Query about Capital vol 3
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Our Capital reading group is puzzled by the following from chapter 27 of Vol 3 Capital on stock companies:
“Before we go any further, there is still the following economically important fact to be noted: Since profit here assumes the pure form of interest, undertakings of this sort are still possible if they yield bare interest, and this is one of the causes, stemming the fall of the general rate of profit, since such undertakings, in which the ratio of constant capital to the variable is so enormous, do not necessarily enter into the equalisation of the general rate of profit.”We just can’t fathom why a high c:v ratio doesn’t “necessarily enter into the equalisation” of GRP. Unless we missed something, here and in the earlier discussion in vol 3, Marx just asserts this idea – is there any other text (in Grundrisse or Critique of Political Economy for example) where he explains himself? or is there some implication of a high ratio that we are just missing?
I think it relates to this: “this total profit is henceforth received only in the form of interest, i.e., as mere compensation for owning capital that now is entirely divorced from the function in the actual process of reproduction” i.e. instead of getting the residue of any prices achieved in the form of profits, profits simply become (he is suggesting) fixed interest on capital advanced, so long as that payment is achieved, there is no requirement to pursue the maximisation of profits. The c:v ratio is only relevant because the size of the firms means they have a wider impact on the economy generally (i.e. the c:v ratio is incidental, it is the bare interest doing the leg work here).
That’s how I’d read it.
I think YMS is right that what is relevant is the fact that in joint stock limited liability companies profit need only be enough to pay interest on the bonds issued to raise its capital, not the fact that they have “a high ratio of constant capital to the variable” (even if they do and why they take this legal form).
Marx is not saying that the return to capital in capitalist enterprises with a high c/v does not enter into the equalisation of the rate of the general rate of profit.
He is saying that the return to capital in capitalist enterprises with a high c/v and which take the form of a joint stock companies with limited liability does not have to enter into this equalisation.
On the other hand, the return in capitalist enterprises with a high c/v ratio but which didn’t have the legal form of a limited liability joint stock company would.
Marx was writing at a time — the 1860s — when joint stock companies with limited liability were only beginning to be adopted as the legal form of a capitalist enterprise; which had only been made legally possible in the previous decade. When Marx mentions this phenomenon earlier in volume 3 he gives railway companies and their bonds as the typical example. In fact Engels, editing Marx’s manuscripts nearly 30 years later, had to insert a note about developments since the 1860s.
Today of course nearly all capitalist enterprises are joint stock limited liability companies and it would be a badly performing or unambitious such company which only made or aimed to make enough profit to pay interest on its bonds (and so none to reinvest in expanding the business).
OK thanks both – will take your contributions back to the group so that we can bemuse on them. Any further contributions?
Capital Volume 3, Chapter 27: The Role of Credit in Capitalist Production
This a very good blog on reading Marx volume 3 of Das Kapital
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