Friday, July 13, 2007

The Savior of Capitalisim, or its End?

Marx argued for the tendency of the rate of profit to fall:

The progressive tendency of the general rate of profit to fall is, therefore, just an expression peculiar to the capitalist mode of production of the progressive development of the social productivity of labour. This does not mean to say that the rate of profit may not fall temporarily for other reasons. But proceeding from the nature of the capitalist mode of production, it is thereby proved logical necessity that in its development the general average rate of surplus-value must express itself in a falling general rate of profit. Since the mass of the employed living labour is continually on the decline as compared to the mass of materialised labour set in motion by it, i.e., to the productively consumed means of production, it follows that the portion of living labour, unpaid and congealed in surplus-value, must also be continually on the decrease compared to the amount of value represented by the invested total capital. Since the ratio of the mass of surplus-value to the value of the invested total capital forms the rate of profit, this rate must constantly fall. - Karl Marx, Capital Volume 3, chapter 13.

At the Wynn Hotel in Macao, the rooms have a copy Wynn magazine, which gives evidence that Marx was wrong about profits. Exhibit A was an advertisement for a pair of $700 Puma sneakers.

I will confess to liking nice things. I am, for examble, the rare Ph.D. economist who likes neckties, and I own way too many of them (my only defence is that I only buy them when they are on sale, but even so). But there are things that are just grotesque in their conspicuousness. It is hard to believe such things are good for social stability.


Anonymous said...

Continuing with the drugs/drug dealer analogy: The dealers that refrain from gambling in situations where the odds are not fixed (the strong-willed) have a huge advantage over those who feel the need to compete with the strong willed. Drug dealers who refrain from using their own product and keep themselves "low-profile" tend to prosper, while dealers who "use" generally go under. It would be tough trying to get numbers to support this, but it seems to be common sense.

Anonymous said...

Apropos Marx and neckties:,0,6889697.story

Anonymous said...