The overarching goal of communism is for laborers to own the means of production instead of an owning/capitalist class. Employee owned businesses are the realization of communism within a capitalist society.
It seems to me that most communist organizations in capitalist societies focus on reform through government policies. I have not heard of organizations focusing on making this change by leveraging the capitalist framework. Working to create many employee owned businesses would be a tangible way to achieve this on a small but growing scale. If successful employee owned businesses are formed and accumulate capital they should be able to perpetuate employee ownership through direct acquisition or providing venture capital with employee ownership requirements.
So my main questions are:
- Are organizations focusing on this and I just don’t know about it?
- If not, what obstacles are there that would hinder this approach to increasing the share labor collective ownership?
This is not true in the general case. If prices for input materials are down, profits rise for the company using them. One company’s profit loss is another’s gain. That is even with the shaky assumption that competition can exist long term in a free market. Imperialism, as defined by Lenin, results in concentration of capital and the removal of competition.
There are counteracting forces for it, but expanding is not one of them. Expanding does not change the rate of profit (profit/capital invested); at most, it changes the total profit.
If it costs 5 dollars to make one widget on average, and company A creates a machine that improves production so as to lower the cost of widgets produced by them to 3 dollars, then they temporarily make more profit until other companies that make widgets find ways to lower their cost of production to around the same level. This new lower price has a higher ratio of value advanced from machinery as compared to labor, lowering the rate of profit. This is a general tendency, but can be fought against by many measures, including monopolization and using regulations to prevent companies from properly conpeting, ie by copyrighting machinery and production processes.
Imperialism didn’t just allow for expansion, it also came with violent means of suppressing wages and extracting super-profits. It wasn’t just an expansion that would raise total profitd while rate of profits fell, it also created new avenues for exploiting labor even more intensely, and selling goods domestically at marked up prices.
Really, I don’t know what your issue with the TRPF is, are you under the assumption that Marxists claim it’s an ironclad law over time and not a tendency, or are you against the Law of Value in general?
You didn’t address any of my concerns, nor was I talking about productivity. Let’s try again for the the first one with a simple example:
Company 1 makes a product (let’s say timber) at 50 surplus value. That 50 is a cost for company 2 that uses the product as an input material (it makes wooden chairs). We can calculate the total rate of profit of both companies. Now company 1 is forced to lower the price to 40 because of competition. We calculate the total rate of profit again and the total rate of profit has actually increased.
Thus, it does not follow that lowering prices/profits leads to a decrease in the overall rate of profit
What you have described is the pure moment of input costs lowering (and you’re confusing surplus value with price, 50 being surplus would also imply 10 in variable and 10 in constant, so 70 would be the input for company 2 if you simplify for the sake of example absolutely no tool usage in company 2). However, unless company 2 has a pure monopoly on chairs, this lowering of cost of production would also apply to other chair companies, and costs would lower. When wood prices are low, wooden chairs cost less than when wood prices are higher.
Further, the TRPF isn’t really about competition, or even surplus value. That’s one-sided. The TRPF is about rising organic composition of Capital, ie as c increases in ratio with v, or c/v. Competition pushes for this, as increasing automation can allow temporary advantage (as you’ve somewhat shown) before other companies follow suit. What you’ve shown is one company lowering the ratio of c/v, ie lowering the costs of their constant Capital over their variable, but that would imply that this company should never reduce wages nor increase automation as a rule.
In order to outcompete, constant Capital must rise in ratio, as it can lower prices of production below what others can offer, even though this raises c/v. Hence total profits rise, but rates of profit trend downwards.
Your argument would only hold true if this was the final part of the process and competition didn’t exist for company 2, allowing them to charge monopoly prices and never worry about increasing automation and productivity.
Now, the rate of profit falling is often wholly combatted by increasing exploitation, or e=s/v. This, however, gives rise to stagnating real wages while the Capitalists get ever wealthier, sharpening class contradictions.
Thanks for the detailed explanation, and sorry for the late response. Mine was just a simple counterexample to show that the tendency doesn’t always apply. You’re right that the c2 I used is wrong, and it should be s1+v1+c1, although that would still not change the result. My example was in the case where one producer wants to compete with another with a lower price, so chooses to trade a lower s for a bigger market share, so I wasn’t really getting into improved productivity, I was just addressing your initial statement of “competition forces prices down”.
In a real economy this chain would be much more complicated with way more steps and even backpropagation of some of the values. If we have a rate of decline of profit for company 1 called R1 and a rate R2, the overall R would only decline if R2 > R1, otherwise it would increase. So to prove a general declining rate of profit you would have to prove that the decline propagates fast enough through the entire chain.
Also, I fail to see how c/v (organic composition of capital) necessarily increases. If prices lower (due to competition, or productivity as you have said), then c will also decrease for the companies using those products (as I have shown in my example) as the cost of machines and input lowers (a computer in 2025 costs way less than the same one in 2000). To prove that c/v increases you would have to prove that dc > dv (derivatives), which is not at all clear since, while they both decrease, they can decrease at varying rates which are not predictable.
No worries about taking time, I’m on social media less and less myself these days. I think the biggest problem with the way you’re looking at the TRPF is using microeconomics to describe a macroeconomic pressure. Marxist analysis stresses the interconnectedness of economics, and trying to view 2 companies while obfuscating the rest of the economy is going to run into false assumptions about a general pressure that applies to economies at scale.
In the instance of R2 and R1, the decline in costs from the input of R1’s price to R2 applies to the rest of the chair manuracturers. If company 2 doesn’t also lower their prices as their cost of input has lowered to match other chair companies, then they will run into fewer total sales. Competition places a negative pressure on Surplus, and increasing productivity of machinery increases Constant Capital in relation to Variable Capital, so the biggest source to counteract the Rate of Profit’s decline is by lowering V or stagnating it with respect to productivity, which is what we are seeing now more than anything else.
As for OCC, think of it in this manner: if machinery costs less for better productivity, then it will be employed more. Economies of scale work precisely because of this grand increase in OCC, which is why equivalent goods cost so little today in comparison to 50 years ago. Selling more widgets for a lower rate of profit per widget but greater total profits is the bread and butter of commodity production, and industrialization. If a worker at the widget factory produces 100 widgets with machine A, and 1000 widgets with machine B, then the OCC is rising. Automation increases OCC. Here’s Marx in Capital:
[Emphasis mine.]
I really don’t know what it is exactly that you’re taking issue with. If you agree with Marx’s Law of Value at its base, then the TRPF follows from it mathematically as a general downward pressure, not as an ironclad linear relationship. If you don’t agree with Marx’s Law of Value, then the TRPF isn’t worth fighting against, there are other more standard attacks on it. Do you consider yourself a Marxist? That might help me understand where you’re coming from a bit more.
It sounds like it’s similar to saying climate change isn’t real because the weather was colder one day, when in actuality the theory of global warming is describing an ongoing process and tendency of the temperature to increase in the overall system overall long period of time, it’s not a day to day weather phenomenon you can describe with a singular slice of time.
No, this is showing a counterexample, which would render the original theory moot. If we find a planet tomorrow that pushes you away rather than attracting you, then Newton’s theory of gravitation is (probably) no longer a valid model of the real world, or would have to be revised. That is just how science works.
Sort of, not quite. The TRPF is closer to saying “if Capitalists continue to automate and improve production, ie if c/v increases, ie if the organic composition of capital increases, then the rate of profit will fall unless exploitation, ie s/v, increases.”
s/v can be increased in a number of ways, from increasing intensity, to Imperialism, ie using far more brutal exploitation in foreign countries.
Climate Change is similar in that the TRPF is a tendency, and temperature vaires on a daily basis, but the key difference is that while the TRPF does exist, ways of countering it temporarily also exist, while Climate Change isn’t “countered” when it gets colder for a day. It’s similar, but I wanted to point it out.
Also, absolute profits and the rate of profit are different, absolute profits have been rising, and rise most by producing and selling more. This is why c/v must rise in Capitalism, you can’t just keep stagnating.