How much longer lads?

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That's true, but in regards to business, what something says on paper and how things are in actuality aren't necessarily the same. The example I gave was rather simple for the sake of explanation, but the economic reality is much more complex.

First, just because a company is making a profit, even a large one, doesn't mean that the rate of profit is growing. The fact too that Apple might be sitting on a quarter trillion dollars also has nothing to do with their RoP.

So what we're faced with are two seemingly conflicting facts: that the number of high-paying, secure jobs that facilitate consumerism have been evaporating year after year, while corporate profits continue to hit record levels. People are able to consume less and less, so this should result in declining profits for corporations as money accumulates at the upper end of the spectrum.

The economy isn't quite a closed system, though. Over the past 8 years, the Federal Reserve has pumped something like $15Trillion into the economy. How they've been doing it is the rub. During the Great Depression, Keynesian economics endorsed printing money and putting people to work doing just about anything and paying them well so that they can generate demand and get the economy rolling again. In the Great Recession, instead of trying to generate demand by subsidizing the populace, the Fed prints the money, and then basically gives it away to the big banks for them to gamble with invest in the economy.

The only problem is that there's no where really to invest because demand keeps shrinking due to an increasingly emaciated working class. The economy can't expand because there's no where to reasonably expand to, and so all this money just keeps getting pumped into the upper stratum. Banks can't just sit on the money, so they divvy it out to their confederate corporations. These corporations then do things like buy up their own stock, which increases its value, which leads to huge profits on paper, while in reality nothing at all has changed. This is just a single example, really. The global economy is rife with this sort of chicanery. The working class gets poorer, demand decreases, production decreases, expansion fades, yet profits keep going up! Nevermind the material realities, as long as those numbers keep increasing, everything is fine :^)

This sort of market insanity is why we're currently in the grips of a (for the moment) "Shadow Recession." You're right on the nose when you say that money continues to accumulate in the upper spectrum, and that's exactly the problem. Money is going from the printing press almost directly into the pockets of the wealthy and is staying there which only leaves the economy to choke and sputter.

lost mine when reading that tripe

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Monopolies tend to accumulate higher profits for longer periods of time. And where the little guys get wiped out during downturns and lower periods of profitability (because smaller capitals need a higher ROP to survive) big oligopolies and banks accumulate more of the market share and more of the aggregate social wealth.

Some Marxists would disagree with me but I think the move to monopoly-capitalism over the past century is one thing keeping the system alive. But eventually even the big oligopolies eventually hit walls and suffer crises of profitability. Their spongelike ability to accumulate enormous amounts of profit and social wealth which for a time makes it seems as if they'd slipped previous economic constraints eventually proves cancerous to the system as a whole and makes the crisis far more dire than say the normal business cycles of the 19th century.

Great post, chommie. Screencapped for future use.

And a "witty" one liner.

Glad to be of help. I just hope it's as accurate as I think it is, but I'm not an expert.

Since profit is exploitation, doesn't that mean falling rate of profit means capitalism is getting less exploitative?

The same rate of surplus-value can and does express itself under the same degree of labour exploitation in a falling rate of profit, because the material growth of the constant capital implies also a growth—albeit not in the same proportion—in its value, and consequently in that of the total capital.

Yes, there is less exploitation in the form of wage labour going on. We may even see a future entirely free of exploitation where the ruling classes just live in fortified castles where automated machines produce everything they need and shoot at all the starving people outside when they try to trespass onto their privately-owned fields to steal food. But hey, at least we won't have wage labour.

What type of communism should we call this? I feel we need to think up a name because it is definitely going to happen, and it would just be pissing on my grave calling it 'communism'.

Anarcho-Capitalism?

in english

No. Exploitation can say the same or even increase as profits fall. How can this happen? During good times businesses often "overinvest" (from the perspective of capitalism and the capitalist class not society in general) in new means of production, new facilities, new types of or better qualities of material etc. which falls under the umbrella of "constant capital" in Marxist theory.

It is not uncommon for capitalist's to expand their investment in constant capital far faster than their investment in variable capital (i.e. labor)–in fact the capitalist is both desires and is compelled to try to get the most value out of the labor they hire for the least amount of pay. This often means hiring fewer people where you can help it and working them harder when their on the clock and doing your best to make them accept stagnant wages, pay cuts etc.

So let's imagine a scenario where we have a sweatshop factory owner who decides he needs better equipment and better materials and therefore decides to invest twice as much in constant capital as he did the year before.

Last year, he invested: $75,000 in constant capital and $50,000 in variable capital and took home a profit of $150,000 which was a very healthy profit of 120%. This year he's decided to invest $150,000 in constant capital but left the portion going to labor the same at $50,000. His return this year is a gross of 350,000 with the same profit of $150,000. Although the profit is the same, the rate of profit has declined quite precipitously to 57% but the absolute mass of value being created by the workers have increased while their pay has stayed stagnant. The mass of value (including capital investment and profit) was $275,000 in the first year and $350,000 in the second year. There was an increase of $75,000 dollars of value raised by the workers to pay off the investment made by the capitalist but no corollary increase in their aggregate pay. The exploitation increased but either "over investment" and/or harder market conditions made it more difficult to increase profit.

Marx argued that commodity prices tend to realize their value through disequilibrium sometimes (usually good times) they were up and other times they went down. The average price is created by price oscillation which is much like and coincides with the boom-bust cycle of capitalist production. During crises, prices usually crash and Marx argues that commodities fall below their value (cost+average rate of profit) and I would argue in extreme crises like the great depression it is not uncommon for the embodied labor in commodities (which manifests itself as profit) to be completely destroyed. During booms, commodity prices typically rise above their average market value and price of production and are typically yield more profit then average. That can't go on forever since the capitalist is also a buyer and infinitely rising prices will inevitably make him unable to reproduce his conditions of production. I think it would be quite formalistic to think that workers are being exploited more during boom times and less during depressions–especially since most workers have the opposite personal experience. Workers typically get exploited more during capitalist depressions as employers are struggling to survive and the contraction of available jobs allows them to offer low wages. During boom-times there is more demand for labor and wages begin to rise, as workers feel more secure in challenging their bosses and bosses are more willing to accept concessions in the battle to make profit at any cost while the going is good.

Is it all just the industrial cycle that determines the level of exploitation? No, in fact the monopolization of production and the increasing proliferation of FIRE sector charges that the economy also burden the productive capitalists as well as workers. More and more of the social surplus goes to paying interest payments, rents, other faux-frais or false costs that drag upon production and make things unnecessarily costly. A falling general rate of profit does not indicate that workers are being less exploited; typically in an imperialist economy there are the oligopolies who have profits that are both vary large in mass and very high in its rate and smaller to medium-sized businesses struggling to get by, seemingly always on the verge of bankruptcy. So there are two-tiers if you will within the rate of profit but even big industrial monopolies have to pay rent, interest, go through shitty times, over calculate their future economic performance based on the past etc. but it doesn't really mean they failed to exploit the workers enough if they failed to make a large enough profit.

How is it capitalism?

Why?

Thanks comrade.
More people need to fucking read kapital

That's a good question that I've been meaning to answer, but I haven't had the opportunity to respond the past couple of days, sorry.

Thank you~

The entire point of reinvesting a portion of your current profit is to increase future profits. And you better, because your competitors certainly are

Yes, but no one here will admit it.

See:

Bumping good thread