How would a bank's profit have a tendency to fall? It seems inherently impossible. Was Marx incorrect about some stuffs?

How would a bank's profit have a tendency to fall? It seems inherently impossible. Was Marx incorrect about some stuffs?

Other urls found in this thread:

critiqueofcrisistheory.wordpress.com/three-books-on-marxist-political-economy/three-books-on-marxist-political-economy-pt-5/
thenextrecession.files.wordpress.com/2014/04/maito-esteban-the-historical-transience-of-capital-the-downward-tren-in-the-rate-of-profit-since-xix-century.pdf

This should be a good thread. I hope mods don't ban you, I have the same question.

It would be ideal for you to actually read Marx first. Listening to what he had to say and why he said it for yourself will be a million times better than listening to a thousand different [mis]interpretations from people here on leftypol

Kek

Falling rate of profit refers to the average rate of profit among all businesses.
As businesses get lower profit they have less ability to invest meaning fewer loans from the bank.

The rate of profit is social; it is not applicable to any one given business.

banks are not means of production.

like everyone

^This is the right answer.

Commercial banks tend to loan to rich capitalists. Their profits can't exceed the profits of industry and other forms of business too much or that will motivate industrial capitalists to quite production and to start up their own banks/lend to banks in order to make bigger profits then they get say selling cars.

Marx was actually the only economist I know of who considered what would happen if the rate of interest exceeded the rate of profit and his prediction that industrial capitalists would divert their money into finance on a large-scale until the high-rate of interest was brought down was proven right during the Volcker shock of 1979 and the economic turmoil of the early 80s when interest rates jumped to 20%. Industrial capitalists such as GM started getting into banking and finance, consumer credit really took off due to the in-pouring of capital etc.

Banks can't keep making money out of thin-air to lend because money has to be worth-something in the long-run otherwise it defends the point of lending at interest. The reference-point for the value of fiat-currency is gold and the total gold reserve in the global economy in Marxist theory despite what other posters may tell you.

critiqueofcrisistheory.wordpress.com/three-books-on-marxist-political-economy/three-books-on-marxist-political-economy-pt-5/

Sam Williams does a pretty good write-up on this topic that you should read.

Gold is a spook.

Good post

no gold is a metal

And yet its the only thing capitalists value, especially during an economic-crisis. In their minds its because gold is accepted everywhere and can be traded for any currency; in reality, its because its produced via human labor and is an embodiment of socially-necessary labor-time.

Under communism gold would be a spook other then its use in industrial processes and for decoration.

Turns out Niggers, Jews, and Jewish-Niggers got it right. Mr. Keynes cucked again.

But banks and petrol company profits continue to grow sky high

This.


Gold is actually quite valuable for a number of applications regardless of its scarcity. One of its biggest uses is in computer chips. It's also valuable for electromagnetic shielding. Sure it became culturally valuable for spooky reasons, but even those spooks were useful.

Gold is the agreed upon universal exchange commodity of the capitalist system.

If you want to figure out why that is and what this means… Read Marx

is that the reason they've been defaulting like crazy and need bail in and bail out?

Are you differentiating between the rate of profit and the mass of profits? There are quite different things.

If you invest 500 dollars in a meth-making operation and get back $50,500 then you'd make a profit of 1000%. If I invest 500,000,000 dollars and earn 2 billion back then my profit-rate is 150%. I may have much fatter profits when you consider the mass of profit then you but when you consider what we each put into our operation yours is by far more profitable.

Neither profit-rate I've mentioned is actually typical of what the average profit is in reality but is in fact far better then average.

Let me use a real-life example: BlackRock manages 15 trillion dollars in assets but does that mean their profit is anywhere like 100%. I seriously doubt it, it has to be rather low in comparison to the capital they employ, last I heard Apple had the largest pile of accumulated profits of any company in the world. Could be wrong tho but the point still stands.

Oil companies take billions and billions of dollars to set-up new profitable drill-sites does that mean that just because they post profits in the billions that they are immensely profitable. Not always. The drilling/excavation operations in Alberta and South Dakota are being hammered by low-world oil prices which could lead to the collapse of operations that have hundreds of billions in capital and financial backing behind it.

The state-budgets of Memezuela, Russia, Iran and other oil-dependent states are completely fucked because their projections were made under the impression that high-oil prices would continue for sometime. I think that's enough for now to show that the principles at work are essentially valid.

But profits aren't declining

That's a vaild counter-argument.

...

Rate of profit is declining.

Seems like a pointless tautology when you frame it like that.

It doesn't work like that. The mass of profits can grow absolutely while the rate of profit declines; what matters is the proportion of profit to the capital invested. Profits maybe increasing in terms of their mass but the amount of capital invested has increased immensely as well, meaning business isn't getting out as much as it would've gotten on the same capital 30,50, 100 years ago etc.

Seems like a load of bunk then.

*takes out fiat money*
nothin personnel… proles…

Bank profits are a portion of the profits of other capitalists, so if their profit was falling, so would the banks

...

If the rate is falling only large capitals can get a high mass, causing a trend to monopoly.

Its basic math and its hardly a tautology to the capitalists involved in the pursuit of profit. Think about it on a personal level if you could get 100% selling old coke cans and you made that your business would it matter to you that the falling price of the metals going into it has caused it to drop to only 10%.

That means you have to bag up and sell ten times as many cans in order to make the same amount of money that you used to. If you had bagged 12 times the cans you used to and earned slightly more cans then you used would you consider yourself better off? Only nominally, that means you have to work 12 times as hard as you did in the past.

Now put yourself in the position of an actual capitalist rather then some hobo are you going to be more or less willing to hire people if your profit-rate is in the shitter compared to where it used to be? Sure you have more money but are you going to be more or less willing to take a chance and go into new business opportunities, hire new workers, grant new pay raises etc.?

Think about what it means on a society-wide level too. Is an economy going to grow faster or slower with a low-rate of profit? Are wages going to go up for the average person if the people at the top have less surplus in terms of its over-all rate to fund their lifestyles, to expand new businesses? Are market-evaluations made of properties and assets from a time when profits were high as likely to stay where they are or go up if the rate of profit is declining? If I try to sell my business and the income stream has slowed in comparison to where it used to be and I keep my evaluation based on the income it would have earned any buyer whose not an idiot will take one-look at the books and see its overvalued. If property and asset-values collapse across an economy, as often happens during a severe recession, then that impacts the health and real wealth of a society negatively.

The only thing that's bunk here is your attitude, friend.

How so? If I put in $20 last year and got $1, but this year I put in $40 and got $1.50 my profits increased and my rate of profit is declining.

how the fuck do you meassure it nigga?

It is as simple as taking global statistics for revenue compared to investment and averaging. I would appreciate if he posted the source, however.

thenextrecession.files.wordpress.com/2014/04/maito-esteban-the-historical-transience-of-capital-the-downward-tren-in-the-rate-of-profit-since-xix-century.pdf

yeah he was about 50-50, but Marxism is a religion so Marxists get incredibly butthurt at any suggestion that he was less than perfect.

Such as?

Capitalism being good

LTV

but gorilla kun you already made around 4 threads about the LTV

я очень благодарен, мой товарищ.

You would think that he would understand this shit by now.

Get out of here Eugen Böhm von Bawerk