James Miller
A DEFENSE OF MARX AGAINST PAUL SWEEZY
The tendency of the rate of profit to fall is a necessary consequence of the
evolutionary logic of the capitalist mode of production. This was explained by
Marx in Capital, Vol. III. Yet many modern Marxist writers do not agree. Here
Marx's original conception is explained and defended against the arguments of
Paul Sweezy advanced in his 1942 book, The Theory of Capitalist Development. It
is demonstrated that Marx still has the upper hand against Sweezy and other
like-like-minded writers.
INTRODUCTION
This essay is a review of the basic features of Marx's law of the tendency of
the rate of profit to fall. After a preliminary definition of terms, we shall
attempt to explain why the law is inseparable from the functioning of the
capitalist mode of production itself, and why, therefore, knowledge of the
workings of this law is identical with knowledge of the workings of capitalism.
We will try to show that the practical significance of the law of the tendency
of the rate of profit to fall is that the rate of profit must fall in life as
the theory explains.
There are a number of counteracting influences which hinder the working of the
tendency of the falling profit rate, but we hope to be able to show why these
forces cannot, in the final analysis, prevent the profit rate from falling.
Naturally, not every influence is touched upon here. But we feel that once the
law is properly understood, it will be seen why it must inevitable dominate over
the counter-tendencies.
In the course of the exposition, the views of Paul Sweezy will be subjected to
critical examination. Ben Fine and Laurence Harris also will also be briefly
countered. These are writers who have rejected, in one way or another, Marx's
law of the tendency of the rate of profit to fall. The best criticisms of Marx
naturally come from those who are the most familiar with Marx's writings, and
these are generally writers who consider themselves Marxists. It is hoped that
it will be seen from this essay that Marx is superior to his critics.
The tendency of the rate of profit to fall is one of the central features of the
capitalist mode of production, and one which, perhaps more clearly than any
other, expresses the historical limitedness of this form of society. Marx's
analysis of the operation of the law of the tendency of the rate of profit to
fall has come under attack from economists who cannot accept the prospect of the
ultimate demise of capitalism through the effects of its own inner
contradictions. Marx commented on the state of mind of bourgeois economists who
begin to confront the possibility of a long-term decline in theprofit rate: "But
the main thing about their horror of the falling rate of profit is the feeling
that capitalist production meets in the development of its productive forces a
barrier which has nothing to do with the production of wealth as such; and this
peculiar barrier testifies to the limitations and to the merely historical,
transitory character of the capitalist mode of production; testifies that for
the production of wealth, it is not an absolute mode; moreover, that at a
certain stage it rather conflicts with its further development." (Marx, 1962, p.
237)
We live in an age in which the horror of a falling rate of profit increasingly
permeates the consciousness of growing layers of capitalists throughout the
world. While profit rates fluctuate widely from boom to bust, from one country
to another, and from one business or branch of industry to another, the feeling
that profits are not what they should be, or not what they used to be, grows.
For the capitalists, and the economists who try to serve them, the shifts in
profits that occur on the balance sheets of banks and corporations are not, nor
can they be, manifestations of an underlying tendency rooted in the basic
character of the capitalist mode of production. If a squeeze on profits becomes
apparent, any number of immediate or indirect causes can be pointed to: interest
rates, taxes, wages, environmental and other regulations, etc. Instead of
probing the inner structure of capital, and the laws of its evolution, they are
restricted to examining this mulitplicity of conflicting forces that forms the
outward appearance of economic relations. As Marx commented about the
capitalists and their theoretical spokepersons:
"...it is just as natural for the actual agents of production to feel completely
at home in these estranged and irrational forms of capital-interest, land-rent,
labor-wages, since these are precisely the forms of illusion in which they move
about and find their daily occupation. It is therefore just as natural that
vulgar economy, which is no more than a didactic, more or less dogmatic,
translation of everyday conceptions of the actual agents of production, and
which arranges them in a certain rational order, should see precisely in this
trinity, which is devoid of all inner connection, the natural and indubitable
lofty basis for its shallow pompousness." (Marx, 1962, p. 809)
For the vulgar (bourgeois-minded) economists, if a problem is recognized, there
is always an answer, or set of answers. The superficial and illusory categories
in which they concieve the world are referred to as containing the solutions.
Thus we have recommendations for trade policies, tax proposals, investment
strategies, labor relations tactics, etc. In this conception, there is always a
way out of the dilemma. The notion that average profit rates cannot be restored
to their previous levels (barring a monumental destruction of capital and
reversion to a lower stage of capital accumulation) is something beyond the
range of their experience. Or, if they should hear about Marx's theory of a
tendency for the profit rate to fall, they dismiss it out of hand, as
propaganda.
What is at stake is the fundamental historical character of capitalist society.
The bourgeois economists believe that it is essentially an unending form of
society. Not that they predict it will last forever (when was the last time any
of them gave a thought to what might happen 100 years from now, or even 50?)-but
they see nothing happening in the world now that would indicate that capitalism
will ever reach the end of its rope.
Marxists, on the other hand, are able to explain the historically transitory
character of capitalism. It is not an eternal form of society. And it is the
tendency of the average rate of profit to fall over the long run that most
convincingly illustrates the temporary nature of capitalism. To understand the
operation of this tendency is to come to grips with the logical dynamic of a
mode of production that lives: like an organism, it is born, it grows, it
matures, it ages and becomes increasingly moribund.
But the law of the tendency of the rate of profit to fall is not a constantly-
functioning, mechanical process. It is a tendency which makes its impact felt on
the surface of events in a limited way, with many reversals and interruptions,
due to the resistance to its operation provided by the counteracting forces
which Marx analyzes. But it continues to gather strength the longer, and the
more completely, the world's population is drawn into the capitalist mode of
production.
The more capital is developed as the exclusive form of the production of the
world's goods and services, and the more production corresponds to the
requirements of capital, the more does the tendency of the rate of profit to
fall express itself as an actual reduction in average profits worldwide, and
thus acts as a practical barrier to the further development of the productive
forces.
DEFINITION OF TERMS
The falling rate of profit is rooted in the increasing productivity of labor as
it develops under capitalism. As Marx explained, "...the level of the social
productivity of labor is expressed in the relative extent of the means of
production that one worker, during a given time, with the same degree of
intensity of labor power, turns into products. The mass of means of production
with which he functions in this way increases with the productivity of his
labor. But those means of production play a double role. The increase of some is
a consequence, that of others a condition, of the increasing productivity of
labor. For example, the consequence of the division of labor (under manufacture)
and the application of machinery is that more raw material is worked up in the
same time, and therefore a greater mass of raw material and auxiliary substances
enters into the labor process. That is the consequence of the increasing
productivity of labor. On the other hand, the mass of machinery, beasts of
burden, mineral manures, drain-pipes, etc., is a condition of the increasing
productivity of labor. This is also true of the means of production ...
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