The Unmaking of Marx’s Capital: Heinrich’s Attempt to Eliminate Marx’s Crisis Theory

Kliman, Andrew and Freeman, Alan and Potts, Nick and Gusev, Alexey and Cooney, Brendan (2013): The Unmaking of Marx’s Capital: Heinrich’s Attempt to Eliminate Marx’s Crisis Theory. Published in: SSRN Working Papers Series (22 July 2013): pp. 1-20.

Abstract

Michael Heinrich’s recent Monthly Review article claims that the law of the tendential fall in the rate of profit (LTFRP) was not proved by Marx and cannot be proved. Heinrich also argues that Marx had doubts about the law and that, for this and other reasons, his theory of capitalist economic crisis was only provisional and more or less in continual flux.

This response shows that Heinrich’s elementary misunderstanding of the law––his belief that it is meant to predict what must inevitably happen rather than to explain what does happen––is the source of his charge that it is unproved. It then shows that a simple misreading of Marx’s text lies at the basis of Heinrich’s claim that the simplest version of the LTFRP, “the law as such,” is a failure. Marx’s argument that increases in the rate of surplus-value cannot “cancel” the fall in the rate of profit is then defended against Heinrich’s attempt to refute it. Finally, the paper presents evidence that Marx was indeed convinced that the LTFRP is correct and that he regarded the crisis theory of volume 3 of Capital as finished in a theoretical sense.

• Item Type: MPRA Paper
• Language: English
• Keywords: Crisis Theory;Marxist Economics;TSSI;Rate of Profit
• Subjects: B - History of Economic Thought, Methodology, and Heterodox Approaches > B4 - Economic Methodology; E - Macroeconomics and Monetary Economics > E0 - General; E - Macroeconomics and Monetary Economics > E2 - Consumption, Saving, Production, Investment, Labor Markets, and Informal Economy > E22 - Investment ; Capital ; Intangible Capital ; Capacity

References

Baran, Paul A. and Paul M. Sweezy. 1966. Monopoly Capital: An essay on the American economic and social order. New York: Monthly Review Press.

Colander, David, Hans Föllmer, Armin Haas, Michael Goldberg, Katarina Juselius, Alan Kirman, Thomas Lux, and Brigitte Sloth. 2009. “The Financial Crisis and the Systemic Failure of Academic Economics.” Kiel Working Paper 1489, Kiel Institute for the World Economy, Feb.

Duménil, Gérard and Dominique Lévy. 2004. Capital Resurgent: Roots of the neoliberal revolution. Cambridge, MA: Harvard University Press.

_______. 2011. The Crisis of Neoliberalism. Cambridge, MA: Harvard University Press.

Engels, Frederick. 1991. “Preface.” In: Marx, Karl, 1991a. Capital: A critique of political economy, Vol. III. London: Penguin.

Freeman, Alan. 1996. “A General Refutation of Okishio’s Theorem and a Proof of the Falling Rate of Profit.” In: Freeman, Alan and Guglielmo Carchedi (eds.), Marx and Non-equilibrium Economics, Aldershot, UK: Edward Elgar.

_______. 2009. “Investing in Civilization.” In: Guard, Julie and Wayne Antony (eds.), Bankruptcies and Bailouts, Black Point, CA: Fernwood Publishing.

2010. “Marxism Without Marx: A note towards a critique,” Capital and Class 34:1, pp. 84–97.

_______. 2012. “What Causes Booms?” Proceedings of the International Conference on “Marx and Beyond,” Kolkata, India, Mar.

_______. 2012/13. “The Profit Rate in the Presence of Financial Markets: A necessary correction,” Journal of Australian Political Economy 70, Summer.

Freeman, Alan and Andrew Kliman. 2008. “Simultaneous Valuation vs. the Exploitation Theory of Profit: A summing up,” Capital and Class, No. 94, Spring, pp. 107–17.

Hegel, Georg Wilhelm Friedrich. 1991. The Encyclopedia Logic, T. F. Geraets, W. A Suchting, and H. S. Harris (eds.). Indianapolis: Hackett Pub.

Heinrich, Michael. 2013. “Crisis Theory, the Law of the Tendency of the Profit Rate to Fall, and Marx’s Studies in the 1870s,” Monthly Review 64:11, April. Available at monthlyreview.org/2013/04/01/crisis-theory-the-law-of-the-tendency-of-the-profit-rate-to-fall-and-marxs-studies-in-the-1870s.

Kliman, Andrew. 2007. Reclaiming Marx’s “Capital”: A refutation of the myth of inconsistency. Lanham, MD: Lexington Books.

_______. 2012. The Failure of Capitalist Production: Underlying causes of the Great Recession. London: Pluto Books.

Marx, Karl. 1987. Karl Marx, Frederick Engels: Collected Works, Vol. 42. New York: International Publishers.

_______. 1990. Capital: A critique of political economy, Vol. I. London: Penguin.

_______. 1991a. Capital: A critique of political economy, Vol. III. London: Penguin.

_______. 1991b. Karl Marx, Frederick Engels: Collected Works, Vol. 45. New York: International Publishers.

Monthly Review editors. 2013. [Introduction to Heinrich, Michael, “Crisis Theory, the Law of the Tendency of the Profit Rate to Fall, and Marx’s Studies in the 1870s”], Monthly Review 64:11, April. Available at monthlyreview.org/2013/04/01/crisis-theory-the-law-of-the-tendency-of-the-profit-rate-to-fall-and-marxs-studies-in-the-1870s.

Potts, Nick. 2009. “Trying to Help Rescue Value for Everyone,” Critique: Journal of Socialist Theory 37:2, pp. 177–99.

_______. 2011a. “Marx and the crisis,” Capital & Class 35:3, pp. 455–74.

_______. 2011b. “Valuation in the Presence of Stocks of Commodities,” Critique of Political Economy 1, pp. 89–119.)

_______. 2012. “Unforgivable Misrepresentation: Deliberately Distorting the Temporal Single System Interpretation of Marx in Order to Dismiss Marx’s Value Theory.” Presented to the Joint Conference of the Association for Heterodox Economics, the International Initiative for Promoting Political Economy and the French Association for Political Economics, Paris, July.

_______. “Keynesian Economics: In search of unnatural stability,” Critique: Journal of Socialist Theory, forthcoming.

Ramos-Martínez, Alejandro. 2004. “Labour, Money, Labour-Saving Innovation, and the Falling Rate of Profit.” In: Freeman, Alan, Andrew Kliman, and Julian Wells (eds.), The New Value Controversy and the Foundations of Economics, Cheltenham, UK: Edward Elgar.

Romer, David. 2011. “What Have We Learned about Fiscal Policy from the Crisis?,” Sept. 2011 version. Available at http://elsa.berkeley.edu/~dromer/.

Warnke, Georgia. 1993. Justice and Interpretation. Cambridge: MIT Press .