In ‘rate and mass’ (nlr 130), the eminent Marxist urbanist David Harvey seeks to provide an explanation for some of the basic structural dynamics that distinguish contemporary capitalism from what came before, while demonstrating the continuing relevance of Marx’s reflections in the Grundrisse for such an effort.footnote1 No subject matter could be of greater importance to the left, for any political strategy aimed at transforming—or even reforming—capitalism must begin with an understanding of the system’s actual dynamics. The question is, to what extent does Harvey succeed with his project?

‘Rate and Mass’ asks two basic questions. First, how should we interpret the ‘tendency of the rate of profit to fall’? Second, how do capitalists respond to the tendency in a way that might counteract it? It is the latter question that occupies Harvey throughout most of his text. He argues, to begin with the first question, that the tendency of the rate of profit to fall results from the increasing amount of constant capital—indirect or ‘dead’ labour—invested in plant and equipment, and other non-labour inputs, relative to the amount invested in direct (or ‘living’) labour. The technical Marxian term for this is the ‘increasing organic composition of capital’. For Harvey, although his presentation is somewhat elliptical, the decrease in the ratio of money (exchange value) invested in labour relative to that invested in plant and equipment outstrips the rise in the ‘rate of exploitation’, i.e. the ratio of surplus (or profit) to the wage. As Harvey puts it, ‘The competitive search for technological advantage tends to remove labour—the source of value and surplus value (profit) in Marx’s theory—from production. A reduced labour input means, all else remaining equal, less surplus value is produced, which translates into a falling rate of profit’.footnote2 This is, in short, a straightforward rendition of the orthodox interpretation of the labour theory of value, which Harvey applies to explain the tendency of the rate of profit to fall.

There is an obvious problem with this idea, however. If there is a direct relationship between the rising organic composition of capital and the declining rate of profit, this would seem to imply that the most technically backward firms—those with the least amount of capital tied up in putatively non-productive plant and equipment—would have the highest rate of profit. Conversely, those firms with the highest wage bills compared to their outlays for plant and equipment should be the most profitable, because they would have a greater proportion of their investment dedicated to value-producing labour than to non-value-producing fixed investments. Put slightly differently, the problem with the formulation is that it implies that industries experiencing relatively rapid technical change, entailing the relatively rapid increase in their organic composition of capital, tend to see their rates of profit fall relative to those with slower technical change and slower growing capital-labour ratios. It would imply that capitalist investment, standardly understood as entailing technical progress, would reduce the profit rate.

If this putative relationship held in the real world, it would be difficult to understand why any capitalist would invest in new plant and equipment, since that would only lower the rate of return. Harvey adduces the ‘competitive search for technological advantage’, but he does not explain what the meaning of this competitive search is—specifically, how and why new investment embodying higher technology and higher organic compositions of capital (K/L ratios) would ever take place. Presumably, what capitalists are after is profit. Why would they invest in technical improvements if such investments harmed those profits? One answer might be that, while the organic composition of capital lowers the rate of profit for an entire line of industry, it does not necessarily lower the rate of profit for particular firms within the line. But if the increasing organic composition of capital brings down profits in the line, why would the same mechanism fail to operate at the level of a firm? Conversely, if—contrary to Harvey’s hypothesis—an increase in the organic composition of capital did raise the rate of profit for a particular firm, presumably as an expression of that firm’s adoption of a new, more productive technique, it is hard to see why the industry as a whole would not copy it—adopting that new technique, sustaining a rising organic composition of capital, and experiencing a rising rate of profit. None of this is clarified, or even broached, in Harvey’s essay. Perhaps unsurprisingly, he offers no evidence that the mechanism he depicts actually operates in the real world. Indeed, were he to demonstrate that it did hold true empirically, it would overturn generations of economic theory and research, as well as common sense. If Harvey were right, capitalists’ investment decisions would be inscrutable at best, illogical at worst.

Harvey argues that the fall in the rate of profit driven by the tendency of the organic composition to rise is counter-balanced by counteracting tendencies. The question that needs to be posed therefore is: what are the consequences of these counter-tendencies in Harvey’s account of the theory? His first assertion in this regard, and indeed his most original contribution, is that capitalists respond to the declining rate of profit by hiring more workers, aiming to offset the fall in the ‘rate’ of profit by way of an increase in the ‘mass’ of profit. So, by increasing the absolute number of workers employed, they increase the total quantity of value and, in turn, surplus value. This is what Harvey is getting at with the article’s title, ‘Rate and Mass’. As Harvey puts it, ‘According to Marx, the decline in the rate of profit since the 1970s should have stimulated the search for a rising mass of wage labour’—and, according to him, this is exactly what happened. ‘The global wage-labour force has in fact increased from around two billion in 1980 to some three billion today’.footnote3 This is a rather surprising idea. In Harvey’s hands, ‘counter-tendency’ no longer means a ‘counter-tendency’ to the tendency of the rate of profit to decline, but rather an attempt to recoup losses in the ‘rate of return’ through an expansion of the mass of surplus value.

As a matter of definition—the meaning of ‘counter-acting tendency’—it is not clear how an expansion in the absolute numbers of workers employed, at a given or increasing level of the organic composition of capital, could constitute a counter-tendency to the declining rate of profit. For simply adding more value by way of adding more labour can in no way be assumed to sustain the rate of profit, only the mass of profit. To take a mundane example, if one has 10 red m&m candies in a bag of 50, and 100 such candies in a bag of 500, the rate of red to non-red m&m’s remains exactly the same as it was before.

This is hardly a scholastic issue, for in Harvey’s hands the distinction between the rate of profit and the mass of profit becomes, at least implicitly, the basis for a new account of the behaviour of capitalists—who, in his telling, compensate for a declining rate of profit by searching for more absolute numbers of workers to employ, thereby increasing the mass of profits. The oddity of this idea cannot be over-stressed. Harvey is suggesting that in the face of declining profitability, capitalists are likely to respond by expanding employment. But what theory of capitalist behaviour lies behind this notion? It can only be that capitalists, in Harvey’s universe, act according to the labour theory of value. Knowing that labour is the source of value, they respond to a fall in the rate of profit by hiring more workers. They are, in that sense, Harveyians.