The Declining Rate Of Profit

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Red Hughs
The Declining Rate Of Profit
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This may seem like a strange post. However, I recently read a blog post that ironically illustrates the effects of the "profitability wall" that has hit been his by present day capitalism. As I'd imagine this, wall, it is the concealed by many devices and it has existed in more disguised form for quite some time (more or less since 1973). But now the wall's outline is visible in quite few places.

The blog post in question describes the "desperate" competition of "angel"  technology investors to put money into Internet start-ups. I don't feel sorry for these investors. And even more, this isn't a new Internet boom. Rather, this is a powerful result of the overall unprofitability of capital - those few areas where some promise of profits exists are over-run with desperate small capitalists. And small capitalist are especially desperate since a decline in profitability indeed throws them into the proletariat.

Anyway, I suggest reading this:

http://networkedblogs.com/8gc1c

With those points in mind...

 

Zanthorus
Decline in profitability not fatal

The decline in profitability isn't necessarily fatal for capital itself. The tendency is offset by the lowering of business costs which causes the organic composition of capital to be restored to levels needed for capital to function properly. However, this doesn't impact on business' who bought their assets in the past when costs were higher. In order for profitability to be completely restored, capital value needs to be destroyed. This should come through the form of an economic crisis, however after the disaster of the 30's, the bourgeoisie is wary about the possibility of a simple crash and recovery. Letting the economy spiral down in such a fashion could be disastrous, so instead they've been trying intervention and management of the economy at a macro level by the state. Unfortunately, all this does is offset the crisis, so it becomes a fiscal crisis of the state. Just look at the massive inflation in state debt to GDP figures we've seen over the past few decades.

The other option that the bourgeoisie has is the physical destruction of capital assets through another imperialist war.

But any way you look at it, capital's gain is humanities loss.

jk1921
The best illustration of the

The best illustration of the declinign rate of profit is the turn to all types of speculative behavior that have actually surpassed production as the main methods for making profit across the economy virtually as a whole. Entire swathes of the economy are built on moving around fictious wealth or outright stealing, swindling, etc. If you can't make any profit by investing in actual production, the next best thing appears to be to steal fake money from someone else.

Red Hughs
The decline in profitability

The decline in profitability isn't necessarily fatal for capital itself. The tendency is offset by the lowering of business costs which causes the organic composition of capital to be restored to levels needed for capital to function properly. However, this doesn't impact on business' who bought their assets in the past when costs were higher. In order for profitability to be completely restored, capital value needs to be destroyed. This should come through the form of an economic crisis, however after the disaster of the 30's, the bourgeoisie is wary about the possibility of a simple crash and recovery. Letting the economy spiral down in such a fashion could be disastrous, so instead they've been trying intervention and management of the economy at a macro level by the state. Unfortunately, all this does is offset the crisis, so it becomes a fiscal crisis of the state. Just look at the massive inflation in state debt to GDP figures we've seen over the past few decades.

The decline in profitability is  theoretically not fatal. What you are saying boils down to the point that IF the market can adjust to the lower rate of profit, then the capital accumulation can go on. Yes, that true.

However, not only are the bourgeois resistant to this decline, they have successfully postponed it for thirty years. This means that there is a huge "overhang" of enterprises which would no longer be profitable were markets to adjust to an equilibrium level. I think jk is correct that you can see the profit problem in the tendency for a large portion of investment to be parasitic, speculative rather than "productive". The thing is that the immediate structure of the market is what determines the capitalist division of power. A given capitalist will resist the large scale restructuring of the market since that will result in them losing relative power and profits.

And that's happened over the last twenty. The capitalist class is definitely restructured versus the proletariat, crushing our living standards in a rather horrific way. But it has done this in defense of the status quo. And now we have a world market structure where a vast number of industries exist "on life supports" or through state intervention. Housing and automobiles in the US are the most obvious. But the vast building boom in China is certainly supporting the world's mining and mineral industries - and much of that building boom comes from speculation financed by various parts of the state sector itself.

The whole thing is palpably rotten... The present promises crisis, barbarity and collapse...

I could go on and one but I'll stop there.