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okay

um and i mean i i agree to sometimes

with your assertion that china is in

fact socialist

i just think that it's not a sustainable

model and from what i've read and from

what i've done my research on

they don't plan on changing it so mike

my issue is that

it's more of a discussion topic to

something or another if china does fall

which i do think it will

because um of the tendency to follow me

to profit if you're i

if you're aware of that you probably are

um the first thing if that's your is

that your intro

yeah i think so i think so yeah well the

first thing i have to ask you is

before we get into the falling rate of

profit stuff

people have been predicting the collapse

of china for many decades now they've

been predicting that there's a

discernible signs of a coming economic

crisis

but it's never happened china's manages

to somehow

surprise them in actually being able to

be cognizant of the

dangers facing its economy when the

economy gets too hot

the government knows how to make it cold

when it gets too cold the government

seems to know how to make it hot

so how do you distinguish your claim

from the myriad of claims about

china's impending doom that have plagued

western discourse for the past few

decades

um so i would argue specifically that um

the organic composition of capital which

is obviously the tendency of the volume

of profit

um it is increasing if i'm thinking it

is increasing

um and a capital accumulation is growing

and yes

um as usual himself i believe has

what's it called cut back taxes cut back

a little other stuff which allows

capital accumulation to

uh to form more which may uh to some

extent

problem but the issue is not that um

they had the neoliberal period where

they were able to keep it up for

quite a while um if i'm not mistaken

period have a profit rate of somewhat

successful profit rate about 15 to 20

percent i think at most

his profit rate has fallen from 30 30

well can we first explain to the layman

this

why the falling rate of profit is here

significant

um okay so i have a

specific area because i have to get my

notes here i don't have a very good

memory

relocation

uh so according to marx's political

economy the basic contradictions of

calculus accumulation are reflected in

the tendency for the profit

of the pr rate of profit to fall uh to

quote marx it is the law of the

capitalist mode of production that it is

its development does in fact involve a

relatively relative decline

in the relationship don't quote it just

just simplify it

simplify like why what it means and why

this leads to crisis

okay let me do you want you want me to

because i think i could do it pretty

fast

yes yes yes yeah okay i i am very new to

this sort of thing

yeah yeah yeah sure so basically the

idea of the marxist

rate of profit to fall is that marx kind

if you want to take it in this way if

labor is the source of value the idea is

basically that

price more or less catches up

to value and therefore

the fresh supply of labor uh with which

to exploit

um is basically used think of it as a

natural resource

is being used up basically and value

cannot no longer is created fresh

it's just recycled and if it's recycled

there can't be any new profits if

there's no

if there's a falling rate of profit you

cannot make

a return on your initial investments and

this more or less leads to some kind of

uh

society-wide crisis you agree with that

i would agree i don't agree um i think

it yeah i think that agree i think i

proudly agree yes

okay but here's the thing are you aware

of the countervailing tendencies to the

falling rate of profit outlined by marx

i am uh i think um

i'm not mistaken you can have government

intervention and that sort of thing

as well as well as having machines

replaced i don't know if it's machines

replaced

there well more electionism is a way

more or less

which is what america's done yeah more

or less revolutions in the forces of

production

right uh as accounting as a

countervailing rate of a

falling greater profit and the reason

for that is because i would say

you're kind of cutting out and lagging a

little bit i don't know if your

connection's not stable or

um is it is it is it's uh

it's probably actually i can stop

streaming i'll uh i'll just record

um

i'll start recording and it'll probably

be a little bit less laggy

it's taking a few seconds here

um

stopping hopefully it's good

i think it's good i'm not sure let me

see yeah can you hear me

thank you ava 1106 supposed to be good

oh

uh yes i can hear you okay i it should

be good now you're not your screen isn't

freezing

anymore um okay dismiss

yeah well there's there's revolutions in

the forces of production

which create a new threshold of

unskilled labor they it displaces the

prior form of uh

instantiation of labor and creates a new

form of uh

new basically fresh supply of uh

labor so so you're saying that is it is

it that more people are coming in

uh i'm literally no no it's it's that

it's that there's a

there's new techniques of production

there's basically a revolution in the

force

oh oh yes yes so that would i would

agree but and that also corresponds to

increased proletarianization so that

middle classes or peasants more of them

are drawn into the

workforce basically um

yes i would have to uh i mean i have

three main

points that i want to bring up that

china's economy and this is the kind of

the article i read

before we get into china we have to

discuss the countervailing tendencies

because

it's not enough to point out that there

is a falling rate we agree there's a

falling rate of profit and obviously

that those dynamics apply not only to

china but to all

countries uh in general in the world so

um we have to establish that another

form of uh

another countervailing tendency for the

falling greater profit is the export of

capital would you agree with that

uh yes yes yes they have been exporting

more capital recently

yeah i uh didn't research on that so yes

there they have had more investment but

that

investment to some extent or another is

a lot less um

stable than they're exporting well okay

then we have to arrive at another

question and this is probably the most

difficult one

when was marx's capital written what

year was it written

oh i have no idea well do you know the

century was written

uh the 20th century yes i mean this is

this is a marxist this was a marxist

it's the 19th it's the united states

it's the 19th century oh sorry different

yeah

right i'm dead okay it's not i'm not

trying to quiz you i'm just

trying to point something out for the

audience that's right

so maybe 150 years have passed

since then more or less right

why has the falling rate of profit not

led to the complete collapse

of global and modern capitalism

um i would say that imperialism has had

a lot to do with that i would say that

uh our actions in probably the middle

east have helped us to keep it following

at least america has helped to keep a

positive rate of profit

and also china opening up but

specifically

well no no we're trying to open up a

large ladder china opened up in the 70s

though

so even by the 70s that's 100 years

that's true uh they i mean it's it's

relatively documented like that

it is a trend uh maybe it's not uh i

agree that it's a trend

but what i contest is that as a trend it

leads to the collapse of economies

and if it does lead to quote-unquote

collapses of economies these are not

system-wide or even politically-wide

collapses these are uh

what in keynesian economics they they

tried to call boom and bust cycles

right we asked the booming bus cycles

but every boom and bus cycle it gets

less and less profit

i can get my uh notes on the

specification sure why why has the

crisis of profitability

not hampered the development of the

forces of production and the

continued vigorous development of

capitalism itself

i would say that um

i i don't necessarily know the answer to

that question uh

i think i think i do i think i do this

for so my answer to that question is

basically that

marx foresaw the inevitability of

socialism

and that more or less countries have

all countries even capitalist countries

have gone in that direction in order to

offset the falling rate of profit

the a new unprecedented relationship

between governments politics and the

economy has allowed states to

find ways to offset the falling rate of

profit

and those are just the capitalist

nations by the way i'm not even getting

to china yet

china which is a a country ruled by

marxists

um so if they've managed to do it for

over a century

the question then shifts that to the

question of

how could a state ruled by a communist

party ruled by people who

study marx all their lives

how could they not be aware of the

falling rate of profit and not be aware

of the necessary interventions they're

going to have to make and have made

actually over the past two days to

offset i would say that

i would say that you have a valid point

then i have

also had that same a similar thought um

but i think that the it's it may have to

do

a lot with the political influences

especially in the party i don't know

much about china i just know that

majority of them are less maoist and a

lot of them are probably more

jiji ping thought and and meet with them

they don't

these are not really real distinctions i

mean um

maoism mao was an era of china the if

you're referring to the culture

revolution the cultural revolution

eventually came to an end

um even under mao i think uh mao didn't

think i mean to be permanent

and i've said i mean i've i've looked at

some

uh uh articles like by the business

insider so it might have been

the best article but it was it talked

that um

in 2036 with what maoist economics was

it is possible that they would be doing

better off than china is now

it's potentially obviously it's not a

guarantee because what do you mean by

maoist economics are you referring to

um you're afraid i'm not entirely sure

they were very vague

when they described it i think you're

basically referring to the soviet style

the vestiges of the soviet system that

china still retained before it reform

its reform and opening up is that what

you're referring to

uh i believe so i wouldn't be sure

though because yeah but the consensus

the consensus in china is not that they

have moved to an entirely different

um you know uh thing it's more that for

the time

the this that type of economy was

necessary to establish china's

national and sovereign politically

sovereign industrial system

after the task was done uh reforming up

and opening up was made possible so

they're just different stages

of chinese socialism agreed

agreed um but but it's it's kind of

unthinkable that

the previous stage could have been

prolonged to

you know to 2036 the stage had exhausted

its purpose and it has exhausted its uh

ability to grow the chinese economy and

develop the forces of production so

i'm not sure how it could have uh been

prolonged

um i'm not that uh well-versed in

history um

so i wouldn't actually be able to

dispute that so i'm not going to really

dispute that claim

but i would say that uh like the growing

class militancy in china the

strikes the large amount of strikes that

have happened um

and the increasing i would say maybe

social contradictions and economic

contradictions

all lead to a potential crisis or

maybe that collapse may not collapse but

maybe a crisis that might be

um unforeseen because i mean in 2015 i

believe

uh the stock market was booming in the

orbital class

uh urban middle income class believed

that it would last forever but

uh potentially forever but it didn't it

collapsed and it went back to the about

the same rate it was before

so well i think they are planning to

some extent or another

they couldn't even with the knowledge

maybe that that was going to happen

prevent that they spent merely uh about

i think several trillion

yuan on uh trying to fix that but they

did they couldn't fix their profit at

that time or they couldn't immediately

fix it

the fact that their response to the

response time may be potentially delayed

uh may also have something to do with

potentially a crisis that is not

avoidable and has to have a uh massive

change

my biggest issue is that xi ji ping has

not um

necessarily said he said that uh

i think i have a quote from him here so

close with him here

um that's any word or action that denies

doubts or waiver over the country's

basic

economic system is not in line with our

principles or policies the party in the

country

i just think such an unwavering uh

supportive system without any sort of

maybe

thought of a perhaps a backup system or

something of that nature

because i think they could do that very

effectively because they already have

their productive forces

and perhaps they could centralize their

economy very effectively especially with

good works that we've had

okay before you a few things you know

we're kind of going uh

really fast in a lot of directions so

the first thing is that the first you

mentioned there's a bunch of

social contradictions and all this kind

of stuff what is different from the past

two decades from two decades ago what's

different now

i don't see a difference well i would

say i would say that

um that the contradiction is

um it's growing you know with the sorry

okay but wait wait wait uh what is that

can i could i see if i can reach some of

my notes here

i mean china's capitalistic development

has brought about a fundamental change

in china social structure as the

agricultural labor force fell

the non-agricultural labor force

expanded to 360 million from 200

to uh to 40 million in 2013. um

dude you're going you're just shouting

you're throwing a lot of information

i'll get i'll get sorry you got to get

to the point you know okay okay

so with the decline uh of the world

surplus labor force capitalists and

manufacturing industries have been

struggling with labor shortages

in recent years the chinese working

class has weighed struggles with growing

trees and militancy

to get better wages to get better stuff

which also decreases

the rate of profit so that also is

something that they have to

offset because they can't simply and

with i don't know if they okay

just please stop quoting your notes and

stop quoting your articles for one

second

and let's actually get to the meat and

potatoes of what you're trying to

what you're trying to say you so you

just gave me which from what you quoted

just now i'm going to freeze you right

now you just quoted to me

that there's a increased shortage of

labor supply within china and then this

is giving leverage for chinese workers

to demand higher wages and that this is

going to

be a problem for chinese profits well we

all know that there's a growing chinese

middle class

in general the chinese demanding a

better way of life

in general the communist party has been

very cognizant of this fact

and uh is aware of this fact i don't see

how this is some kind of

see i think the general trend of what

i'm noticing with your analysis and your

interpretation of china is that

things that would lead to an economic

collapse or crisis in the west

uh you're assuming that it's also going

to lead to that in china but

the difference in china is that the

party is two steps ahead the party knows

about these uh what is a apocalypse in

the west

is a type of um cycle in china if you

will

what i mean by that is that china

doesn't see

the decline in the rate of profit as the

end of the world

it sees it as a kind of cycle of its

economy and it has to intervene in a

specific way and

it goes up and it goes down just kind of

like the boom and bust cycle that i told

you about

so i think in the first place when

you're describing all of these problems

it's almost like you're describing the

problem of a wave

a wave goes up but the wave must also go

down but how do you know the wave

doesn't also

go up again it's a wave you see my

problem

you are looking at it from a narrow

perspective you're

isolating a single moment of a very

complex

dynamic and innovative system uh and

just assuming that this downward trend

it's uh some kind of permanent

devastating crisis for

china as a whole my what i want to

arrive at

what i really need to be convinced of

a major impending crisis in china

is beyond a boom and bust a

fundamentally devastating economic

crisis

which is not within the party's sphere

of intervention

to offset or to deal with in the ways

that it has

been dealing with in the past

okay so i would say that the

i mean the exports to other countries

has been declining

so i mean they could obviously have more

investments

first of all a lot of things have

happened in the past two years the

coronavirus pandemic has happened

there's a lot of

political tensions with the united

states china's

dealing with this geopolitical issue are

you is this a long-term problem that

you're describing the decline of exports

like what are you actually describing

here

um i i'm not because as far as i'm

concerned

china is the world's foremost pioneer

uh its foremost leader of establishing

an unprecedented level of newfound

global

economic interrelatedness and

interdependence china's forming all

sorts of new deals it has its belt and

road initiative

obviously it's expanding and building

infrastructure and countries china's

goal is

to develop the forces of production on a

global scale

uh and i don't see uh

how this will not address whatever fears

of an economic

crisis in china or a general decline in

the rate of profit will be

and furthermore i also

have a lot of questions about the

significance of the falling rate of

profit in relation to modern economies

in general

for example when we have a fiat system

why is the falling rate of profit even

relevant in the first place

how is the falling rate of profit

destroy

economies um

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in today's modern uh 21st century

economies i don't see how it does

for example i don't see how

profitability is the main

index of economic success anymore

profitability

is certainly a good indicator of the

success or failure of enterprises but

profitability seems to be like a temp a

temporary issue

for most for example i'll give you an

example of this

is china's infrastructure projects are

those profitable

no not in the short term in the long

term they they promote the general

welfare of the economy in general but as

a capitalist

enterprise they're not profitable at all

okay um

let me see here

i uh i figured you have a pretty good

response to this and i it's kind of i

haven't really had any

talks with any very informed mls about

this and

i was just sort of curious on this issue

but i i do think i mean

if you look at the graphs and i mean

obviously graphs aren't everything and

that sort of thing and uh

obviously that sort of thing is um

can be reversed but all of the economy

the world rate of profit broadly

speaking

has always been on the decline and i

think that inevitably

what will happen when you get far enough

down what happens uh

sorry sorry from from what year has it

been on the decline

um it's not all it's obviously not

always been on the decline it's it's not

it's not always been on the decline

because it has gone up it's fluctuated

also

it's a cyclic uh fluctuation yeah i need

to know the specific

the

i don't have the article printed out for

the world rate of profit but i do know

from 1948

in america to 2015 it's gone down

significantly and during

uh

if you have a graph that's telling you

that from 1948 to now

the rate of profit has gone down and

it's i'm not doubting that this might be

true

shouldn't you just ask since you then

ask yourself why is that

does the reform does the rate of profit

have decisive significance for modern

economies

because we obviously know that from the

period of 1948

to now the american economy has grown

significantly

the general wealth of nations uh to

paraphrase the title of adam quote's

book

the general wealth of nations has

increased we know that

so if the general wealth of nations has

increased the general prosperity of

countries

has greatly increased since then what

does that say about the rate of profits

ability

to explain what drives

modern economies uh i wouldn't say it's

a driving force i would say that the

driving force is

um sort of uh maybe monitored perhaps by

the

um what's it called by the uh

tendency they're following me to profit

to decline i would say that

that decline uh indicates at least

to me and i mean maybe to other people

uh that

the inevitable collapse of i just don't

think that uh capitalism in this stage

maybe this to me that this seems like a

kind of wishful

uh kind of uh

theological kind of eschatology like

it's been 150 years but the final

collapse is coming

right but why should we believe there's

going to be a final collapse

perhaps we shouldn't but i would say

that uh being aware of it

either way is still a very important

thing as well as china's growing

but the falling rate of profit has not

proven its significance

whatsoever uh from the 20th century

onwards

in the 19th century it clear it had a

clear and decisive significance but i'm

just trying to say things have changed

we don't live in the time in which marx

lived

the falling rate of profit does not

appear to have

a very good explanatory value for

what or marx was basically trying to

describe the dynamics

of historical and economic

revolutions why is it that some modes of

production

fall into decay and crisis and other

ones

inevitably arise out of their shell why

how does the how are their revolutions

in the forces of production right

that's really made the main thrust of

what marx is talking about

and the paradigm that you appear to be

using does not

appear to explain the history of the

20th century in the 21st century

interesting um that being said uh i

i haven't gotten to my third point i'm

sure you'll have a response to it as

well and i'm sure

actually i kind of already have an idea

of uh maybe a response but

uh china has become more increasingly

reliant on

non-renewable energy uh they've imported

they've

especially i think in 2021 or 2020 they

became the leader ex-leading importer

of oil which is uh a problem because

obviously there was there was a lot of

mass protests sometimes another where

there's protests the government

obviously increase in in china very much

protections

yes in the environmental protections but

those environmental protections

obviously are going to have a

um wait wait i gotta i gotta i gotta

hold i gotta

intervene here are people protesting

because

of china's import of oil or whatever

or gas or are they protesting because

they find the smog and the environmental

conditions within which they live

to be intolerable because those are two

entirely different

topics um well i think they're really i

i'm not sure but i feel like they're

related because i feel they're not

they're not i'll tell you the reason

i'll tell you the reason they're not as

long as people don't have to live with

smog i don't think they give a [ __ ]

about you know whether the government's

exporting oil i don't

see how i think that please please don't

interrupt me let me finish this

i don't see how in china there's an

environmentalist movement like in

america where they just

care about the planet like this

religious religion about the planet

they don't care in china they care about

their immediate

surroundings you know what i mean they

care about

whether there's too much pollution

that's making life intolerable

um which the chinese government is aware

of that issue

and they have taken significant steps

where they have the uh

the solar farms and and what sorts so i

know

listen listen please don't confuse these

two issues i literally just interrupted

you only to make a distinction between

these two issues

there's a general ecological crisis of

the need to invest in renewable energy

yes

china's done that but then there's also

the issue

of there being too much smog in cities

and too much environmental pollution

that's making life

intolerable now these are interrelated

in a way right

but the source of protests and

grievances is not coming from the fact

that the chinese government is importing

oil

it's not like american protesters going

to protest an oil company to save the

planet that's what i'm trying to say

that's all i'm trying to say if there's

protests i imagine that they're because

people are sick of smog and they want to

get rid of they want the government to

address that issue

i think i would agree but the the

relation here to what my point is is

that growing regulations will also

increase the

uh the um the amount of

or the increase the cost of capital

accumulation or will it would decrease

uh the greater profit so all these

circumstances work together with

but this is this is there but listen

listen this is a sh

it's another issue basically you're

naming that

how the chinese government's actions are

going to cut into profits in general

but the issue is that the chinese

government doesn't think in terms of

short-term profits it thinks of

in terms of the long-fair welfare of the

people in the economy so in the short

term it'll cut into profits

in the long term uh it will

uh it will lead to a more healthy

not just a healthy economy but a more

healthy overall

society more healthy overall environment

china's government has proven

it's a i mean the best example of this

is infrastructure doesn't building

infrastructure cut into short-term

profits

doesn't a whole bunch of other actions

by the chinese government

but into the short-term profits of these

uh

private enterprises they do but in the

long term

the people and the economy benefit from

it

i think you're misinterpreting the

following the tendency for the raid to

profit to fall

to mean that any actions by a government

which

lead to uh you know um which decrease

the rate of profit spells economic

collapse that is not this is a extreme

vulgarization of marxism

okay i would i guess i would agree i'm

not once again

uh as familiar perhaps as i should be uh

with this particular issue i'm

relatively new to this like i think the

whole point of chinese socialism is the

way in which it's proved

that profitability is not actually the

main source

of economic welfare and economic

prosperity now profitability is a good

measure of that

but you can sacrifice you can actually

sacrifice

short-term profitability in the name of

the general welfare of the people

and this will allow the economy to

flourish it won't kill the economy

because the remember for marxism teaches

us what

marxism teaches us that overall the main

source of the wealth of the economy lies

in what it lies in labor and it lies in

the forces of production it doesn't

actually lie in profit it lies in labor

in the forces of production

now profit is still a good measurement

but it is not the fundamental driving

force of the economy actually stalin and

his economic problems in the ussr

wrote about already how the soviet union

still was not completely free from the

law of value and therefore the tendency

of rate of profit to fall

but it has already established a form of

uh

an economic form a system that is going

beyond the law of value

and we see the same thing in in the case

of china the law of value is not the

main determining force

of the chinese economy

okay i i get i guess i get that that

makes a lot more that uh

just make a little more sense yeah i

guess if

no it's okay well

um i guess that makes sense yes i i just

um

i don't know that's um to think about i

guess

huh i mean i don't i don't have much

more for you i guess

i guess you've sort of answered my

questions and i guess i mean i

wanted this to be a lot more of a

discussion because i'm i'm not

necessarily um

that educated on these issues i've came

to microsoft relatively recently i've

watched your stuff and i kind of

became a little bit more more excellent

oriented but um

yeah i think that's uh a valid point to

make and i think that maybe

uh yeah okay

uh well you you were a great guest it

was a really fruitful uh

for the audience and uh you know

don't worry i'm pretty sure the audience

likes you uh

so they don't hate you

it was a good discussion you know it was

a good discussion

yeah that's like that's what i came here

for so uh thank you it's been a pleasure

having you

yep been a pleasure yeah okay see you

later man bye see ya