I am new to marxism and except for Marx himself my introduction has been This Life by Martin Hägglund and Mute Compulsion by Sören Mau (also Postone but I won't mention it here). I am currently comparing Hägglunds and Maus interpretation of the law of the tendential of the rate of profit to fall. Mau claims that this law cannot be found within a single capitalists production itself but is located as a contradiction between what is rational for the capitalists and what is rational for Capital:
Since the 1970s, most Marxist theories of crisis have taken as their point of departure the law of the tendency of the rate of profit to fall. This law hinges on the assumption that in the long run, the organic composition of capital will rise rapidly enough to outpace its countervailing force, namely a rise in the rate of surplus value. But, as Heinrich has demonstrated, there are some serious problems with this assumption.38 Boiled down to its essentials, the problem can be stated this way:
Regardless of how we express the rate of profit, it is always a relation between two quantities. The direction of movement for these two quantities (or parts of these two quantities) is known. That, however, is not sufficient; the point is, which of the two quantities changes more rapidly – and we do not know that.39
What is at stake here is, once again, what we can and what we cannot conclude on certain levels of abstraction. What Heinrich argues – convincingly, in my view – is that we cannot demonstrate the existence of a necessary tendency of the rate of profit to fall on the basis of an analysis of the ideal average of the capitalist mode of production. This conclusion does not imply the denial of the possibility that the profit rate might fall precisely in the manner predicted by the ‘law’. Nor does it even imply the denial that such a tendential fall of rate of profit has taken place throughout the history of capitalism.40 It merely implies that the long-term tendencies of the profit rate is an empirical question which cannot be deduced from the analysis of the core structure of capitalism.41
Where does this leave us? The good news is that we do not need the law of tendency of the rate of profit to fall in order to have a coherent Marxist theory of crisis, or to derive the necessary tendency to overproduction. In order to see why, it is necessary to recall that the aim of capitalist production is profit – an aim which is forced upon individual capitals by competition. For any individual capital, the possibilities for making a profit are not restricted by the size of the market, since individual capitals always have the possibility of capturing market shares from their competitors. In other words, from the perspective of the individual capital, the expansion of production, insofar as it allows this individual capital to undercut its competitors, is immediately also an expansion of the market. On the level of the totality, however, this leads to a general overproduction. A crisis therefore arises from the contradiction between what is rational from the point of view of the individual capital and what is rational from the point of view of the capitalist system as a whole. Clarke sums up this dynamic well:
Once the capitalist has taken command of production, the characteristic way in which the capitalist appropriates a profit is not by responding to fluctuations in demand for the product, but by introducing new and more productive methods of production in order to reduce his costs below those of his competitors. The capitalist who is able to reduce his costs is not confined by the limits of his share of the market, but can expand his production without limit in the anticipation of undercutting his competitors.42
For this reason, capitalist production necessarily results in crises of overproduction. This is a mode of explanation firmly rooted in the fundamental contradiction of capitalism, namely the contradiction between use value and value. In the capitalist mode of production, the production of useful things is subordinated not only to the production of value, but to the valorisation of value, and the mute compulsion of competition forces individual capitals to produce without regard for the limits of the market, like a stuck gas pedal in a car heading towards a cliff.
I accept that this necessarily leads to overproduction, and I think I understand that it leads to crises because all capitalists will increase their productivity, and eventually they will not make a profit because they are unable to sell a larger and larger part of their products, reducing the rate of profit. Intensifying the exploitation of workers to extract relative surplus value has a limit and cannot counteract the reduction in the rate of profit.
Hägglund however seem to believe that the contradiction can be located in the production itself:
Striving to make the rate of profit rise is intrinsic to any capitalist enterprise. In order to sustain my water business, I have to keep making a profit from the production and distribution of water. Such profit depends on converting the surplus time of living labor into surplus value for my capitalist enterprise. Given the limits of the workday and legal constraints on labor conditions, however, there are restrictions on how much I can exploit the lifetime of my workers. The major method for making my business profitable and staying competitive is rather to extract relative surplus value from my workers by making the technological means of production more efficient. This is why I built a hyper-well in the middle of our village when I sought to increase the rate of profit for my water business. The hyper-well makes it possible for my workers to produce more water in the same amount of time and thereby increases the relative surplus value I can extract from their labor.
Striving to make the rate of profit rise is thus inseparable from pursuing a technological development that reduces the socially necessary labor time for a given commodity. If I seek to make the production of a commodity more profitable, I seek to make the production of the commodity more efficient, which is to say less time consuming.
By the same token, however, I am caught in the contradiction that characterizes the capitalist mode of production. As a capitalist, I can extract surplus value only from living labor time. Yet, in seeking to extract more surplus value from my workers, I am led to develop technologies that increasingly replace living labor time (from which I can extract surplus value) with nonliving production time (from which I cannot extract any surplus value).
As a result of such technological development, the rate of profit for my water business has an inherent tendency to fall. When my production of water becomes more efficient, there is a shift in what Marx calls “the organic composition of capital.”32 The ratio of living labor time (from which I can make a profit) decreases, while the ratio of nonliving production time (from which I cannot make a profit) increases. Thus, even if the mass of surplus value and profit increases due to the efficiency of the hyper-well as a means of production, the rate of profit for my water business will tend to fall for the same reason.
Hence, we can specify the dynamic of the contradiction in the capitalist mode of production. On the one hand, in striving to make a profit, I develop ever more efficient technological means of production. On the other hand, the more efficient my technological means of production become, the more my rate of profit tends to fall.
To sustain a rate of profit, the capitalist mode of production must inhibit its own drive toward increased technological productivity. If the proportion of nonliving production time is allowed to increase indefinitely, the proportion of living labor time will decrease indefinitely and the possibility of making a profit will diminish. When I have perfected my hyper-well to such a degree that it barely requires any living labor time to operate, I am left with almost nothing from which I can extract surplus value in order to make a profit.
The law of the tendential fall in the rate of profit is not a prediction but a structural dynamic that renders intelligible the counteracting tendencies under capitalism. It is because the rate of profit tends to fall that capitalist employers must intensify the exploitation of living labor and/or export the production facilities to locations where labor is cheaper to buy. Given the reduction of socially necessary labor time, the only way to increase the extraction of relative surplus value—on which profit depends—is to intensify the exploitation of workers by lowering the relative value of their wages. Unemployment and the exportation of jobs are not something that can be removed under capitalism, but a necessary condition for the production of capital wealth. Lowering the relative value of wages and sustaining a rate of profit depends on a surplus population of the unemployed who are willing to work for less, either domestically or in poorer countries to which production is moved.
Most importantly, the law of the tendential fall in the rate of profit renders intelligible the tendency toward crises under capitalism. A continuously increasing technological productivity leads to crises under capitalism, since the replacement of living labor time with nonliving production time makes the rate of profit fall. The falling rate of profit can be counteracted through numerous strategies, but ultimately it requires the destruction of large amounts of capital, either through crises of devaluation or through full-on destruction of existing capital in war or through other means.
Are these two interpretations reconcilable? Hägglund says that the capitalist mode of production must inhibit its own drive towards increased technological productivity which does not seem proper to me because they could then be out-competed by the capitalists that do increase their technological productivity. Or is hägglund talking about the capitalist system overall here? If that is the case, how can we be sure that the expansion of production requiring living labor does not "out-pace" the dead labor caused by technological productivity? (e.g. "bullshit jobs" as postone writes or just more service work/engineering/etc)
At the same time, I am wondering why the capitalist wouldn't hire less workers as productivity increases to reduce expenses in an attempt to actually adjust to market demands by predictions which Mau denies is possible. This would argue in favor of Hägglund if that is the case and perhaps this is what Hägglunds mean with "In order to sustain my water business, I have to keep making a profit from the production and distribution(!!) of water.".
I feel like I am stuck here and am unable to compare these two interpretations. Could someone aid me in a direction from here?