FROP and economic growth

Could I please start up a discussion on economics and crises theory again. Very slowly over a long period of time, and through discussions on the ICC forum too, I am reevaluting my own views of crises theory and trying to relate them to the real world. I think this is actually a good point to be doing so because with now have a period of a century during which capitalism continues to develop in most surprising ways yet our political current has recognized that a significant change took place at that point and calls it obsolete or decadent and looks to the emergence of communism out of a wc revolution against it.

Ive said before that for me decadence is an important concept and whilst I know the ICT/CWO express things differently I also know the content of what we say and mean is very similar.

Both Luxemburg and Lenin talked of the start of the final phase of capitalism as did Grossman and Mattick in their own ways. Their theories are insightful but incomplete or incorrect in the sense that we have far more experience of this final phase than they had.

I recently read some of Pikettys work and your review of it and came across the statistics he used on world gdp growth.

In conjunction with this, I would like to raise again the issue of the growth of world population in the last century and question its significance for economic theory. I have never been able to quite grasp what Marx meant with regard to explaining population control and growth and relating to needs of capitalist expansion. Although I note the Luxemburg explaining labour supply as one element of her theory of capitalism’s dependance on pre-cap markets for accumulation and growth

Both the population and GDP (and please clarify if you have different statistics) have grown significantly during the last half of the 20th Century. The world gdp levels the figures are 1820 - $1.2 Trillion; 1900 - $3.42 tr; 2000 - $63.1 tr. I think this is still a significant set figures in that growth rate in 20th century is very much higher than in the 19th. Its not what i would have expected because growth in the 19th was from a much smaller base. Also world population appears to have more than doubled since the 1960s and approx 5x since 1900, far more than was happening previously.

I am interesting therefore to understand how these statistics can be explained from the FROP perspective because a simplistic interpretation would argue that as the ROP falls, capitalism experience increasing crisis and growth is eventually restricted. Clearly these levels of growth do not square with any theory that puts accumulation dependent on non-capitalist markets but your website uses statistics by E Maito and these confirm a generally tendency for the ROP to fall over the last century apart from the period of post war reconstruction. How would you explain the process of tendency and countertendency of the ROP leading to such levels of growth in gdp and population?



Without going back to look at everything that is written on this (perhaps other, more methodical, comrades will be doing it but that would mean you will probably have to wait for a response) I would just offer these few initial thoughts.

  1. There is no question that what you have stated is born out by the statistics for both population growth and GDP - any debate about them would be around the margins and ergo not significant (but be careful with GDP as the bourgeoisie are not agreed on how to calculate it but they automatically increase it in line with population growth so I would argue that if the population grows faster or at the same rate as GDP growth we are actually talking about a stagnant system). I have not compared the two properly but believe that has been particularly the case over the last decade and more.
  2. The LTORPTF is not only about crises but is also an explanation for dynamism of capitalism as compared to previous modes of production. The drive to globalisation, the fragmentation of the working class in the advanced capitalist sector, the technological transformation of the digital age are all a response to that tendency. It gives an impression of continuing dynamism only if we ignore the social costs.
  3. You are right about the long tendency for profit rates to fall and this comes from a variety of different econometric methods as used by Kliman, Maito, Carchedi, Roberts and others (none of whose political recipes we endorse). Despite nuances there is a remarkable degree of agreement between them. However they have to use figures based on prices and not values and they have to use mainly US figures since no other place in the world provides data in so clear a manner to be able to make these calculations (thanks to Simon Kuznets when at the BEE). How representative they are is a matter of debate (and there are several schools who deny them - Dusmenil, Husson etc).
  4. Most of the economic analysts who concentrate on the rate of profir also agree that the end of the psot war boom (late 1960s/early 1970s) signalled the entry of the system into a new period of the downward path of the cycle. The world has been in need of a massive devaluation ever since on the scale of the devastation of a global conflict. All of those in the UK who came to revolutionary politics at that time did so because the class was putting up resistance across the world and at different levels to the attempt by the system to make them pay for the crisis. It took the corporatism of the unions and ten years for the capitalists to regain control by basically liquidating a lot of fixed investment, creating mass unemployment and thus a more precarious labour environment which since the 1980s as only developed.
  5. We are thus today in an entirely new situation. The intervention of the state has (just) managed to keep the system going through various attempts to manage the economy in an era of lower profits. We have now gone over 40 years in this system but nothing has stood still. The capitalist state has tried everything from deficit financing to neo liberal policies of selling off state assets cheaply to "entrepreneurs" for them to make the profits for themselves until finally the financial world entered into it in the speculative phase which we are now in and where the future of the system has been mortgaged so far into the future that it defies imagination. What also defies imagination is where the world goes from here. What other trick can they pull that can devalue enough capital to sufficiently kickstart a new round of accumulation? We (and many others) can see none but then we did not think they would abandon the "commanding heights" of any national economy back in the 70s and 80s as they did in the UK. The current incompetence and confusion in ruling class circles as evidenced by Trump, Brexit, the rise of the nationalist right across Europe suggests we need to prepare ourselves for more open rivalry (Trump's latest security statement reads like a declaration of war on Russia and China but then the rhetoric does not completely cohere with the reality) between the imperialist powers. In the meantime their proxies continue to sustain genocidal wars which never end but just shift from one theatre to the next on the edges of the system. Imperialist decadence it is which the lack of profits is driving forward. Happy New Year in 2018!

Sorry, but what do the letters FROP stand for ?

Falling rate of profit.

Thank you.

Once capitalism has created the material base from which socialism can be constructed, its further existance is an obstacle to that potential higher form,

This does not mean it cannot continue to generate an ever more immense accumulation of commodities, but another process kicks in - the tendential rate in the decline in the use value of commodities.

Ever more useless production geared up to satisfy the pseudo needs of the masses under capitalist conditions of isolation and powerlessness, an abundance of alienated production and consumption for many, if not all.

The penury remains, the essential misery of the proletarian condition, but for many it is no longer a question of survival, of existing, food, shelter, clothing.

It is a question of a pointless alienated experience, working and buying, not able to step off the treadmill of production and consumption that has gone beyond survival.

No doubt a much rawer level of primary poverty exists and spreads, but this is arguably not the prime experience of the proletariat of the advanced metropoles.

it may be the case that revolution does not break out before generalised pauperisation. This seems to be the thrust of the Communist Manifesto.

But are we then discounting the possibility of revolution throughout the sixties, seventies, eighties?

A society moulded in the interest of profiteering may not threaten us with death by hunger before we revolt.

Does anyone here have any statistical data that may concretize whether the cost of new investements is decreasing more or less quickly than the rate of profit?


The best places to look are economic blogs like Michael Roberts or Carchedi (even if we don't agree with their social democratic politics) as they spend time digging this stuff out. Given the level of interest rates I think they answer is fairly obvious but the problem for them is that even at these historically low rates there is little new investment (hence the so-called "productivity problem"), Generating revenue rather than creating new value is where we are at in the crisis.