tag:blogger.com,1999:blog-6245381193993153721.post333534684395116512..comments2024-03-28T17:08:15.784-07:00Comments on Social Democracy for the 21st Century: A Realist Alternative to the Modern Left: Prolegomena to the Study of Marx’s Capital (Updated)Lord Keyneshttp://www.blogger.com/profile/06556863604205200159noreply@blogger.comBlogger2125tag:blogger.com,1999:blog-6245381193993153721.post-5010623682950302732015-06-02T06:50:05.738-07:002015-06-02T06:50:05.738-07:00Hi LK,
The rate of profit rises and falls over th...Hi LK,<br /><br />The rate of profit rises and falls over the trade cycle and the Great Depression might have seen by some (at the time, especially some Communists) to be evidence of the long run tendency of the profit rate to fall to such an extent that capitalism would collapse <br /><br />But Keynes showed that capitalist economies require some form of Government intervention to prevent the capitalist system from collapse. He showed that capitalist systems can produce a series of possible equilibria with full employment being the limiting case. <br /><br />If an economy settled down at an equilibrium with a high level of unemployment then Government action through stimulatory monetary and fiscal policies would be required. Such action would help prevent capitalist economies collapsing.<br /><br />There is no need to posit Marx's long run tendency of the rate of profit to fall as a basis fore predicting the collapse of the capitalist system,<br /><br />John ArthurAnonymousnoreply@blogger.comtag:blogger.com,1999:blog-6245381193993153721.post-25738599548779103572015-06-02T06:37:23.978-07:002015-06-02T06:37:23.978-07:00Hi LK,
I am not sure that I understand the long r...Hi LK,<br /><br />I am not sure that I understand the long run tendency of the rate of profit to fall in capitalist societies. In my understanding of Marx (which is limited) P = S/(C+V) = (S/V) / (C/V +1) where P is the rate of profit, S is surplus value (the sum of rent, interest and profits), C is constant capital and V is variable capital. S/V is the rate of surplus value, C/V is the organic composition of capital.<br /><br />Now what I don't understand is that the long term rate of profit will have a tendency to fall.<br /><br /> An increase in the organic composition of capital (roughly an increase in the capital/labour ratio) would lead to a decease in the rate of profit if S/V does not change. However, if labour productivity is increased, then S/V might increase and the rate profit not necessarily fall. There does not seem to be any real empirical evidence (that I am aware of) that the long run profit rate in capitalist societies will fall.<br /><br />John Arthur<br /><br />Anonymousnoreply@blogger.com