Calculation of profit rate

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Tagore2
Calculation of profit rate
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We have all heard of the tendency of the rate of profit to fall.

But before explaining a fact by theory, we must first prove this fact by statistics. To prove that “something” down, we must first describe what is it, its measure, and its unit.

Profit is some value. Its measure is therefore the amount of labor. And its unit is hour, day, week, month, year of socially necessary labor.

But the socially necessary labor is abstract labor, not measurable concrete labor. How to establish a strict correspondence between the abstract labor and the concrete labor?

I suggest you find the solution by yourself and in 24h I will give you the answer.

To guide you, here are some clues:

According to Marx, what exactly is the “socially necessary labor”? The solution is entirely in the Section 1 of the Chapter 1 of the Capital (vol. 1): The Two Factors of a Commodity: Use-Value and Value.

According to this definition, you can find a special case where a determinate duration of concrete labor exactly contains the same amount of labor than the same duration of abstract labor. You will also find the solution in the section 1 named above.

After having found this correspondence, we will be able to estimate what is the global profit rate and see how it evolves over time. We can also anticipate how it will evolve over time.

Send me your responses by PM, at the right top of the web page (Write new message).

LBird
Method (once more)

Tagore2 wrote:
But before explaining a fact by theory, we must first prove this fact...

This is not either Marx's or the 'scientific' method, Tagore2.

'Facts' are always 'theory-laden' (to use the academic jargon), and Einstein maintained that 'the theory determines 'what' one can observe'.

Marx argued for 'theory and practice', not 'practice and theory' (which is induction, or 'proving facts prior to theory').

So, we must first construct a 'theory', which will contain 'parameters of selection', and use this theory to create our facts.

This is the actual way that 'science' works, no matter what bourgeois ideologists claim, that they have a neutral method, which allows them 'objective access' to 'facts'.

Tagore2
Solution

Yes, yes Lbird.

We will find the solution in the following sentence:

Quote:

The total labour power of society, which is embodied in the sum total of the values of all commodities produced by that society, counts here as one homogeneous mass of human labour power, composed though it be of innumerable individual units.

In other words:

The total labour power of society <=> the sum total of the values of all commodities produced by that society

Here we have our correspondence.

And this is logic:

Quote:

Each of these units is the same as any other, so far as it has the character of the average labour power of society, and takes effect as such; that is, so far as it requires for producing a commodity, no more time than is needed on an average, no more than is socially necessary. The labour time socially necessary is that required to produce an article under the normal conditions of production, and with the average degree of skill and intensity prevalent at the time.

Value in workers is like calories (or joules) in candies: candies contains more or less joules in each, but we can establish an average of joules for every candies. Naturally, the total sum of averages is equal to the total sum of joules:

(a+b+c+d+…)/n = x (the average)

a+b+c+d+… = nx (the total)

Sum total of concrete labor = sum total of socially necessary labor.

From these equivalences, we should be able to see how to express the global GDP in amount of labor, and therefore in value, and to deduce all usual economic variables in value.

Does anyone want to continue the argument, or to give some leads?

LBird
Value as candy, or as candidly social?

Tagore2 wrote:
Value in workers is like calories ... in candies...

I think we have different understandings of 'value', Tagore2.

I, like Marx, regard 'value' as a social relationship, not 'a physical amount', in either workers or commodities, which can be 'measured'.

As I said initially, we have to sort out the 'theory', first.

That is both Marx's and the scientific method.

Tagore2
Value is like mass

Value is like mass: it can manifest itself only as a relation between things, however its manifestation is quantitatively measurable: the weight.

Quote:

A use value, or useful article, therefore, has value only because human labour in the abstract has been embodied or materialised in it. How, then, is the magnitude of this value to be measured? Plainly, by the quantity of the value-creating substance, the labour, contained in the article. The quantity of labour, however, is measured by its duration, and labour time in its turn finds its standard in weeks, days, and hours.

The theory used is Marxism.

Please, read carefully the first section of the first chapter of the Capital (vol. 1). This section is certainly difficult but it contains all the theoretical tools for the calculation of the tendency of the profit rate to fall.

LBird
Value doesn't have a 'weight'

Tagore2 wrote:

Value is like mass: it can manifest itself only as a relation between things, however its manifestation is quantitatively measurable: the weight.

A 'relation' and a 'thing' are not the same. 'Weighing' a 'thing' does not give the 'weight' of a 'relation'. It's like weighing a kid's birthday card, to find the 'weight' of the love sent from the kid's parent.

Marx is quite clear that not an atom of any 'thing' is in 'value'. As you say, the theory is all in Capital.

Do we need to trade quotes?

 

lem_
ah no i agree with Tagore2,

ah no i agree with Tagore2, and think it's clearly and well put:

"Value is like mass: it can manifest itself only as a relation between things, however its manifestation is quantitatively measurable: the weight"

i didn't quote understand LBird what you objected to therein? we can if we like call "weight" a relata and not a relation, accroding to our metaphyical ideas, but to find it we are manipulating a world of things which stand in relation with one another. which seemed to me to be exactly what Tagore was saying

lem_
"I, like Marx, regard 'value'

"I, like Marx, regard 'value' as a social relationship, not 'a physical amount', "

moreover this is a non sequitor, and trivially so:

i am 25 years younger than my dad: that relation is an "amount"

Tagore2
measure of the labour quantity

Yes, Lbird, a relation is not a thing.

Well, what is the measure of the labour quantity? The duration of “homogeneous human labour”. We can count it by two ways:

  • either we take a fixed number of standard workers, and we multiply the duration of homogeneous labour,

  • either we take a fixed duration of homogeneous labour, and we multiply the number of standard workers.

The general formula of the labour quantity is therefor:

  • number of standard workers × duration of homogeneous labour.

It's valid only for standard workers and homogeneous labour.

So what is our metrologic standard of the labour quantity? The total labour power of the society. This is our standard, because this is the only quantity where the abstract labor quantity is exactly equal to the concrete labor quantity. And what is the total labour power of the society? The global labor force, who produce value. It is known with good approximation by the specialists of the professional demography.

In 2013, the labor force contains 3.3 billions of concrete workers (on average), who produce value (goods & services). By equivalence, this exactly corresponds to 3.3 billions standard workers. In 2013 therefor, the labor quantity was 3.3 billions standard workers, working homogeneously for one year. This labor quantity is the measure of the value produced in 2013.

LBird
Measuring value?

Tagore2, why would you want to measure 'value'?

Weight measurement involves quantitative evaluation, ie. numbers.

But value is qualitative, and so involves human and social evaluation, which can't be reduced to 'objective' numbers (it's a human vote, and their social views, if we want 'numbers').

Einstein again, I'm afraid:

Not everything that can be counted, counts; and not everything that counts, can be counted.

We're back to the weight of kids' birthday cards, versus the love of parents.

Value, like love, can't be 'weighed'.

Tagore2
Don't worry

I wish to measure the value to verify a Marxist law: the tendency of the profit rate to fall. In the Capital, Karl Marx continually compares value variables. In my argument, I rely exclusively on the beginning of the first chapter of the Capital. From a Marxist point of view, I do not anything illegal.

For Karl Marx, the value is not a philosophical or subjective category, like love, but an scientific and objective variable, like mass, or, by his own example, like the surface of a geometric figure.

There is absolutely no reason to worry about such value concept.

If you are afraid that Karl Marx can be faulted with statistics, this is not the case. Analyze what means concretely the concepts of value, labor quantity, profit, etc. allows us to better apprehend the Marxist theory and use it wisely.

LBird
How many angels on a pinhead - an objective measure

Tagore2 wrote:

For Karl Marx, the value is not a philosophical or subjective category, like love, but an scientific and objective variable, like mass...

Well, we have a difference of opinion, Tagore2.

Good luck with 'measuring' 'objective' value!

Tagore2
GDP in value

Therefore, we can establish a correspondence between the labor force and the global GDP. Such quantity of work is equivalent to (produces) such quantity of commodities.

The total labour power of society ⇔ the sum total of the values of all commodities produced by that society

3.3 billions of workers working for a year ⇔ 100,000 billions international dollars (PPP)

So if the China GDP is 16,000 billions international dollars (PPP), so the value produced (the homogeneous labour spend) is:

3.3 billions ÷ 100,000 billions × 16,000 billions = 530 millions (average) workers working for a year.

Note that the real labor force in China is 790 millions, so the China productivity is a little lesser than the global average productivity.

530 millions average (abstract) workers working for a year ⇔ 790 millions chinese (concrete) workers working for a year

Note too that the determination of the GDP raises some problems, but I do not speak of this to go faster.

LBird
Value or 'values'?

Tagore2 wrote:
...the values...

Note, 'values' (plural), not 'value' (singular).

All you seem to be doing here, Tagore2, is telling us in 'international dollars (PPP)' the 'values'.

But a social relationship can't be expressed in money.

You're basically adding up the 'values' of birthday cards in dollars, and then claiming that that sum represents all the parents' 'love' in the world.

'Value' is like 'love', or 'hate', or 'morale', or 'hope', etc.

We can estimate the size/extent/power of all these categories, but it is a human judgement, not a mathematical operation. Clearly, our judgement would take into account various 'things', events, processes, histories, oppositions, etc., but it wouldn't produce an 'objective measurement' in money or hours or weight.

slothjabber
value and socially-necessary labour-time

When you talk about value as being like love I completely disagree. The 'value' of any specific quantity of a commodity is the average amount of labour that it takes to replicate it. It can be measured against other commodities, which also require certain average times to replicate.

 

I'm not sure how you measure my love for pies against someone else's love for beer.

LBird
I love pies and beer: the 'measurement' is my gut size

slothjabber wrote:

When you talk about value as being like love I completely disagree. The 'value' of any specific quantity of a commodity is the average amount of labour that it takes to replicate it. It can be measured against other commodities, which also require certain average times to replicate.

 

I'm not sure how you measure my love for pies against someone else's love for beer.

You don't! That's my point.

'Measurement' of love is impossible.

We'll produce pies and beer whilst humans have a hunger and thirst for them.

The bourgeois myth that 'value' can be 'measured' will be rejected.

Production will be for use.

lem_
"i am 25 years younger than

"i am 25 years younger than my dad: that relation is an 'amount'"

bunch of simple horseshit if you ask me.

Tagore2
Net Capital Formation

In 2013:

Gross Capital Formation: 22% of GDP

Consumption of Fixed Capital: 15% of GDP

Net Capital Formation: 22% - 15% = 7% of GDP

Value: 7% × 3.3 billions workers = 231 millions workers

(Average workers working for a year)

If we do the math for all years since 1990, we observe:

With a maximum of 300 million in 2007 and a minimum of 170 million in 2009, usually moving between 200 million and 250 million workers, the Net Capital Formation is not increased for nearly 25 years.

Therefore, the accumulation rate of capital decreases over time.

But it's a little boring, I feel I have lost everyone in my argument.

slothjabber
planning to abolish love?

If 'value' is like love, then when value is done away with by the progressive socialisation of the economy, what are you planning to do with love?

Certainly we will produce for use. Use-value isn't 'value' though. 'Value' is exchange-value, and without exchange there is no exchange-value.

LBird
Love or hate?

slothjabber wrote:

If 'value' is like love, then when value is done away with by the progressive socialisation of the economy, what are you planning to do with love?

Certainly we will produce for use. Use-value isn't 'value' though. 'Value' is exchange-value, and without exchange there is no exchange-value.

You don't do simile or explanation, do you, sj? Perhaps that's why we're having so many problems with your explanation of 'decadence'.

'Exchange' is a 'relationship', not something that can be 'weighed'.

In fact, it's a bit like 'love' - or, just for you, sj, 'hate'!

slothjabber
similie like you mean it

Usually I'm charged with the opposite crime LB, that my argument relies too much on similie, metaphor and analogy. How many times have I mentioned cancer, viruses, diagnoses and sickness, in my explanation of decadence?

There isn't a problem with decadence. You don't accept that capitalism is decadent. That isn't a problem for me. It doesn't fundamentally challenge my understanding of society.

The thing about 'weight' is that it is a relationship. What is the 'weight' of a single body? Nothing. Weight is only demonstrable as the relationship (in this case, attraction) of two bodies.

So perhaps weight is a bit like love.

What about value? It's a relationship too, between different commodities. In reaching the market the commodity form reveals itself. We are proposing to do away with the commodity form. But in the meantime, commodities are measured against other commodities, in much the same way as the weight of a body can only be determined by its relationship to other bodies.

in much the same way as "And in the end, the love you take is equal to the love you make."

Now let's not get into the whole Lennonism thing again.

LBird
Lennonism

I'm happy with your use of simile, metaphor and anology, sj!

You're right, from what I can tell from explanations of the 'theory of decadence', I don't think capitalism is 'decadent'.

As to the issue of 'weight' versus 'relationships', I suspect that there are underlying philosophical disagreements between us, related to 'materialism', but we won't go there again!

Amir1
LBird

If i did not deviate you discussion,' theory of decadence' is outset of capitalism 'decadent'

inconsistency progress

lem_
i hope it's ok to ask

i hope it's ok to ask here?
 

do marxists expect another important economic crisis anytime soon?

it sounds like a pretty worrying idea.