Tendential Fall in the Rate of Profit | Karl Marx | Keyword

In this episode, I present Marx's idea that as capitalist production advances, the rate of profit falls.

If you want to support me, you can do that with these links:

Twitter: @DavidGuignion
IG: @theory_and_philosophy

[rinainnsegall]

Concerning your question, one line of response that I've personally found very useful is considering seriously the role of credit. How does credit as a particular technique of articulating capital, encourage, discourage, and make possible certain arrangements. Timothy Mitchell at Columbia has an excellent, short article about Uber in particular and the gig economy more general. It's called “Uber Eats: How Capital Consumes the Future."

[criscrypto]

is the transcript for this video available? might be easier to follow with it. thank you for your great work!

[alexgebhardt]

Hey! I’m alex, my pronouns are they/them, I live in Grand Rapids, Michigan. Don’t come here though, I hate it!

[andresmorera]

16:55 shooting from the hip, the way i make sense of this, this falls outside of the capitalist mode of production here, sort of. In fact, after listening to Yanis Varoufakis, I would say this is a (techno)feudal relation between gig laborer (serf) and platform owner (lord). The goal of Uber, Lyft, (and even Amazon and Google) is to ultimately force laborers to use their platforms in order to do their labor and extract rent from them as they use their platform, disguising it as providing a service. They extract rent from those who are forced to use their platform much like a lord forces a serf to give a portion of what they make in the land owned by that lord to that lord.

Although the likes of Uber and Lyft aren't making a profit, they are gambling that they will in the future. Right now, i guess you could say they are currently expending money and capital in trying to establish their domain, much like a lord did, and banking that their expanded influence will allow them to either get away without paying back their debts or that they will start raking in the dough any day now. :) Maybe I am taking this analogy way too far...

[lt]

Would love to comment on Uber and the Gig economy. Post 2008, we have qualitative easing, and national funding and subsidizing for projects. Uber is not profitable, and there is a nice gravel institute video on it. Uber, over the last decade that it has existed, it has not produced profit. It has been in the red almost every single year. It requires subsidizing to continue existing and would not exist if it did not have it.

[judithwyer]

There are revenue streams for the likes of Uber et al. which include investors, govt. subsidies tax avoidance/evation, etc. which classify these entities as financial entities and not classic industries in the Marxian sense. The likes of Uber knows that they have to fill the coffers of the investor class. We are not living in an industrial world but a financial world and Silicon Valley and platform capitalism resides there.

[JaredEMitchell]

Ayyyy, lemme take a crack at the gig economy analysis:

This is pretty similar to the way wages are being pushed down- in Volume 1, Marx stipulates that wages are based on the Means of Reproduction, the things that the working class needs to reproduce themselves (food, water, shelter in the immediate sense, but training and education to bring in new high-skilled professionals in the long-term). What's happened over the past several decades is the attempt to shift over some of these costs to the workers themselves and to have the worker bear the brunt of these costs. This is seen in "degree inflation", where jobs that used to train entry-level people now require bachelor's degrees, jobs that require bachelor's degrees are paying less and less, and more workers (in America at least) are being saddled with student debt.

In this same way that the cost of education is "offloaded" onto the worker, so too I think is the cost of the constant capital offloaded onto the worker in the case of gig economy jobs, and thus a car and its maintenance, or a second apartment, is actually now factored in to the means of reproduction for the gig worker (can I keep being an Uber driver if I can't afford a car?). As a lot of people have noticed, though, Uber drivers are making sub-minimum wage after all their costs are factored in; normally this would be illegal, but Uber and Lyft have taken advantage of loopholes in contract law, and have outright campaigned to pass their own more advantageous laws in the form of Prop 22 in California. I'd actually say this is a *reaction* to a profitability crisis by trying to drive down wages even further than possible before.

I think it's the same way if you bought a machine to further automate a factory- what you're paying for is both the source of constant capital, but also the labor of the people who assembled the machine. It's just that this is on a much more rapid scale- Uber is essentially "purchasing" a new machine every time a driver logs in. Even if you contract your production out to someone else, their rising cost of production will still filter back to you eventually.

Of course, cars get more expensive, and so does everything that's needed to maintain them- rising price of gas, car parts, repairs, etc. (and in the case of AirBNB the cost of real estate is DEFINITELY going up!). And so because of this, I think a larger and larger proportion of the worker's wages is going to go to this maintenance. Uber will either deal with this by raising rates, or the proportion of take-home pay is going to become so low that people can't make ends meet, and will then (hopefully!) start engaging in organized labor actions.

Hope that's somewhat comprehensible!

[kenari]

Nice explanation. I don’t think you need the formula in this kind of short video. It probably just confuses more than it clarifies. And if you’re going to use it, it would be better to draw it on a blackboard or show it on the screen. Other than that, great video!

[Zezmezzie]

Uber still has a vast amount of constant capital in the form of the cars that the drivers use. The only difference is that they are renting the cars from the driver(as well as paying for the drivers labor)instead of outright owning it.

[erikeparsels]

Uber increases the rate of profit by externalizing the costs of equipment acquisition and upkeep, wages and insurance for taxi drivers, etc. which temporarily increases profits by lowering the working class' income and prchasing power and by degrading the overall quality of the transportation sector. Thus value that had been built up during the phase of industrial capitalism is cannibalized during the phase of finance capitalism as the job skills and infrastructure are degraded.

[oussamajt]

Answering ur qst, the falling rate of profit is hugely attached to commodity production, hence the industry sector, however in postfordist economical framing, service economy gives more of a loophole, services aren't commodities per se, there's no constant capital to maintain in order to make goods or fine-tune them..

[aishikgupta]

Does AirBnB and Uber generate profits ??? ... Although not investing in Fixed Constant Capital ...

[duongvo]

I want to add that labor is not the source of all wealth. In the critique of the Gotha program Marx says that nature is just as much the source of use value as labor

[JAMAICADOCK]

That's why welfare came about as an economic stabilizer to keep up demand regardless of employment. But welfare has its own contradictions in terms of inflation and people choosing not to work. Also leading to a declining rate of profit.

But I wonder what Marx would have made of self-service tills, or on-line banking.

Wherein under a guise of efficiency, corporations are exploiting the labour of the consumers themselves.

It's now possible to be worker and consumer at the same time..A kind of sly, sporadic form of digital slavery.

It's like the other day I spent a morning setting up direct debits for my bills. Needless to say, without payment.

[gutocardoso]

What I've heard about Uber not being profitable is that this is due to them investing in expanding globally into different countries and markets and the stock market value usually reflects perceived future values more than actual present figures.

[peterbonucci]

1. Is there evidence for the declining level of profit? It's been 150 years. There should be a lot. I haven't found any, but i don't know much about this.
2. I understand how an investor would move his money out of something that pays 4% into something that pays 5%. I think that was part of Marx's argument.
3. Does automation only increase the rate of surplus value generation? If 100 workers produce $100 of surplus value and 1 worker with machinery produces $100, then the rate of surplus value generation goes from $1/worker to $100/worker, but the profit rate drops depending on the cost of buying and maintaining the machine. Did I get that right?
4. If I replace the 100 workers with robots, are they still producing $100 of surplus value? How does this match with the labor theory of value? This could be realistic if ChatGPT replaces human writers.

[xuvetynpygmalion]

Hey, I think I can give an answer, or at least a lead, to your question: First we have to consider if Uber and such companies are within the domain of productive or unproductive industry. Uber falls within the category of the transportation sector, and as you know from Vol. II, some of its work is productive and some is unproductive. We can conclude that Uber and its tendency to lower the production cost through a redistribution of constant capital to variable, will only produce a larger quantity of surplus value if the labour is actually is productive and produces value. If this is not the case, all their costs (variable and constant) will be included into the general cost-price in the general profit rate. Only if these costs are have been lowered below the already existing general cost-price (which Uber presumably has), it will reduce this cost-price and therefore increase the general rate of profit. But! if this in turn lowers the average cost-price for the services Uber provides, one could foresee that average profit will be leveled to this new standard though economic competition, and thereby Uber loses it surplus-profit and reducing their rate of profit.

One last remark, even if Uber and such companies push over some costs of constant capital to the workers, this does not reduce the value of the constant capital nor necessary labour-time in production of these services; its just a reallocation of costs. If costs has not actually been reduced, the general cost-price has not been reduced, thus general rate of profits is left unchanged (that is, the tendential fall is still in place).

Hope this can bring you some clarity !

[greythax]

Love the channel. It would be hard to analyze uber by its cost model, at least when assuming rational markets. Uber primarily remains unprofitable because of dreadful mismanagement and an attempt to corner an industry. They have spent many billions acquiring competing startups, and investing further billions trying push new technologies such as self driving cars and drone taxis. Additionally, they pushed hard to go global all at once, probably realizing that regulation was eventually going to be thrown at them, and hoping to hit "too big to fail" status. However, they simply have benefited from such great quantities of investment capital, they haven't really needed to turn a profit for a decade. Now, being under new leadership, they are divesting themselves from their research companies and taking losses as they spin down the competitors they have bought. This will likely help them show a profit on their balance sheet next year, and then substantive analysis can really happen.

[jeffbiscuit]

Brand new here. I'm in SLC. You should visit so you can support the workers here unionizing the Cottonwood Heights Starbucks ;).

[stevenheath]

I ejoyed your discription outlining the tendency of the rate of profit to fall. Is this idea in any way connected to imperialism?