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I believe that the “falling rate of profit” is actually a real phenomenon, but it is not only caused by workers not being able to afford stuff.
It’s also partially caused by other companies learning to produce the same products, which drives up competition, reduces monopolies and therefore reduces profits. Like consider medicine.
When you develop a new medicine, the first 20 years you have a patent right and therefore nobody else can produce the stuff. So you can set arbitrary prices and as long as people pay for it, you profit. But after your patent runs out, every company can produce it, which leads to cheap generica, and the rate of profit reduces significantly.
This is very well studied. https://en.wikipedia.org/wiki/Tendency_of_the_rate_of_profit_to_fall
You are correct yeah, it is more complex than the meme presents but I thought it was funny
other companies learning to produce the same products
Other companies in China.
Other companies in China cannot be bought and taken off the market.
The big question is: How are western profits going to be protected?
Why should Western profits be protected?
Maybe in the long run, but corporate profits are sky high at present. Best believe there’s more juice they’re gonna squeeze from this rind.
Easy solution: eat the rich.
Easy solution: just make products for owners of other such companies
No, the capitalists can’t consume the surplus product. This has been considered and it has been proved not to work (eg by Luxemburg). The reason is, that capitalists are in competition with each other and are thus forced to invest in constant capital (machines etc) expanding circulation and making the problem worse. Capitalists who only consume the surplus are outcompeted and cease to be capitalists.
One real way that this contradiction is (temporarily) dealt with, is to expand to markets who are not yet fully under the capitalist mode of production (colonialism/imperialism). When England ran into this problem with their textile industry, they destroyed Indias textile industry, forced them to buy English textiles, forced them to sell opium to China to pay for the textiles and forced China to buy the opium and pay with silver that the English wanted. There aren’t many white spots left on the globe though so this “solution” is starting to run into problems.
Another tried and proven way to deal with the crisis of overproduction and get rid of the surplus product, is to destroy lots of value. Like in war. This unclogs the arteries of capital circulation and gets things following again. The state can help expropriate people via taxes or inflation and funnel that directly to the military industrial complex. Crucially, this has to happen without providing any use value to anyone or it would cut into profits. So the state funding weapons to blow stuff up works, but building useful things like schools or railways or housing doesn’t, because it would lower the profits of private companies.
Another big one is debt and financialization. Just gamble on future generations being able to afford the present surplus product. Debt is a claim on future labor, so to realize it, the productivity of labor has to go up. But oops, this again increases the surplus product. So no permanent solution.
The only thing, that genuinely works is war. The more destructive the better. Or, you know, getting rid of capitalism.
well written analysis overall. a few comments though:
No, the capitalists can’t consume the surplus product. This has been considered and it has been proved not to work (eg by Luxemburg). The reason is, that capitalists are in competition with each other and are thus forced to invest in constant capital (machines etc) expanding circulation and making the problem worse. Capitalists who only consume the surplus are outcompeted and cease to be capitalists.
Yes, i agree with this. Capitalists typically don’t actually spend money on consumption themselves so they don’t increase consumption. Relying on capitalists’ consumption alone does not work at all.
One real way that this contradiction is (temporarily) dealt with, is to expand to markets who are not yet fully under the capitalist mode of production (colonialism/imperialism). […] There aren’t many white spots left on the globe though so this “solution” is starting to run into problems.
You are seriously underestimating how important the concept of settlements in outer space / other planets is to capitalists precisely for this reason. Capitalism is well aware that it has to continuously expand just to stay alive itself. And that is why outer space will be settled, whether it appears profitable at first glance or not. The state will literally just throw money in the form of subsidies at the problem until it happens. Much better than throwing money at the military, because it causes less public outrage, so it is politically “cheaper” because it costs you fewer votes. Consider that war is not profitable at first glance either, because it doesn’t create stuff, only destroys stuff. So it is not economically cheap but rather expensive and pointless; and yet we can already observe today that it still happens just to keep capitalism alive as a whole. You have even written this in your own comment! So it is not absurd to assume that the state will be willing to throw the same amount of money on outer space settlements just to keep capitalism running as a whole.
Thank you. It’s not like I completely thought of it myself. I mostly got it from David Harveys lectures/podcast. Yes, maybe I am underestimating it. It could be a better way to sink value than war, so it might happen. But there’s no consumer market in space. No one to sell to who’s not already part of capitalist circulation like India was during the industrialization. There’s no one in space who can buy the surplus product. War has the double benefit of destroying value (like space projects) and opening up markets on top of it (for selling surplus and for unequal exchange). Space exploration is also very capital intensive and has low actual human labor involved. Since all profit comes from human labor, it would drive down profit rates further. For example, robots successfully mining asteroids would make one single company rich for a time and lower profits for many companies, as prices drop.
Historically, funding for space related ventures has mostly been an offshoot of funding for war, with lots of dual use technologies. I don’t really see that relationship reversing soon. It’s not just rockets. For example, intelligence agencies have discard several surplus telescopes for spy satellites with capabilities that surpass Hubble. They have more advanced ones in operation.
Couldn’t this also just end up as a command economy masquerading as capitalism? Basically the oligarchs get together and say ok game over we win, lets divide up whatever is left and milk that cash cow into perpetuity?
You speak of the transition to a non-capitalist economy that’s a kind of socialism for the few against the majority, so it wouldn’t fully resolve the contradictions of capitalism. I guess how stable that would be depends on the details of how production is organized. But it seems like the ruling class has made their choice for his to manage the crisis: using fascism to enforce an ultra capitalist logic of accumulation through expropriation and overexploitation by violent means.
The only thing, that genuinely works is war. The more destructive the better. Or, you know, getting rid of capitalism.
this explains the forever wars …
Yes, I think it does. Not saying people consciously plan it like that, it’s just the one option left once you discard everything that capital might not like. For capitalists, war promise a stabilizing effect in the face of deep crisis. But leftists in the imperial core can turn the effects of war against the ruling class by waging struggles over who should pay for the blowback. Strikes against inflation, social cuts and against war funding in general. The war will end, when it no longer seems to promise profit opportunities.
war never changes just as that class
Easier solution: Kill every single corporate higher-ups.
