This introductory paper examine the discussion among Marxists about the rate of profit. It is non-mathematical but contains many numerical examples and a detailed textual exegesis. It is a good starting point for the new student of temporal approaches to value and their difference from the simultaneist (equilibrium) standpoint. It contains a more or less complete non-mathematical exposition of the temporal calculation of the profit rate, and demonstrates that the simultaneist approach leads to the creation of value without labour.
The paper explains the alternative Temporal Single System Interpretation (TSSI) of Marx’s value theory developed by a number of scholars since the early 1980s. It illustrates the errors that arise from physicalist and simultaneist reasoning with a detailed series of numerical examples and thereby illustrates how the rate of profit really governs a modern capitalist economy.
This paper was produced as a study aid, to help people understand twentieth-century debates about Marx’s theory of the profit rate. It discusses and dissects the principal criticisms of Marx’s formulation of the ‘law of the tendential fall in the profit rate’. It is I think one of the more complete explanations of why and how Marx’s temporal conception of the profit rate leads to a different, and greatly more logically coherent, account of its movement than the simultaneist and physicalist alternatives which have dominated this field within academic Marxism since Sweezy’s (1942) endorsement of Bortkiewicz’s (1905) re-interpretation of Marx as a general equilibrium theorist manqué.
It was originally presented at the Greenwich symposium on value theory in 2000, and is substantively the same as the paper distributed there; however I have completed the text and the references where there were minor gaps in the original.
To aid the reader, its central focus is the criticism first articulated by Moszkowska, but popularised by Joan Robinson, according to which Marx erred because the value of capital advanced must fall, along with prices, in such a way that it entirely offsets the rise in the value of invested capital. This criticism, it shows, is based on a particular though widespread reading or ‘interpretation’ of Marx, corresponding to a particular view of value: the ‘physicalist’ concept which Western academic Marxism. Physicalism, it shows, is an automatic outcome of simultaneism, according to which Marx is best understood as a variant of economic general equilibrium.
It employs the method of symptomatic reading – attempting to present what the protagonists are really trying to say – and in this way differs from the adversarial method that has become standard. I begin from the fact that Marx, and his critics, draw diametrically opposite conclusions from the same premises – continuously rising productivity as a defining element of accumulation.
I ask what are the presuppositions and necessary conclusions of the two opposed interpretations, with the aim of laying bare the logical world-view which underlies them. I show that the opposed conclusions which are drawn by scholars from the two main paradigms arise not from errors of logic but from their opposed value concepts. My aim is, without presupposing which is right, to investigate what each concept actually is.