The rate of profit and the world today
Thursday, 5. July 2007, 18:41:48
Chris Harman
A quarterly journal of revolutionary Socialism Issue: 115
2 July 07
The “tendency of the rate of profit to fall” is one of the most contentious elements in Karl Marx’s intellectual legacy.1 He regarded it as one of his most important contributions to the analysis of the capitalist system, calling it, in his first notebooks for Capital (now published as the Grundrisse), “in every respect the most important law of modern political economy”.2 But it has been subjected to criticism ever since his argument first appeared in print with the publication of volume three of Capital in 1894.
The first criticisms in the 1890s came from opponents of Marxism, such as the liberal Italian philosopher Benedetto Croce and the German neoclassical economist Eugen von Böhm-Bawerk. But they have been accepted since by many Marxists—from Paul Sweezy in the 1940s to people such as Gérard Duménil and Robert Brenner today.
The argument was and is important. For Marx’s theory leads to the conclusion that the there is a fundamental, unreformable flaw in capitalism. The rate of profit is the key to capitalists being able to achieve their goal of accumulation. But the more accumulation takes place, the more difficult it is for them make sufficient profit to sustain it: “The rate of self-expansion of capitalism, or the rate of profit, being the goal of capitalist production, its fall…appears as a threat to the capitalist production process”.3
This “testifies to the merely historical, transitory character of the capitalist mode of production” and to the way that “at a certain stage it conflicts with its own further development”.4 It showed that “the real barrier of capitalist produc-tion was capital itself”.5
A quarterly journal of revolutionary Socialism Issue: 115
2 July 07
The “tendency of the rate of profit to fall” is one of the most contentious elements in Karl Marx’s intellectual legacy.1 He regarded it as one of his most important contributions to the analysis of the capitalist system, calling it, in his first notebooks for Capital (now published as the Grundrisse), “in every respect the most important law of modern political economy”.2 But it has been subjected to criticism ever since his argument first appeared in print with the publication of volume three of Capital in 1894.
The first criticisms in the 1890s came from opponents of Marxism, such as the liberal Italian philosopher Benedetto Croce and the German neoclassical economist Eugen von Böhm-Bawerk. But they have been accepted since by many Marxists—from Paul Sweezy in the 1940s to people such as Gérard Duménil and Robert Brenner today.
The argument was and is important. For Marx’s theory leads to the conclusion that the there is a fundamental, unreformable flaw in capitalism. The rate of profit is the key to capitalists being able to achieve their goal of accumulation. But the more accumulation takes place, the more difficult it is for them make sufficient profit to sustain it: “The rate of self-expansion of capitalism, or the rate of profit, being the goal of capitalist production, its fall…appears as a threat to the capitalist production process”.3
This “testifies to the merely historical, transitory character of the capitalist mode of production” and to the way that “at a certain stage it conflicts with its own further development”.4 It showed that “the real barrier of capitalist produc-tion was capital itself”.5
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