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On Feb 6, 2013, at 6:47 AM, Ed George wrote:
Me: Capitalists introduce technical change because it allows them (the innovators) to realise an above average rate of profit (at least for a period of time). Other capitalists are forced to adopt new techniques (through competition) to avoid being priced out of the market. My question is: why are capitalists *necessarily* driven to pursue surplus-profits? That they are is an observable fact; but why are they?
The answer is insecurity. In the competitive-capitalism model used by Marx (well reflecting the institutional framework of that epoch's capitalism) productivity-raising technological change allows its adopter to undersell the others and drive the weaker ones out of the market. In those conditions failure to "seek excess profits" is a death sentence--"one capitalist kills many." That process of "creative destruction", over a century-and-a-half, has now reached the point of market domination by concentrated, globalized, financialized oligopolies; an institutional structure best described as a combination of state-monopoly-capitalism (the US/EU model) and monopoly-state-capitalism (the East Asia model). In its initial stages, the main driving insecurity was military: the US Civil War and every subsequent conflict demonstrating that the price of technological retardation was defeat or conquest by the advanced power. That pressure obviously remains today, but over the course of development since Marx's day the driving force has been ever- increasing indebtedness, "financialization." In Marx's competitive- capitalist model the direction of production is determined by the owners of the capital at stake. But in "monopoly [shared-oligopoly] capitalism" every institution large enough to implement technological progress is financed by *borrowed* capital, whether in the form of 'loans" or "shares." On which dividends or interest must be paid out of realized surplus-value on pain of bankruptcy. The last competitive capitalist was Henry Ford. The modern corporation has production determined by managerial personnel who depend on realized surplus- value for their colossal salaries (what Marx in his day called "a new swindle') and the colossal valuation of the "incentive" shares that they allocate to themselves. What became crucial was no longer market presence, and now no longer even market share--it has become access to capital markets. Moreover, generalization of oligopoly pricing means that trying to raise sales by lowering prices means lower, not higher, profits. Under pressure of the law of the falling tendency of the rate of profit, impelled by an organic composition of capital steadily rising not merely on account of the normal and traditional capital- using innovation but at least equally by the institutional requirement of a steadily increasing diversion of constant capital into the spheres of circulation and the state apparatus, multiplying the quantity of unproductive fixed capital and unproductive labor (unproductive circulating capital), the return on investment cannot be maintained out of the stagnating or even falling *net* productivity of labor but only out of the rents procured from ever-increasing environmental destruction (cf. fracking, tar sands, rare earths, dragnet fishing, atmospheric CO2, etc.). What Marx demonstrated to be the central contradiction of capitalism as a market (political economy) system remains central to the overall crisis, the fatal crisis, of capitalism as a material (ie., natural) socio-economico- politico system.
Shane Mage This cosmos did none of gods or men make, but it always was and is and shall be: an everlasting fire, kindling in measures and going out in measures. Herakleitos of Ephesos ________________________________________________ Send list submissions to: Marxism@greenhouse.economics.utah.edu Set your options at: http://greenhouse.economics.utah.edu/mailman/options/marxism/archive%40mail-archive.com
