Marxist EVISCERATES Dinesh D'Souza - Who Gets The Profit?

In case you haven't heard of him, Dinesh D'Souza is the self-proclaimed intelligentsia of conservatism and capitalism. He's so smart that he has repeatedly claimed that Nazis are socialists "because it's in the name" and that famous billionaire socialist and Marxist George Soros collaborated with Hitler. I'm being facetious here in case you're wondering. 

I'm torn between dismissing D'Souza as a grifter or just accepting that American conservatives are simply vastly stupider than British ones. At least our conservatives have the courtesy to speak with a posh accent, be Oxbridge educated or affable in a way that disguises their rank politics.

On another note, I've now been waiting for my Soros cheque for 892 days. I'm sure it'll be here any day now. 

Any day...

Anyway, below is the video of D'Souza's that I'm attacking here:

Where D'Souza is right

I know this video is a few years old but it's always worth debunking these virulent morons with huge platforms if only to give me something to do for twenty minutes whilst I drink my coffee.

D'Souza isn't anywhere near as smart as he thinks he is. The question of "Who gets the profit?" is but one aspect of Marx's critique of political economy that many leftists and conservatives get hung up on, but it isn't the central issue of capitalism. It's frequently framed as a moral question and as such, it's neither right nor wrong to say one or the other is objectively correct. It does miss the bigger picture though, one that D'Souza's conservative myopia will never allow him to see.

Workers are paid a wage below the value of what they create and beyond what they require to live, that's true. That's how profit or surplus value is made. But in having their labour-power purchased in exchange for a wage, combined with the fact that workers produce surplus-value, they become capital - self-expanding value, or value that begets more value. D'Souza is actually right when he says this (in fewer words and more stupidly) in the video.

Here's where he starts to go wrong.

To produce more profit for expansion or remain as a competitor in the markets, a capitalist must purchase more capital either in the form of labour-power or machinery.

With me so far?

Two separate yet related external laws come into effect here: competition and supply and demand. Prices of goods and services provided by the capitalist must remain low for any individual capitalist to remain competitive in the market. 

To keep up with competitors, a capitalist must purchase more capital. Placing demand on capital beyond what can be supplied not only increases its cost but also hastens the need for competitors to keep up which places further market pressures upon capital.

Are you getting this yet?

The tendency of the rate of profit to fall

There are two definitions of this, one from Adam Smith and one from Karl Marx. There's contention amongst scholars about which is the most accurate or correct definition, but I don't think they're totally incompatible. One is an explanation of how external forces can cause the rate of profit to drop and the other is an internal explanation within the context of production (as opposed to service or finance industries).

If there is a demand for more labour, workers obtain an advantageous position - they can ask for a higher wage. Though great for workers, at least initially, this is a problem because it increases the cost of capital. When the cost of capital rises, profit becomes squeezed to the point where it is no longer useful as capital in itself meaning the capitalist, eventually, can no longer purchase materials, machinery or labour-power. One outcome of this might be that the capitalist has to eventually raise prices, an outcome that'd surely solidify their eventual demise in the face of competition. 

Alternatively, as the rate of constant capital (machinery and materials) to variable capital (purchased labour-power) changes, the rate of profit declines. Constant capital has a labour-saving bias to it -  automation and tools, for example. Automation is beneficial to the capitalist because it allows the production of more commodities in less time. But it doesn't produce any new value, it merely transfers value already congealed in itself to the commodity. This is because all commodities have embedded within them the totality of labour needed to produce them and constant capital is sold as a commodity.

Let me expand on that with this example from the marxists.org glossary: 

"So for example, let us suppose a worker earns £100 and consumes £1000 worth of materials and components to produce a product which is sold for £1300. This value could be represented as constant capital (£1000) + variable capital (£100) + surplus value (£200). That £200 of surplus value was added to the product solely by the activity of the worker. That is, of the capitalist’s investment of £1100, only the variable capital, £100, expanded."

A machine cannot create new value in the form of a surplus because it cannot produce more than it needs to survive and it is not paid a wage below the value of what it creates; it doesn't need one. It's congealed labour, it's dead labour - it does not need to survive and it cannot be exploited. It'll eventually wear out and at the point, all the value congealed within it will have been transferred to the commodity it produces.

Thus, the rate of profit plunges toward zero. This, in a nutshell, and very roughly, is Marx's tendency of the rate of profit to fall. 

How do capitalists fix this problem? How do they stop workers from gaining an advantageous position so they don't demand pay rises? After all, there are more workers than there are capitalists. Them gaining such a position would be disastrous for capitalism!

Here are some ways that we're witnessing today:

• Expand the pool of workers beyond what is required through immigration or push them out of work through automation. 
• Push down wages through fire and rehire or zero-hour contracts. 
• Intensify exploitation by making workers work longer hours or combining job roles into one.
• Outsource work to nations where labour is already cheaper. 
• Cheapen imported resources by waging constant wars upon otherwise impoverished nations.
• Offloading the burden of taxation onto workers.

These aren't the only means, just the ones that are used to repress working class power. Where it's not possible to do this or it's been done to such an extent that there is no further possibility of repression, state power is levied through various means to obtain cheap loans with bespoke repayment plans, spurious contracts or other subsidies. Maybe even a war or two over foreign resources? Maybe somewhere like Iraq or Afghanistan, perhaps?

But why do any of this?

To reiterate: otherwise, the rate of profit plunges below what's needed to purchase capital and sustain capitalism.

Why D'Souza is wrong, in brief 

The question of "Who gets the profit?" is a distraction from the real issues of exploitation, destruction and misery waged on the working class by the state and monopoly capitalists. It distracts from the greater evils of imperialism and colonialism in the international struggle for workers liberation.

Within the nations of the Imperial Core, such as the US and Britain, the tendency for the rate of profit to fall is the biggest problem within capitalism. It is a manifestation of its inherent contradictions between labour and capital. It is why and how we have monopoly firms like Amazon, Serco, Google and so on who pay little to no taxes and can levy state power through lobbying and shady donations and so on to keep themselves afloat. They become too big to fail but they can barely stand on their own two feet.

D'Souza comes to the conclusion that the capitalists should keep all the profit because of the risks they take in investing and the labour they expend in organising the workforce. Whilst this may be accurate, or morally correct, it's also irrelevant to the logical problems within capitalism itself and its internal contradictions. He fails to consider the system as a whole and gets distracted by the "Who gets the profit?" question.

Addressing the question directly, when workers see business owners making shed-loads of cash without receiving any of it, they'll just leave and find a better job. Any business owner who decides that all profit belongs to them because of "risk" or whatever also risks alienating their workers. It's the workers, as capital, that made them that profit in the first place! If they don't also reap the benefits, why should they bother? Productivity will decline and so will profit.

Personally, I part own the business I work for because it's run as a cooperative. The risk and organisation are spread among all of us so I know he's talking horse-shit. It's very low effort and we're not in pursuit of constant expansion or competition because we're part of a niche industry. But despite all of this, the falling rate of profit has over the past twenty years started to hit us.

Most of our shop trade has already disappeared because we can't afford to be on the high street and we don't have the huge purchasing power of economies scale which is used to push down prices. Our advantages remain in the service sector and with selling bigger, niche equipment. This is a familiar story that you can hear from a lot of small business owners.

Being a cooperative within a capitalist framework, however, does nothing to quell the internal contradictions of capitalism. It sounds like a solution but it's more of a means to mitigate capitalism's worst tendencies whilst developing self-management capabilities. As a worker-owner, I still have to make decisions between capital and labour, only this time it's my own capital and my own labour. Does that improve the situation at all given that I'm now essentially self-exploiting? It's more ethical I guess and I can better self-manage the contradiction, but that's about it. The anarchy of market forces and capital itself still dominate. Think of cooperatives more as a prefiguration of socialism - a blueprint of things to come.

Whichever way D'Souza slices it though, whether he portrays "risk" and organising the workforce as virtuous for the capitalist and thus a justification for taking all the profit or not is ultimately irrelevant. We have much bigger fish to fry.

This sort of idealism does nothing to change the nature and logic of capitalism in any way. You can describe capitalism in all sorts of colourful, virtue-signalling language as D'Souza does, but it does not change the thing itself.

Capitalism is still bad for the capitalist and it's even worse for the workers.