Thanks, doctor Cockshott. We just had a discussion about this topic in the spanish Cibcom forums against the TSSI approach. Needless to say, this video provides even more clarity on the matter 👍
Not understanding probability theory, data driven modelling and bayesian modelling has spurned critiques and misunderstandings all over the sciences. Moving from having some estimate(or) to distributions describing a phenomenon requires additional theoretical explanations and/or numerical experiments, as that many scholars conflate the statistical tooling with theory-building. Those problems have happened in ecology, biology, pharmacology and psychology as well.
just discovered your channel and I love the videos so far. Would you consider making a video doing a genuine materialist analysis on why it seems like any socialist movement in the west has been basically destroyed even though the contradictions of capitalism are sharpening? And also what we can do to reverse that? keep up the great work.
“It is not the task of the revolutionary to convince the whole bourgeois intelligentsia of the correctness of our views. That is as futile as trying to convince the bourgeois class of the necessity of abolishing themselves.” -Lenin Wasting time on the “transformation problem” ^
This isn’t about convincing bourgeois intellectuals, lol, who do you think follows these debates? This is about continuing to develop the science of political economy. And communists leaderships do follow these debates. Why do you think China is performing so well vs the West?
I don't follow how that quote has anything to do with this. It's an empirical discussion for understanding the nature of capitalism and what socialism can look like. If communists were against academic debate, 90% of what Marx wrote would not exist. The quote you present is actually about convincing the bourgeoisie into peacefully establishing socialism, i.e., a form of reformist socialism. Debate enables greater completeness of information in our understanding of capitalism, which is critical for evaluating under what conditions capitalism will fall and how socialism will be sustained.
The question is, why are Roberts and others attacking this? It reinforces the TFRP and therefore his particular angle on capitalist crisis (that declines in investments lead capitalist crises)? So what is he playing at, misrepresenting basic things like averages!? Anyway, it's a long time since I stopped reading his blog regularly because he rarely offers much insight beyond these basic matters, and speaks quite a bit of nonsense about the world political economy.
@@AbraK_oui I put it down to the sunk cost fallacy. Before F and M came along a whole generation of Marxist economists like him spent their formative years trying to respond to people like Steedman by coming up with new ways of solving the so-called transformation problem. They invested so much in this that they cannot bear to discard the theories.
@@TankieVN Marx would have relished applying modern statistical maths to these theories. F&M do not undermine M’s discoveries - they explain them at a lower level of abstraction! Values remain attractors for prices at the higher abstraction level. Nothing is lost, the science of Marxism develops.
Acording to Marx prices are random variables that are "stabilized" around value + systematic correction based on difference between capital stock and average capital stock in that field. (Capital v 3. [I can't show exact page due to differancec between russian and english versions in russian version it is page 169] ). The mechanism of changing prices which will "stabilize them" in capitalist economy is supply and demand (The poverty of philosophy). It is strange to be non probabilistic marxist.
Would you mind doing a video on what role you think that simulation and deep learning reinforcement learning techniques would have, if any, on Central Planning? Thanks
If pi' is the *most probable*, as opposed to the average, does the decline of pi' also necessarily imply a decline of the average? Or is that not necessary for the overall decline of the profit rate?
Strictly pi' is the expected value, since the distribution is skewed left with a long right tail this does not coincide with the peak of the probability density function
Farjoun and Machover's theory surely predicts the technological slowdown we have observed. Whilst individual firms will be driven toward high levels of organic composition to outcompete their rivals, surely this steady linear drop in profit rates with increased investment, would predict systematic under-investment in high-organic-composition industries, compared with what would occur in countries where an actor (i.e. the State) invests in order to keep the technological frontier moving forward rapidly. Basically, if you are Boeing, or Nvidia, or some other very high organic-composition firm, and you need to invest several billion and will receive minimal profit, why would you bother? If you can avoid it, you will.
@@browncow7113 the level of investment in most western countries has fallen over the last decades and is substantially lower than it was mid 20th century
@@paulcockshott8733 I think profit rates make sense when it's a flow - that's how capitalists would generally judge profit, ie ROI. I don't think profit rates calculated with a stock make sense conceptually.
in an infinitely long sequence from a random source all n-tuples appear with equal frequency. the diffictuly with such a concept is that we are finite beings and always deal experimentally with finite sequences. under the ideal concept of equiprobablity of n-tuples every finite sequence is nonrandom at some n-tuple level for sufficiently large n. for example, proteins may be regarded abstractly as sequences from an alphabet of 20 letters, the 20 kinds of amino acids commonly found in nature. hence there are 20 times 20 = 400 possible doublets, yet most proteins so far sequenced are not this long. . hence it is physically impossible for all 400 doublets to appear equally in any real protein sequence and even if they did, this would represent a vary rare and, in this sense, non random sequence. THUS the concept of a random finite sequence is an unattainable IDEAL. for example although no real gas obeys exactly the ideal gas law, pv=nRT where P is the pressure v is the volume etc etc etc etc
For Marx equalization in profit rate is caused by investment decisions. So, we would expect it to work on a very different time scale than price. When Paul shows these plots, I am convinced, but I feel like it is unfair to Marx. What I want to see is not whether profit rates were qualized in 1987 but rather whether there is movement in an industry that was lower than average profit in 1987 to go up in the next couple of years (because the sector itself shrank presumably), and vise versa for hgh profit industries. Sometimes I feel like Paul comes close to claiming that high profit rates don't attrack new investment (or that this effect is just so marginal it can be ignored). Speaking very imprecisely in a way that I hope will be undesrtood, I feel like price is location, value is velocity, and profit is acceleration.
One question. I can understand the causal mechanism behind a tendency of the rate of profit to equalize in capitalism since capitalists will at least try to exit low profit areas and enter higher profit ones. Naturally, there may be obstacles to the extent their investments are illiquid or some industries are protected legally or otherwise. And of course the target is always moving. But it still makes sense as a causal mechanism. I don’t see what the mechanism is for profit to be higher in lower organic composition sectors. I grant that the important thing is the empirical evidence and if that is what it shows then theory has to give way. But why wouldn’t the big capitalists move their investments to small scale industry if it is more profitable?
Maybe it has more to do with how labor intensive it is? Also, mechanics of competition and saturation? (honestly I'm mostly just tagging this in case you get a proper answer : p)
The problem with this theoretical causal mechanism is that it confuses the social relation of capitalist investment with the actual underlying forces of production of the economy. You kinda get to it saying "to the extent that their investments are illiquid", but you're severely underselling said illiquidity, becuse financial assets, which are merely fetishistic property titles that can wildly go up and down in price based on speculative capital movements, are not the same as productive assets, actual commodities that embody labor time spent on their production and which further enable production of other commodities. For instance imagine a highly capital intensive energy infrastructure development market, with relatively low profit rates, any capitalist who wishes to move their capital somewhere else will not just destroy the power plant they built over the last 10 years and turn it into a bunch of retail shops, they would sell it to another capitalist who would continue operating it. Capital goods aren't just willed into existence by investment, nor do they just dissapear because they were sold off, there's structural inertia that does not exist in speculative financial markets, so the idea that movements of capital searching higher profit rates would severely destabilize supply of industries leading to equalization of profit rates does not hold up. There's another reason given by the actual structure of productive forces, which is that there's precedence of industries. You can't have an electrodomestic industry without a developed power plant industry, so capital simply cannot decide to invest in the more profitable electrodomestic production (i'm assuming it is more profitable for the sake of the example) without someone having invested in energy infrastructure beforehand. in fact if capitalists just left all high capital intensive industries to rot the entire economy would collapse, as in our example the entire energy grid and all the industries that depend on it would collapse without power plants. Lastly, the reason why there's higher profit rate for lower organic composition of capital is built into the very definition of profit rate. If you have a capital asset worth 1M$ producing 1M$ a year then the profit rate is 100%, if the asset was worth 2M$ then the profit rate would be 50%, you would be getting half a dollar in return per dollar invested. The key insight is that capitalists don't exploit capital goods, they exploit labor, so the best capitals are the ones that cost the least to acquire while allowing the exploitation of the most amount of workers, given the same rate of exploitation.
@ In response to your first paragraph, I don’t think I am conflating capital as a social relation with means of production. Capital necessarily goes through a cycle of being money, then means of production and labour power, then product and then hopefully (from the capitalist’s perspective) more money. At each new cycle the capitalist goes where they expect the highest return (in money) at the end of the cycle. Of course, their expectations may not turn out to be fulfilled. And the cycle time will vary with high OCC industries presumably seeing longer cycles. That is why profitability is a random variable. But classical and Marxist economics at least before Farjoun and Machover still assumed that the average rate of profit would be an attractor. And while capital exploits labour, capitals are not motivated by that exploitation but by seeking as much delta between M’ and M as possible
@ There is a fallacy of composition here. There is no doubt that from the perspective of the capitalist economy as a whole, for a given rate of exploitation (s/v), the higher the OCC, the lower the rate of profit. But from the perspective of a capitalist deciding whether to invest in a more labour- or more capital-intensive production process, he will pick whichever provides the higher expected profit. So if profit is higher in low OCC firms, capital will flow from higher to lower OCC sectors, which is not what we observe
Thanks, doctor Cockshott. We just had a discussion about this topic in the spanish Cibcom forums against the TSSI approach. Needless to say, this video provides even more clarity on the matter 👍
Not understanding probability theory, data driven modelling and bayesian modelling has spurned critiques and misunderstandings all over the sciences. Moving from having some estimate(or) to distributions describing a phenomenon requires additional theoretical explanations and/or numerical experiments, as that many scholars conflate the statistical tooling with theory-building. Those problems have happened in ecology, biology, pharmacology and psychology as well.
just discovered your channel and I love the videos so far. Would you consider making a video doing a genuine materialist analysis on why it seems like any socialist movement in the west has been basically destroyed even though the contradictions of capitalism are sharpening? And also what we can do to reverse that? keep up the great work.
also I would love to hear your opinion on whether china is genuinely progressing towards communism.🙏
He has videos on modern socialist strategy. I think that's the name. You can find them if you search his channel.
@@redoktopus3047 ahh I'll check them out thanks
@@redoktopus3047 ahh I'll check them out thanks
Losurdo's Western Marxism has some pretty compelling claims on this, well worth a read.
“It is not the task of the revolutionary to convince the whole bourgeois intelligentsia of the correctness of our views. That is as futile as trying to convince the bourgeois class of the necessity of abolishing themselves.” -Lenin
Wasting time on the “transformation problem” ^
This isn’t about convincing bourgeois intellectuals, lol, who do you think follows these debates? This is about continuing to develop the science of political economy. And communists leaderships do follow these debates. Why do you think China is performing so well vs the West?
I don't follow how that quote has anything to do with this. It's an empirical discussion for understanding the nature of capitalism and what socialism can look like. If communists were against academic debate, 90% of what Marx wrote would not exist.
The quote you present is actually about convincing the bourgeoisie into peacefully establishing socialism, i.e., a form of reformist socialism. Debate enables greater completeness of information in our understanding of capitalism, which is critical for evaluating under what conditions capitalism will fall and how socialism will be sustained.
You are confusing "not caring about the opinions of the bourgeoisie" with "being an anti-intellectual".
The question is, why are Roberts and others attacking this? It reinforces the TFRP and therefore his particular angle on capitalist crisis (that declines in investments lead capitalist crises)? So what is he playing at, misrepresenting basic things like averages!? Anyway, it's a long time since I stopped reading his blog regularly because he rarely offers much insight beyond these basic matters, and speaks quite a bit of nonsense about the world political economy.
Because they are loyal to what Marx said and the dialectic method I think.
@@AbraK_oui I put it down to the sunk cost fallacy. Before F and M came along a whole generation of Marxist economists like him spent their formative years trying to respond to people like Steedman by coming up with new ways of solving the so-called transformation problem. They invested so much in this that they cannot bear to discard the theories.
@@TankieVN Marx would have relished applying modern statistical maths to these theories. F&M do not undermine M’s discoveries - they explain them at a lower level of abstraction! Values remain attractors for prices at the higher abstraction level. Nothing is lost, the science of Marxism develops.
Acording to Marx prices are random variables that are "stabilized" around value + systematic correction based on difference between capital stock and average capital stock in that field. (Capital v 3. [I can't show exact page due to differancec between russian and english versions in russian version it is page 169] ). The mechanism of changing prices which will "stabilize them" in capitalist economy is supply and demand (The poverty of philosophy). It is strange to be non probabilistic marxist.
what font and powerpoint theme do you use to make your presentations?
@@SireSalty_ it is Google slides not PowerPoint usually. Some I do with latex beamer
Would you mind doing a video on what role you think that simulation and deep learning reinforcement learning techniques would have, if any, on Central Planning?
Thanks
If pi' is the *most probable*, as opposed to the average, does the decline of pi' also necessarily imply a decline of the average? Or is that not necessary for the overall decline of the profit rate?
Strictly pi' is the expected value, since the distribution is skewed left with a long right tail this does not coincide with the peak of the probability density function
@@paulcockshott8733 oh, ok. Thanks.
Farjoun and Machover's theory surely predicts the technological slowdown we have observed. Whilst individual firms will be driven toward high levels of organic composition to outcompete their rivals, surely this steady linear drop in profit rates with increased investment, would predict systematic under-investment in high-organic-composition industries, compared with what would occur in countries where an actor (i.e. the State) invests in order to keep the technological frontier moving forward rapidly.
Basically, if you are Boeing, or Nvidia, or some other very high organic-composition firm, and you need to invest several billion and will receive minimal profit, why would you bother? If you can avoid it, you will.
@@browncow7113 the level of investment in most western countries has fallen over the last decades and is substantially lower than it was mid 20th century
How does this account for oil selling for less than 0 in 2020 when refineries were paying people to take barrels away?
sorry, are you using capital stock for c? shouldn't c be depreciation?
For Sweden I think Zachariah used a flow measure for c, for the UK and US we used stock which is more correct
@@paulcockshott8733 I think profit rates make sense when it's a flow - that's how capitalists would generally judge profit, ie ROI. I don't think profit rates calculated with a stock make sense conceptually.
in an infinitely long sequence from a random source all n-tuples appear with equal frequency. the diffictuly with such a concept is that we are finite beings and always deal experimentally with finite sequences. under the ideal concept of equiprobablity of n-tuples every finite sequence is nonrandom at some n-tuple level for sufficiently large n. for example, proteins may be regarded abstractly as sequences from an alphabet of 20 letters, the 20 kinds of amino acids commonly found in nature. hence there are 20 times 20 = 400 possible doublets, yet most proteins so far sequenced are not this long. . hence it is physically impossible for all 400 doublets to appear equally in any real protein sequence and even if they did, this would represent a vary rare and, in this sense, non random sequence. THUS the concept of a random finite sequence is an unattainable IDEAL. for example although no real gas obeys exactly the ideal gas law, pv=nRT where P is the pressure v is the volume etc etc etc etc
For Marx equalization in profit rate is caused by investment decisions. So, we would expect it to work on a very different time scale than price. When Paul shows these plots, I am convinced, but I feel like it is unfair to Marx. What I want to see is not whether profit rates were qualized in 1987 but rather whether there is movement in an industry that was lower than average profit in 1987 to go up in the next couple of years (because the sector itself shrank presumably), and vise versa for hgh profit industries. Sometimes I feel like Paul comes close to claiming that high profit rates don't attrack new investment (or that this effect is just so marginal it can be ignored). Speaking very imprecisely in a way that I hope will be undesrtood, I feel like price is location, value is velocity, and profit is acceleration.
high profit rates do attract investment. The issue is that the economy is too dynamic for this to translate to an equalization of profit rates.
One question. I can understand the causal mechanism behind a tendency of the rate of profit to equalize in capitalism since capitalists will at least try to exit low profit areas and enter higher profit ones. Naturally, there may be obstacles to the extent their investments are illiquid or some industries are protected legally or otherwise. And of course the target is always moving. But it still makes sense as a causal mechanism.
I don’t see what the mechanism is for profit to be higher in lower organic composition sectors. I grant that the important thing is the empirical evidence and if that is what it shows then theory has to give way. But why wouldn’t the big capitalists move their investments to small scale industry if it is more profitable?
Maybe it has more to do with how labor intensive it is? Also, mechanics of competition and saturation?
(honestly I'm mostly just tagging this in case you get a proper answer : p)
The problem with this theoretical causal mechanism is that it confuses the social relation of capitalist investment with the actual underlying forces of production of the economy.
You kinda get to it saying "to the extent that their investments are illiquid", but you're severely underselling said illiquidity, becuse financial assets, which are merely fetishistic property titles that can wildly go up and down in price based on speculative capital movements, are not the same as productive assets, actual commodities that embody labor time spent on their production and which further enable production of other commodities.
For instance imagine a highly capital intensive energy infrastructure development market, with relatively low profit rates, any capitalist who wishes to move their capital somewhere else will not just destroy the power plant they built over the last 10 years and turn it into a bunch of retail shops, they would sell it to another capitalist who would continue operating it. Capital goods aren't just willed into existence by investment, nor do they just dissapear because they were sold off, there's structural inertia that does not exist in speculative financial markets, so the idea that movements of capital searching higher profit rates would severely destabilize supply of industries leading to equalization of profit rates does not hold up.
There's another reason given by the actual structure of productive forces, which is that there's precedence of industries. You can't have an electrodomestic industry without a developed power plant industry, so capital simply cannot decide to invest in the more profitable electrodomestic production (i'm assuming it is more profitable for the sake of the example) without someone having invested in energy infrastructure beforehand. in fact if capitalists just left all high capital intensive industries to rot the entire economy would collapse, as in our example the entire energy grid and all the industries that depend on it would collapse without power plants.
Lastly, the reason why there's higher profit rate for lower organic composition of capital is built into the very definition of profit rate. If you have a capital asset worth 1M$ producing 1M$ a year then the profit rate is 100%, if the asset was worth 2M$ then the profit rate would be 50%, you would be getting half a dollar in return per dollar invested. The key insight is that capitalists don't exploit capital goods, they exploit labor, so the best capitals are the ones that cost the least to acquire while allowing the exploitation of the most amount of workers, given the same rate of exploitation.
@ In response to your first paragraph, I don’t think I am conflating capital as a social relation with means of production. Capital necessarily goes through a cycle of being money, then means of production and labour power, then product and then hopefully (from the capitalist’s perspective) more money. At each new cycle the capitalist goes where they expect the highest return (in money) at the end of the cycle. Of course, their expectations may not turn out to be fulfilled. And the cycle time will vary with high OCC industries presumably seeing longer cycles. That is why profitability is a random variable. But classical and Marxist economics at least before Farjoun and Machover still assumed that the average rate of profit would be an attractor.
And while capital exploits labour, capitals are not motivated by that exploitation but by seeking as much delta between M’ and M as possible
High OCC = high overhead = low RoP. Look at any quarterly report.
@ There is a fallacy of composition here. There is no doubt that from the perspective of the capitalist economy as a whole, for a given rate of exploitation (s/v), the higher the OCC, the lower the rate of profit. But from the perspective of a capitalist deciding whether to invest in a more labour- or more capital-intensive production process, he will pick whichever provides the higher expected profit. So if profit is higher in low OCC firms, capital will flow from higher to lower OCC sectors, which is not what we observe
Greetings from Spain!
Nice video. Thank you
I don’t like the thumbnail
It is very disrespectful
Why?