06/07/2013 by socialistfight
Ticktin, Taaffe and Underconsumption
The article by Paul Demarty on the SP/CWI Rudeness and revolution (WW July 4) is disingenuous. He has neglected to tell us that the CPGB and specifically their in-house Marxist economic theoretician, Hillel Ticktin, has almost exactly the same line on the falling rate of profit (TFRP) as the Peter Taaffe of the SP/CWI (and the AWL) and it is this he wishes to defend. In fact Bruce Wallace deals with Ticktin and underconsumption generally in his blog, Focus on prominent underconsumptionists: Hillel Ticktin. If you look at the comments on the blog you will see that in discussing the video of last year’s Communist University he says;
“Then in response to a challenge on the rate of profit from the floor he describes believers in Marx’s theory of crisis as being members of a CULT! Clearly even in the CPGB there must be some members who can’t swallow Hillel’s nonsense.”
Unfortunately the CPGB has no such critical members, that challenge (for the second year) was made by yours truly and the CULT referred to is obviously Socialist Fight. Paul attempts to denigrate the theory of the falling rate of profit. Let us first of all set out the proposition according to Marx:
“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 a 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, vol. 3, chapter 13).
TFRP is the central plank of Marx’s revolutionary economic theories. He formed his theory in opposition to the closely related theories of the so-called “iron lay of wages” and underconsumptionism and sharply counterposed TFRP to them. He did not have several theories of capitalist crisis, he had one; TFRP. Marx attacked the “iron law of wages” in two lectures to the International Working Men’s Association in 1865. As the Irish Workers Group say in Connolly A Marxist Analysis:
“The argument was that the “iron law” meant the absolute immiseration of the working class which led to a lack of demand for commodities and hence a crisis pushing prices below the value of commodities, finally squeezing profits.”This is closely allied to underconsumptionism. Of course it has an immediate reformist implication; there is a Keynsian solution to the crisis of capitalism. All we need to do is raise wages and pump more money into the economy and the crisis will be solved. Hillel is forever telling us that there is plenty money available but the capitalists just won’t invest. So implicitly all we have to do is force them to do so or get the government to do so on their behalf. Because this is the case it is impossible that Imperialism will embark on WWIII, he confidently assures us in a logical reformist extension. It is this reformist conclusion that Bruce Wallace has correctly identified in the line of both the CWI and the CPGB. The notion that they won’t invest because the rate of profit is too low is beyond them both.
Ludicrously Paul tells us that: “The idea that the falling rate of profit interpretation has a total monopoly on orthodoxy, and that underconsumptionism necessarily equals reformism, dates not from the 1860s, but the 1970s, and emerges wholly out of post-New Left trends in Marxist economics.”
Well we already have Marx putting that “interpretation” on it in 1865. Now scroll on ten years and he is at it again in the Critique of the Gotha Programme: “It is well known that nothing of the “iron law of wages” is Lassalle’s except the word “iron” borrowed from Goethe’s “great, eternal iron laws”. The word “iron” is a label by which the true believers recognize one another. But if I take the law with Lassalle’s stamp on it, and consequently in his sense, then I must also take it with his substantiation for it. And what is that? As Lange already showed, shortly after Lassalle’s death, it is the Malthusian theory of population (preached by Lange himself). But if this theory is correct, then again I cannot abolish the law even if I abolish wage labor a hundred times over, because the law then governs not only the system of wage labor but every social system. Basing themselves directly on this, the economists have been proving for 50 years and more that socialism cannot abolish poverty, which has its basis in nature, but can only make it general, distribute it simultaneously over the whole surface of society!”
Marx spends fifty pages in Volume 3 of Capital explaining this tendency and the countervailing factors which partially and temporarily offset this “single most important law of political economy”. Lenin cites the falling rate of profit in the Imperialist countries as the reason for the development of monopolies and foreign investments a little before the 1970s. Trotsky’s theory of uneven but combined development explained that the rate of profit had to be taken globally in the epoch of imperialism. It is impossible to judge by national statistics which might prove that the rates of profits are rising in individual countries. This was the crass error of Bill Jefferies whose misjudgements of the nature of the 2007-8 crises was so famously wrong because he relied on national statistics. The point about TFRP is that it is a revolutionary theory; capitalism is in crisis because it has these fatal structural flaws; private ownership of the means of production and a system of production for individual profit which has this inescapable tendency to fall and halt production through lack of investment. Only a rationally planned socialised economy based on production for need will overcome the ever recurring crises of capitalism. War on a global scale is the only thing that will temporarily solve this crisis for the capitalists; a much smaller group of monopoly capitalists will now have their profits rates restored before they fall again and the next conflagration is prepared. That is the history of the twentieth century. The same iron laws apply to the twenty-first.
 Focus on prominent underconsumptionists: Hillel Ticktin, http://184.108.40.206/~brucieba/2013/06/17/focus-on-prominent-underconsumptionists-hillel-ticktim/
 The Iron Law of Wages is a proposed law of economics that asserts that real wages always tend, in the long run, toward the minimum wage necessary to sustain the life of the worker. The theory was first named by Ferdinand Lassalle in the mid-nineteenth century. Karl Marx and Friedrich Engels attribute the doctrine to Lassalle (notably in Critique of the Gotha Programme (1875), Marx), crediting the idea to Thomas Malthus in his work, An Essay on the Principle of Population.
 Connolly A Marxist analysis, by Andy Johnson, James Larragy and Edward McWilliams. This book devotes six pages (17-23) to showing that James Connolly held the mistaken views of Lassalle and Dühring on this question.