Presentation on chapter 7 Brendan Cooney In this chapter RD looks that the African revolutions, the way these revolutionary developments in practice meet revolutionary theory to form a single dialectic of revolution. She also addresses the retrogression of African revolutions, as revolutionary momentum was lost as nations got sucked into the world market. As with previous chapters, there is a lot of material covered, from economic theory and history, to African history, to revolutionary theory. I am going to try to summarize the main contours of the chapter as they focus on a few central questions. The chapter contains a concentrated history of global capitalism in the 20th Century as well as a Marxist-Humanist theory of capitalist crisis. I will turn to this first. On page 226, RD mentions Marx’s theory of the Law of the Tendential Fall in the Rate of Profit (LTFRP). Though RD does not explicitly discuss this theory much in the chapter, this theory underpins much of her discussion of global capitalism and its inability to develop Africa. Marx argued that although human labor is the sole source of surplus value, capitalists are compelled to spend an increasing portion of their capital outlays on non-human inputs to the production process (machines and raw materials). As the proportion of non-human inputs to human inputs (the organic composition of capital) rises, the aggregate profit rate of the capitalist class, as a whole, falls. In other words, capitalists are compelled to spend more and more money on the elements of production that do not produce value. This means that the rate of return on their investments will fall as less money is spent, proportionally, on human labor. The rate of profit can fall even though the mass of profits rises. The tendential fall in the rate of profit eventually leads to economic crisis when there is a shortage of profitable investments for this mass of profit to be invested in. In a crisis, capital is devalued: firms go bankrupt and sell their factories and equipment at fire-sale prices. Once enough capital value has been destroyed so that the organic composition of capital falls, profit rates can rise again. Thus Marx saw crisis as part of an inherently cyclical process of boom-and-bust. Dunayevskaya is concerned to make it clear that the inevitability of capitalist crisis is not something which can be planned away. It strikes centrally-planned state-capitalist economies as equally as it does the lassie fair, free-market nations. This is because no capitalist nation can avoid the two inherent forces which compel capitalists to raise the organic composition capital: 1. Capitalist in competition compete to lower socially necessary labor time by making labor more e ffi cient through the development of labor-saving technology. This means more spending on machines and more spending on raw materials (the more workers can produce in an hour the more raw materials they require to do so.) Since all nations still rely on the world market, all nations, centrally planned or not, feel this compulsion. 2. The other compelling force which drives the rise in the organic composition capital is the need for the capitalist to use labor- saving technology to discipline and control the recalcitrant worker. Thus, even in a closed system in which there was a single capitalist, with no competition over socially necessary labor time, labor-saving technology would still be necessary to compel the workers. Crises are also moments where capital is centralized. Firms that go out of business sell their assets to other firms, leading the the consolidation of capital into fewer hands. RD makes several references to the centralization and concentration of capital in this chapter. This is because she is trying to explain why capital remains in the hands of the industrialized West rather than flowing to the under-developed nations.
Though the tendential fall in the rate of profit forms the background for much of this section of the book, RD refers more frequently to the fall in the rate of accumulation. The rate of accumulation is the rate at which profit is reinvested in production. It is the rate at which the mass of profit existing as capital increases. Clearly, the two rates are related. The higher the rate of profit, the more money there is to accumulate for reinvestment, and vice versa. RD’s focus on the rate of accumulation is likely because she is discussing the inability of the West to invest in Africa. Thus the questions are “how much money is there for such reinvestment?” and “where do capitalists want to invest their accumulated capital?” In answer to the first, “How much money is there for such reinvestment?”, she argues that, “it would be hard to find anyone who would claim today that there is an excess of capital anywhere in the world su ffi cient to develop the technologically underdeveloped economies…” (p.227) RD argues that there just isn’t enough accumulated capital, even in prosperous times, for the developed countries to develop the under-developed countries. In answer to the question of where capitalists will invest the excess capital they do have, RD points out that capital will flow to where the highest rates of profit are. In the “sensational 50’s”, a time when high rates of growth were pointed to as proof of the robust nature of capitalism, Africa was entirely left out of this investment. Rather, most investment went to Western Europe where the rate of profit was high. The reason for the high rate of profit in Western Europe, as compared to Africa, is interesting, and takes us further towards an understanding of capitalist crisis and uneven development. While economic crisis devalues capital, setting the stage for recovery, it is not necessarily the case that enough capital can be destroyed in each crisis for a substantive recovery to take place. RD cites Simon Kuznet’s figures on the rate of accumulation to argue that the rate of accumulation (and, by proxy, we can assume the rate of profit as well), has fallen not just in the short run (within the boom and bust of one profit cycle), but also over the long run (over many profit cycles). This suggests that the modern era of capitalism is faced with a chronic problem of low-profitability which cannot easily be overcome. RD argues that even the Great Depression, as destructive as it was, was not su ffi cient to restore profitability. Rather, it was the massive destruction of WWII which finally laid the ground for a new economic boom. As she puts it, “The phenomenal growth of Western Europe in the 1950’s was only further proof of the fact that new growth depended on the equally phenomenal destruction of capital in the holocaust of WWII.” (p. 229) One might think that since African nations in the 50’s had little technological development, and large quantities of labor ready for exploitation, that they would have potentially high profit rates to o ff er capitalist investors- in other words, that their low organic composition of capital would allow for high rates of profit. But, RD argues that their extreme under-development, the fact that they “have no capital to begin with” (p.225), makes them unprofitable. The amount of capital that would be required to start to develop these countries presents a barrier to entry. When RD talks of the “most human way out of the most ‘complex’ and ‘purely economic’ questions,” she means that there is no way, through the logic of capitalist investment, that capital will solve the problems of poverty and lack of development in Africa and other under- developed nations. Instead, the African nations take on a Neo-colonial position vis-a-vis the developed nations. This means that their economic function within global capitalism is one in which they exist as mono-cultures, the price of their one crop determined by the world market.
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