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

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

by Andrew Kliman, Alan Freeman, Nick Potts, Alexey Gusev, and Brendan Cooney

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.

Click here for the whole essay in PDF format.

 Marx After Heinrich?
Marx After Heinrich?


  1. A large thanks to the authors is needed for producing this piece. So thank you.

    One doesn’t need to know the nuances of 19th century German to understand that Marx was not arguing that the rate of profit MUST fall – as the authors point out – only that when it does, he has a theory as to why it has occurred. The fact Marx posits roughly 6 counter acting tendencies is enough to conclude that Marx is not saying it must fall. Just to offer an obvious scientific example, that might elude Heinrich, if one was to say that the boiling point of water is 212º, unless a series of counter acting tendencies are present (e.g., adding salt, or going to lower altitudes) we would then not posit that water must boil at 212º if we wait patiently at an declined altitude.

    Also, for future readers, Michael Roberts – the Marxist economist and blogger – offers another compelling refutation of Heinrich’s theory. When read in tandem with Kliman et al, it’s clear Heinrich needs to revise his theory entirely.

  2. Having read the review, I find it very good and on the mark. Let me make a comment which is not directly on your argument with Heinrich. You state that the tendency of the rate of profit to fall is cyclical, rather than long term, due to the various counteracting tendencies. This is true. However,this is now the epoch of late capitalism, with the growth of semi-monopolies, interpenetration, and statification, and with giant firms becoming “too big to [be allowed to] fail.” The full business cycle is not allowed to be completed, which means that the counteracting tendencies are not able to be fully effective. Debts are not wiped out, fictitious capital is not cleared away, unproductive parts of businesses do not fail, wages are not driven down (as much), and new productive technology is not put in place (again, as much as it would otherwise). As a result, there appears a long term tendency for the rate of profit to decrease. As is evidenced even by those who do not believe in it, such as the Monthly Review theorists (with their focus on “stagnation”) or Robert Brenner.

    Incidently, the latest issue of New Politics has a review of Heinrich’s book together with my book The Value of Radical Theory: An Anarchist Introduction to Marx’s Critique of Political Economy. The review rejects Marx’s concepts pretty much down the line.

  3. My own reading of Capital III suggest the following understanding of the rate of profit, as follows.

    1) LTFRP — as the name suggests, this is long term trend and the counteracting tendencies work against the trend.

    2) There are short-term ups and downs in the rate of profit, which mirror growth and recession in the economy. The countervailing tendencies do NOT work here, but drastic government intervention in ‘the epoch of late capitalism’ does. This intervention is quite different than Marx’s counteracting tendencies!

    There is a degree of interaction between the 1) and 2): while a recession is expected to contribute to the falling long-term trend, growth is expected to work against the long-term trend.

    However, if drastic government intervention does not allow ‘the counteracting tendencies … to be fully effective’, then this would mean a faster, and thus more short-term, fall of the rate of profit—but does this happen in the economy?

  4. to Thoralf Dassler: Your point 1 is not an argument with me but with Andrew Kliman et al. They interpret Marx to mean that the tendency of the rate of profit to fall is cyclical and not long term. I argued that even if that were true (in the epoch of competitive capitalism), it is no longer true now in the epoch of semi-monopolistic capital. This is because the counteracting tendencies are limited in their action by monopolization and state action. The counteracting tendencies are (relatively) countered. Such counter-counteracting tendencies may not have been listed in Capital, I grant you, but so what?

    Counteracting tendencies, especially the cheapening of constant capital and of the consumer goods used in variable capital, suceed due to the contradictory effects of expanded productivity. Profts go down, the econmy declines, and therefore debts are wiped out, constant capital is cheapened, wages are lower, etc., which lays the basis for a new upswing. By preventing profits from declining (through pumping up fictitious capital through debts etc.), the economy seems to be bouyant but actually never clears out the poisons. Therefore the real rate of profit (without fictitious capital) is declining, and will cause stagnation….and eventual actual crises. It’s like those foresters who prevent forest fires by stamping out little fires, until the accumulation of material is so great that it breaks out into major forest fires. It was the very government intervention of the post-WWII boom which laid the basis for the post-1970 stagnation.

  5. To Wayne Price: for clarity, I think some of the points we made need unpacking.

    “Your point 1 is not an argument with me …”. You are right, it isn’t. I didn’t mean to imply it was.

    “… but with Andrew Kliman et al. They interpret Marx to mean that the tendency of the rate of profit to fall is cyclical and not long term.” Where exactly in their article do they do so? Reading their article again, I didn’t find evidence of your suggestion.

    Also, “counteracting tendencies are limited in their action by monopolization …”—centralization of capital—“… and state action.” I do not agree. Firstly, some aspects of centralisation are expected to counter the long-term fall of the rate. For example:
    i) the increased mass of the dividends, generated by an increasing mass of stock market shares, does not contribute to the equalisation of a general profit rate (Capital III, ch.14, German edition)
    ii) the physical mass of capital might increase, but the corresponding value does not (ibid); this is especially so where foreign trade kicks in, with a higher single profit rate abroad (e.g. China) boosting the lower average profit rate (in the West)

    Secondly, state action, of which there are two types:
    i) State action, in the form of breaking up monopoly industries, and limiting M&A activity, e.g. through not granting OFT and EU Commission approval. These actions are expected to counter the long-term fall because they account for de-centralisation (and therefore dis-accumulation). This is especially so where the broken up portions of capital are valued at a discounted level.
    ii) State action as in bailing out banks. This type affects the short-term ups and downs, rather than the LTFRP.

    Your other point: there is a difference between the mass of profit and the rate of profit. Mass can increase, while the rate declines. Profits decline during short-term crisis, but not necessarily during the long-term tendential fall.

    Your foresters analogy: Ok, a few more times governments might be able to put out smaller fires, but then the end of the flagpole is reached. Thus, my view is that we will see the destruction and the rebuilding of value to play out again in the future—rather sooner than we’d think. But I am not convinced this is because of the LTFRP, I rather think this is because governments start lacking the funds and/or the willingness to smooth off the short-term ups and downs. This is especially so because the Eastern block is gone, so there is no longer an incentive for capitalism to put on its nice face.

    Having said all this, the LTFRP is still there, yet not as prominently as you suggest.

  6. There is a wrong Marx quote in the essay, which is essential:

    “the counteracting tendencies which … act to bring about a rise in the rate of surplus-value, simultaneously lead to a fall in the mass of surplus-value produced by a given capital, hence a fall in the rate of profit.” (Marx Capital: A critique of political economy, Vol. III. London: Penguin 1991, p. 340)

    German: “Dies sind die widerstreitenden Tendenzen, die, während sie auf eine Steigerung in der Rate des Mehrwerts, gleichzeitig auf einen Fall der von einem gegebnen Kapital erzeugten Masse des Mehrwerts und daher der Rate des Profits hinwirken.”

    Correct translation — to be found in Capital, Vol. 3 at, p. 165:

    “These are the counteracting tendencies, which, while effecting a rise in the rate of surplus-value, also tend to decrease the mass of surplus-value, and hence the rate of profit produced by a certain capital.”

  7. mieterin2terklasse–why is this essential? Do you think that the 2 translations differ in meaning? If so, how?

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