fall in the rate of return on capital invested is especially likely, in the later stages of capitalist accumulation, if, in those stages, the value of fixed capital plant and equipment dwarfs the value of wages, this dwarfing being, itself, an expression of the high level of social reproductive force already attained, for it is the growing physical mass, and, secondarily, the growing 'value-mass', of the machine means of production that enables the growth of commodity-production productivity.

Again, this is also especially likely if, given the advances in productivity, or in “productive force”, already achieved, the value of wages is already a tiny percentage of the value of the commodities produced, so that only a tiny percentage of the working day remains as the percentage of daily working time that reproduces the value of wages, of the wages-expense.

For this means that only a tiny amount of additional potential relative surplus-value is available, per worker, to be reaped as such by further increases in productivity.

So, on the one hand, increasing productive force adds to profits, by increasing the rate of relative surplus-value, although at an ever-diminishing rate, for the reasons cited above.

But, on the other hand, increasing productive force devalues accumulated fixed-capital-value, subtracting from gross profits, due to the "write-off", contra gross profits, of that devaluation that arises due to ‘technodepreciation’.

This nets out on the side of rising net profits during the earlier stage of the self-evolution of the society founded upon the capital-relation, when fixed capital-value is but a small percentage of the total capital-value employed, this smallness reflecting the then lower level of the social reproductive force.

That early stage is the ascendant phase of the capitalist system.

This nets out on the side of falling net profits -- falling rates of return on capital investment -- during the later stage of the self-evolution of the society founded upon the capital-relation, when fixed capital-value becomes a gargantuan percentage of the total capital-value employed, reflecting the gargantuan level of development of the societal-reproductive force -- unless the capitalist ruling class undertakes catastrophic steps to block, divert, and undermine this capital-value-destroying growth of human-social self-productive force.

That later stage, in which we now reside, since circa 1900, and which is characterized, e.g., by global economic depressions, world wars, genocides, and, potentially, by global revolution, is the descendant phase of the capitalist system.

Those catastrophic steps are the core of the enfetterment, by the capital-relation -- and, consciously, by the core of the capitalist ruling class, as a class-for-itself -- of the further growth of the social forces of production.

This ‘intra-duality’, or ‘‘‘self-contradiction’’’, of the capital-relation -- of ‘“self-expanding capital-value”’, due to the increase in relative surplus-value wrought by productive force increase -- versus ‘self-contracting capital-value’, due to the ‘technodepreciation’ devaluation of capital-value also resulting from productive force increase -- is capitalism’s fatal flaw.

This fatal flaw renders capitalism a self-advancing, progressive, growing, self-organizing system early on.

This same fatal flaw renders capitalism a self-destroying, humanity-destroying, self-dis-organizing system later on.

That is, humanity, acting as capitalism, must eventually negate itself as capitalism, in the one way, or in the other way.

The descendence phase of the capitalist system must eventuate in the dialectical self-negation of the capitalist system -- leading either to its transcendence, in and via a global renaissance of human flourishing, founded in a global generalization of social equity, or in “the mutual ruin of the contending classes”: a new, and, this time, likely final “Dark Age”.

For which of these two outcomes will you fight?

Regards,

Miguel