Capitalism's Fatal Flaw, and the Way Forward: Part 10. b. Marxian Theory Series. ‘DescendEnce-Phase’ Capitalism. GLOBAL STRATEGIC HYPOTHESES.

Part 10. b. Marxian Theory Series.

‘Descendence-Phase’

Capitalism.

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, Foundation discourses on key elements of Seldonian Psychohistorical Theory.

The second part of the 10th text in this new such series is posted below [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 –

[Continuation, Part b.] “The foregoing hypotheses should help to clarify the practical, ‘praxical’ reality, the empirical manifestation, and the material mechanism of Marx’s ‘“Law of the Tendency of the General Rate of Profit to Fall”’.”

“The algebraic and arithmetical, formal causation of the Marxian rate of profit ratio to fall, in Marx’s mathematical model of the abstract core of “the concept of capital” and of “the capital-relation”, is not the same as the [psycho]physical, human praxis, material causation of that profit-rate fall.”

“Nor is Marx’s, analytically deep and correct algebraic formula for the “core” profit-rate ratio the same as the profitability metrics that capitalists use in, e.g., their capital investment decision-making.”

“The psychohistorical «mentalité» that is definitive of the typical capitalist is, precisely, the «mentalité» that denies that [wage-]labor[-time] is the root-source of capital-value, hence also of profit. The capitalist «mentalité» does not see wage-labor as the ultimate source of profit, or wages as a “capital investment”; as Marx’s “v”, “variable capital”. On the contrary, the capitalist «mentalité» sees wages as a mere expense among other business expenses.”

“The capitalist «mentalité» sees CAPITAL as the source of profit. Their profit rate metrics are ratios that involve a profit metric in the numerator, and a capital metric – e.g., fixed capital-value invested – in the denominator. Thus, a major such metric is “ROI” – “return on Investment”, r/I.

“The ‘algebraic causation’ of the profit-rate fall, in Marx’s “core” profit-rate ratio, which is not visible to capitalist mentalities, or on “the surface of society” [Marx’s phrase], is the relatively unlimited rise in Marx’s “organic composition of capital” ratio, (c/v), in the context of the more limited rate of exploitation of labor ratio, (s/v). This is because, in terms of Marx’s concept of “relative surplus-value”, worker’s cannot even work 24 hours per work-day as “surplus-labor” for the capitalists’ “surplus-value”-based profit, with none of that 24 hours going to “necessary labor”, i.e., to reproducing the cost of their labor-power, their wages-cost, v.”

“Let’s look at Marx’s algebraic profit-rate ratio in a form which reveals, more directly, the relation of its sub-ratios, (s/v) and (c/v). We can multiply the standard Marxian profit-rate ratio, s/(c + v), by 1, in the specific form of ((1/v)/(1/v)), a multiplication that should not change any “arithmetic” value of that algebraic profit-rate ratio as long as v does not become 0 –

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

– which visualizes how, if the magnitude of (c/v) grows faster than that of (s/v) for long, and as (s/v) eventually stops growing at all, in “relative surplus-value” terms, the resulting bigger-in-magnitude-than-the-numerator denominator will pull the value of the profit-rate ratio as a whole down.”

“Now, we contend that the (s/v)/( (c/v) + 1) profit-rate ratio does not tell the story of the profit-rate fall’s material causation, at the “surface of society” [Marx’s phrase], in practical/‘praxical’ terms.”

“Productive Force”/productivity increases that lower the ‘presentary’ reproduction costs, hence also the market prices, of the commodities that constitute the raw materials costs, and the fixed capital depreciation-costs, in c, and the “means of subsistence”/“wages goods” costs in v, do not reduce the profit rates of an individual capital that buys c and v for its production processes. On the contrary, “other things being equal”, such reductions in production costs RAISE such a capital’s rate of profit.”

“However, productive force/productivity increases that lower the ‘presentary’ reproduction costs of the commodities in the owned fixed capital plant and equipment of such an individual capital do lower profits, and profit rates, in the context of “the competition of capitals” [Marx’s phrase].”

“They do so by forcing the “write-off” – the subtraction from gross profit in the period in which those lower reproduction costs are recognized and accounted-for – of the remaining undepreciated portion of the higher original costs of those fixed capital plant and equipment commodities that were ‘pastly’ purchased and that are now owned by the individual capital in question.”

CONCLUDED.

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