In the past two decades the number, variety, and monetary value of marketable financial instruments, particularly securitized instruments, has grown by orders of magnitude. This is the most significant development in what many writers, for the most part Marxist, term ‘financialisation’1. It brings to light, however, an anomaly in the way they calculate the profit rate. This calculation takes no account of the capital tied up in these instruments.
This article shows that when this omission is corrected, there is a consistent long-run fall in the UK and US rate of profit which, contrary to the figures widely used by Marxists, have both fallen almost monotonically since 1968.
Why does this matter? First, the profit rate figures prominently in Marx’s own theory, as is clear from his published works. It is the explicit subject of the first 15 chapters of Capital Volume III (Marx, 1981: 117-378) and dominates the remaining analysis. Second, the results shed light on current debates about the cause of the present extended crisis. A significant group of writers (see Choonara, 2011) argue that this is recent in origin, unconnected with the serious difficulties that beset Western economies in the 1970s, and follows a recovery from that crisis, brought about by neoliberalism, in the 1980s. Thus Husson:
“After the generalized recessions of 1974-5 and 1980-82, a new phase opened in the functioning of capitalism, one which one could for convenience call neo-liberal. The beginning of the 1980s was a real turning point. A fundamental tendency towards increasing the rate of exploitation was unleashed, and that has led to a continuous rise in the rate of profit” (2008).
Michael Heinrich is an exponent of what is known as the ‘New German Reading of Marx’, which interprets the theory of value that Marx presents in Capital as a socially specific theory of ‘impersonal social domination’. He is a collaborator on the MEGA edition of Marx and Engel’s complete works and has published several philological studies of Capital. He has also authored a work on Marx’s theory of value, The Science of Value, which is forthcoming in the Historical Materialism book series. And recently he has published An Introduction to all Three Volumes of Capital as his first full-length work to appear in English.
I am not going to do a critique of Heinrich’s views on the theory of value, as this has been done by Guglielmo Carchedi in his book, Behind the Crisis (see chapter 2). But I am moved to respond to a recent article of Heinrich’s in the American Monthly Review, entitled Crisis theory, the law of the tendency of the rate of profit to fall and Marx’s studies in the 1870s (monthlyreview.org).
In this article, Heinrich makes the following points: 1) Marx’s law is inconsistent because its categories are indeterminate; 2) it is empirically unproven and even unjustifiable on any measure of verification; 3) Engels badly edited Marx’s works to distort his view on the law in Capital Vol 3; 4) Marx himself in his later works of the 1870s began to have doubts about the law as the cause of crises and started to abandon it in favour of some theory that took into account credit, interest rates and the problem of realisation (similar to Keynesian theory); 5) Marx died before he could present these revisions of his crisis theory, so there is no coherent Marxist theory of crisis.
“O marxismo são marxismos – e os marxistas estão hoje plenamente conscientes desse fato, além de estarem, também, plenamente satisfeitos com essa pluralidade. Como se sabe, o marxismo não é propriamente uma ilha, mas vem a ser um arquipélago formando por um grande número de ilhas, mais ou menos próximas entre si. É nessa perspectiva que se deve enxergar o livro Marx, Ricardo e Smith, do prof. Reinaldo Carcanholo – livro este em que ele procurou retomar criticamente os três clássicos do pensamento econômico. Justamente por respeitar essa pluralidade, ele pode ser bem enfático na defesa de suas posições sobre as teorias do valor dos três autores mencionados. Marx dentre os três, como ele próprio deixa claro, é o mais profundo.
Os ensaios reunidos nesse livro são resultados de um prolongado esforço de compreensão desses três autores, nenhum deles fácil de ler e de compreender como os manuais de economia matemática (cuja dificuldade eventual é meramente técnica). Eles se debruçaram com denodo sobre a complexidade do mundo real para revelá-la em sua verdade e isto está refletido na riqueza conceitual – e certa obscuridade constitutiva – de seus escritos. Pois, aquilo que é contraditório não se deixa conhecer por um discurso claro, sem contradições. Em toda a sua vida intelectual, o prof. Reinaldo Carcanholo se dedicou com paixão à compreensão dos autores que, agora, ele ousa expor e criticar. Trata-se, pois, de um livro que vem contribuir para o desenvolvimento de uma cultura econômica de esquerda no Brasil.” (Eleutério Prado)
Segunda sesión del Seminario Marx Revisitado: “Michael Heinrich, ¿Cómo leer El Capital de Marx?”: Luis Arizmedi y Alejandro Fernando González
2da. Sesión 20 de marzo:
Michael Heinrich, ¿Cómo leer El Capital de Marx? Indicaciones de lectura y comentario del comienzo de El Capital, Escolar y Mayo Editores, 2011. Comentan: Mtro. Luís Arizmendi y Lic. Fernando González
Apart from your recent article, which has been translated into Chinese, which books have you written?
My first book, my PhD thesis, was Die Wissenschaft vom Wert (The Science of Value). It was first published in 1991 and a considerably extended edition appeared in 1999. After all the discussions of the late 1960s and 1970s, it was an attempt to determine the peculiar scientific kernel of Marx’s project of a Critique of Political Economy. I was occupied with the difference, on the one hand between early and late Marx, on the other hand with the difference between Marx and classical political economy but also with the difference between Marx and modern neoclassical economics. I tried to describe Marx’s fundamentally new project of critique of political economy, a project, which was not only meant to add a new theory to the existing theories, but to practice a critique of a whole science, to articulate a scientific revolution. But in this project of Marx’s you can also find some ambivalences: on the one hand, Marx broke with the old field of economic science, on the other in some of his inquiries he remained in this field, without realizing it. The simultaneity of break with this field, leaving this field and remaining in this field, caused certain problems in Marx’s theory, for example the well known “transformation problem.” The transformation from values to prices of production I can understand as a problem which is caused by this incomplete break with the field of political economy. It is not really a problem of Marx’s new theory; it is a problem of a mixture between old elements (which Marx had already criticized) and new elements.
Riccardo Belloﬁore – Crisis theory and the great recession: a personal journey from Marx to Minsky
The global economic crisis and recession that began in 2008 had at least one unexpected outcome: a surge in sales of Karl Marx’s Capital. Although mainstream economists and commentators once dismissed Marx’s work as outmoded and flawed, some are begrudgingly acknowledging an analysis that sees capitalism as inherently unstable. And of course, there are those, like Michael Heinrich, who have seen the value of Marx all along, and are in a unique position to explain the intricacies of Marx’s thought.
Heinrich’s modern interpretation of Capital is now available to English-speaking readers for the first time. It has gone through nine editions in Germany, is the standard work for Marxist study groups, and is used widely in German universities. The author systematically covers all three volumes of Capital and explains all the basic aspects of Marx’s critique of capitalism in a way that is clear and concise. He provides background information on the intellectual and political milieu in which Marx worked, and looks at crucial issues beyond the scope of Capital, such as class struggle, the relationship between capital and the state, accusations of historical determinism, and Marx’s understanding of communism. Uniquely, Heinrich emphasizes the monetary character of Marx’s work, in addition to the traditional emphasis on the labor theory of value, thus highlighting the relevance of Capital to the age of financial explosions and implosions.
“El ciclo equivalencial: valor de cambio, dinero y mercado“: tercera conferencia de Enrique Dussel sobre la crítica de la economía política de Marx de su curso ” 16 Tesis de Economía Política”
University of Warwick
Distinguished Lecture Series
14 February 2013
David Harvey is the Distinguished Professor of Anthropology at the Graduate Center of the City University of New York. He is a leading political economist and social theorist of international standing. He is a highly cited academic and the author of many books and essays. Professor Harvey received his BA, MA and PhD from Cambridge University and was formerly Professor of Geography at John Hopkins University, Halford Mackinder Professor of Geography at the University of Oxford and Senior Research Fellow at St Peter’s College Oxford.
His numerous awards include Outstanding Contributor Award of the Association of American Geographers, the Centenary Medal from the Royal Scottish Geographical Society and the Patron’s Medal of the Royal Geographical Society for contributions to critical human
“Finance and the realization problem in Rosa Luxemburg: a ‘circuitist’ reappraisal”: Riccardo Bellfiore and Marco Passarella
Article showing that Rosa Luxemburg’s analysis of capitalist accumulation is framed within a ‘circuitist’ macroeconomic reading of capitalism as a monetary production economy
The aim of this chapter is to show that Rosa Luxemburg’s analysis of capitalist accumulation is framed within a ‘circuitist’ macroeconomic reading of capitalism as a monetary production economy. The strengths and limits of her approach are to be found elsewhere than suggested by usual criticisms, especially those advocated by Marxist authors. Rosa Luxemburg cannot be reduced to the uncertain theoretical status of an ‘under-consumptionist’. On the contrary, she presents a clear (although incomplete) picture of the macro-monetary and sequential working of the capitalist process.
This chapter is organized as follows. The next section examines Luxemburg’s comments on how the enlarged reproduction scheme is introduced in volume II of Marx’s Capital. The third, fourth, and fifth sections summarize, first, the orthodox attack by Bukharin, and then the more sympathetic interpretations provided by Michał Kalecki and Joan Robinson. The sixth and seventh sections emphasize the affinities and differences of Luxemburg’s circuitist perspective with the contemporary theory of the monetary circuit. The eighth section concentrates on the problem of the monetization of profits and interests. Some concluding remarks are provided in the last section.