End of capitalism in mid of the xxi century

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END OF CAPITALISM IN MID OF THE XXI CENTURY
Fernando Alcoforado 
Abstract: This article aims to: 1) demonstrate how the profit is formed in capitalism; 2) demonstrate the
inexorable downward trend of the profit rate of the world capitalist system; 3) show that the world capitalist
system come to an end in the mid-twenty-first century; 4) present incapacitating shares of the profit rate of
the downward trend in the global capitalist system; 5) present the beneficial and harmful effects of industrial
automation on the rate of profit in capitalism and society; 6) present the performance of the world capitalist
system in the recent period; and 7) to analyze the financialization of capital and risk debacle of the world
capitalist system.
Keywords: Profit rate in capitalism. Downward trend of the profit rate.
1. Introduction
This article aims to demonstrate that the world capitalist system come to an end in the
mid-twenty-first century. To achieve this goal, it was presented in Chapter 1 the truth
about the formation of profit in capitalism relying on Karl Marx's teachings in his work
The Capital (1999). Chapter 2 presents the statement of Karl Marx's thesis of inexorable
downward trend of the profit rate in the global capitalist system. In Chapter 3 it is shown
that the rate of profit will be equal to zero for the period 2048/2059 and presents the
actions or strategies adopted to neutralize the downward trend of the profit rate of the
world capitalist system. Chapter 4 presents the beneficial and harmful effects of industrial
automation on the profit rate in capitalism and society. Chapter 5 presents the performance
of the world capitalist system in recent years regarding the profit rate, the rate of surplus
value and organic composition of capital. Finally, in Chapter 6 analyzes the
financialization of capital and the risk of debacle of the world capitalist system.
2. The truth about profit formation in capitalism
From any given time throughout the history of mankind, humans began to exchange goods
(M). At this time there was still no money as a medium of exchange. He practiced the

Fernando Alcoforado, member of the Bahia Academy of Education, engineer and doctor of Territorial
Planning and Regional Development from the University of Barcelona, a university professor and consultant
in strategic planning, business planning, regional planning and planning of energy systems, is the author of
Globalização (Editora Nobel, São Paulo, 1997), De Collor a FHC- O Brasil e a Nova (Des)ordem Mundial
(Editora Nobel, São Paulo, 1998), Um Projeto para o Brasil (Editora Nobel, São Paulo, 2000), Os
condicionantes do desenvolvimento do Estado da Bahia (Tese de doutorado. Universidade de Barcelona,
http://www.tesisenred.net/handle/10803/1944, 2003), Globalização e Desenvolvimento (Editora Nobel, São
Paulo, 2006), Bahia- Desenvolvimento do Século XVI ao Século XX e Objetivos Estratégicos na Era
Contemporânea (EGBA, Salvador, 2008), The Necessary Conditions of the Economic and Social
Development-The Case of the State of Bahia (VDM Verlag Dr. Muller Aktiengesellschaft & Co. KG,
Saarbrücken, Germany, 2010), Aquecimento Global e Catástrofe Planetária (P&A Gráfica e Editora,
Salvador, 2010), Amazônia Sustentável- Para o progresso do Brasil e combate ao aquecimento global
(Viena- Editora e Gráfica, Santa Cruz do Rio Pardo, São Paulo, 2011), Os Fatores Condicionantes do
Desenvolvimento Econômico e Social (Editora CRV, Curitiba, 2012) and Energia no Mundo e no Brasil-
Energia e Mudança Climática Catastrófica no Século XXI (Editora CRV, Curitiba, 2015).

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barter, where goods were exchanged for merchandise (M = M). The use of money
as we know it today is the result of a long evolution. To present advantages as the
possibility of hoarding, divisibility, rarity, beauty and ease of transport, the metal was
chosen as the main standard of value. It was changed under different forms. The principle,
in its natural state, then in the form of bars and also in the form of objects such as rings,
bracelets etc. Arise, then, in the seventh century BC, the first coins with the current
characteristics: they are small pieces of metal weighing and defined value and the print of
the official stamp, which is the mark of who issued them and ensures their value. The
money appeared thus to facilitate the exchange of goods.
(M D M)
Under capitalism, money is no longer a means of exchange between goods of equivalent
value, passing it being also the means to obtain more-money (D'). From an amount of
money (D) seeks to get more money (D').
D M (.........) M´ D´
In the first volume of O Capital, Karl Marx (1999) shows how the profit is realized. He
explains that the capitalist finds in the market a special commodity, which, unlike all other
commodities, is the source of your profit. Marx defined it as "the set of mental and
physical capabilities existing in a human being". The purchase and use of these "mental
and physical capabilities" is the source of the profits of the capitalists.
Although the employee has a contract to work for, say, eight hours a day, he would cover
the value of their salary in maybe four hours to meet your needs. This first period, Marx
describes it as necessary labor time. But once covered the value of his salary, he did not
stop working and continues to do so until the end of his eight-hour shift. It is this extra
period exceeding the required part, that the worker produces surplus value for the
capitalist, and is described by Marx as surplus labor time. This is unpaid labor and is
where the profits of the capitalist arise.
According to Marx (1999), the capitalist profit results of Surplus Value (m). This comes
from the difference between the value of a good or service produced by a worker and the
salary paid to him. In other words, it is the working time that is not paid or paid by the
capitalist. Therefore, the profit comes directly from human labor, worker. Hence we can
calculate the rate of exploitation (m'), for example, if the value produced by a worker for a
year is R$ 72,000.00 and the salary paid is R$ 18,000.00 (v) the Surplus Value is R$
54,000.00 (m), then: m'= m / v = 54,000 / 18,000 = 3 (300%).
The value of raw materials and energy used in the production cannot constitute a source of
profit because it creates no new value, given that simply transfers their value to the new
product. This includes the use and wear of machines, which gradually transfer its value
only, which is known as depreciation. According to Karl Marx (1999), the work

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(combined with nature) is the true source of all new value, including Surplus Value. All
value derived from previous work contained in the raw materials, etc., is transferred to the
new goods. To this Marx calls "dead labor", as opposed to new value added resulting from
human labor that Marx describes as "living labor".
The driving force of capitalism is the production of Surplus Value. The capitalist is
determined to extract every last drop of profit from the unpaid labor of workers. It does
this through a combination of means: lengthening the working day, increasing the speed of
the machines, introducing sparing machines of work, through rationalization, productivity
agreements, new work shifts, time and motion studies, using new technologies, etc. These
methods have become familiar to workers.
The total capital invested by the capitalist was considered by Marx (1999) as follows. The
capital constituted of means of production, raw materials, energy, etc. is considered
constant capital (k), which simply transfers its value to the new goods. The value that they
transfer is fixed. However, the capital represented by labor (wages) is considered a
variable capital (v) as a source of all new value. Consequently, the total value of all
commodities is composed of k + v + m, where m is the Surplus Value. While the Surplus
Value is "trapped" within the commodity, the capitalist can only accomplish this Surplus
Value when the goods are sold in the market. Thus, the Surplus Value is created only in
production, and performed only in the exchange market.
It is worth noting that it is through the added value (m) that the capitalist pays his capital
invested, paid social and labor costs as well as fees and taxes to the government, among
other requirements. Ultimately, it is the worker who, in addition to ensuring the production
of the good or service, guarantees the gain of the capitalist and the payment of the
commitments assumed by this. If the journey of work is divided between necessary labor
and surplus labor, the rate of surplus value is the ratio of the two portions of the journey of
work. The higher the excess portion, the greater the rate of surplus value. It is exactly the
same ratio of surplus value and variable capital, ie (m / v). In simple terms, the rate of
surplus value is the rate of exploitation of labor by capital, or workers by the capitalist.
The capitalist class force the working class to do more work than is required to cover their
livelihoods, thus producing surplus value.
What matters to capitalist is the profit and the pursuit of higher profits. They need to know
if the value that legally does not pay its workers - the Surplus Value (m) - is greater than
the capital that invests in constant capital (k) and variable capital (v). Being the constant
capital machinery, raw materials, energy, etc. used in the production of goods or services
and capital variable buying labor to workers. Therefore, mathematically the rate of profit
is thus:

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Whereas m'= m / v, we will have m = m'v. Replacing m by m'v in the formula that
calculates the rate of profit will have:
Dividing the numerator and denominator by v, we have the profit rate:
l'= m'. 1 / (k / v + 1) = m'/ (k / v +1)
Whereas the organic composition of capital (coc) is the ratio of constant capital (k) and
variable capital (v):
We will have the rate of profit as shown below:
l´= m´/(coc + 1)
The analysis of this formula reveals that the rate of profit (l') is proportional to the rate of
exploitation (m') and inversely proportional to the organic composition of capital (coc).
The incessant and passionate technical development, driven by competition between
capitalists forces them to invest in machinery (constant capital = k) that allows them to
produce the same with less time to "work live" (variable capital = v). Therefore, in their
search for reproduction capital, capitalists tend to invest more in constant capital (k) and
less in variable capital (v) tending to increase the organic composition of capital (coc)
causing the rate of profit has a tendency to decrease.
Unemployment resulting from this increased investment in constant capital (k) at the
expense of variable capital (v), thus making it also more difficult to capitalist obtain the
Surplus Value. Faced with the low rate of profit trend, the capitalists seek to increase the
rate of exploitation (m') to increase the numerator of the equation l'= m'/ (coc + 1). At the
same time, paradoxically, encourage consumption while the workers' purchasing power
tends to fall with rising unemployment. Thus, circulation D-M-D' decreases and happen
the system crises.
This pressure to enter machines allowing labor-saving driving, however, a relative
decrease of variable capital (workforce) compared to the constant capital (means of
production, raw material, etc.). Although there is a relative decrease in the workforce for
those who invested in constant capital, that fact, however, results in more investment

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being made available to each worker employed. Through competition, the capitalist is
forced to invest to produce goods cheaper than its rivals.
The industries where labor productivity is below average are excluded from the business
for those that use the most current methods. Competition leads to the concentration and
centralization of capital. This process results in larger companies with the most modern
equipment and technology. This accumulation of capital is a fundamental feature of
capitalism. It´s the historic mission of capitalism to develop the productive forces. The
driving force of capitalist production is not the satisfaction of human needs, but the
production of surplus value at an ever increasing pace, much of which must be
accumulated and incorporated into new means of production.
3. The inexorable trend of fall of profit rate in the world capitalist system
In Chapter 2, The truth about the profit formation in capitalism, we present the
interpretation of the great economic and social thinker of the nineteenth century, Karl
Marx, on the dynamics of the capitalist system and its generating source of profit.
According to Marx, the capitalist profit results of Surplus Value (m) and this comes from
the difference between the value of a good or service produced by a worker and the salary
paid to him. In other words, it is the working time that is not paid by the capitalist to the
worker. Therefore, the profit comes directly from human labor, of the worker. The value
of raw materials and energy used in the goods production can not constitute a source of
profit because it does not create a new value, given that simply transfer their value to the
new product. This includes the use and wear of machines, which only gradually transfer its
value, which is known as depreciation.
In the Chapter 2, it was demonstrated that the driving force of capitalism is the production
of surplus value. The capital consists of means of production, raw materials, energy etc. is
considered constant capital (k), which simply transfers its value to the new goods.
However, the capital represented by labor (wages) is considered a variable capital (v) as a
source of all new value, and (m) is the Surplus Value or surplus labor or unpaid by the
capitalist to the worker. Consequently, the total value of all commodities is composed of k
+ v + m.
The capitalist is determined to extract every last drop of profit from the unpaid labor of
workers (m). It does this through a combination of means: lengthening the working day,
increasing the speed of the machines, introducing sparing machines work, by streamlining
the production process, productivity agreements, new shifts of work, time and motion
studies, making use of new technologies etc. The working day is divided between labor
socially necessary for worker and his family maintenance and the surplus unpaid labor by
the capitalist to the worker. In simple terms, the rate of surplus value is the rate of
exploitation of labor by capital, or of workers by the capitalist. The larger the surplus
portion (m), the higher the rate of Surplus Value. The capitalist class force the working

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class to do more work than is required to cover their livelihoods, thus producing the rate of
Surplus Value (m / v).
What matters is the capitalist profit and the pursuit of higher profits. They need to know if
the value that legally does not pay its workers - the Surplus Value (m) - is greater than the
capital that invests in constant capital (k) and variable capital (v). The constant capital
corresponds to the machinery, raw materials, energy, etc. used in the production of goods
or services and capital variable with respect to wages paid to workers. Chris Harman
(2007) published the article A Taxa de Lucro e o Mundo Atual (The Profit Rate and the
Current World) in which informs, based on The Capital of Karl Marx, that the profit rate
is the key by which capitalists can take forward its goal of capital accumulation. But the
more it develops the capital accumulation is more cornered for capitalists make a profit
rates to continue the process of accumulation. The rate of profit, being the goal of
capitalist production, its fall appears as a threat to the capitalist production process. This
situation shows the historical character, transitional of capitalist mode of production and
the conflict that is established with the possibility to continue its development. According
to Karl Marx, this shows the true barrier to capitalist production which is represented by
own capital.
Based on the reasoning of Marx, Harman says the following: each capitalist may
individually increase their own competitiveness by increasing the productivity of its
workers. The way to do it is using more "means of production" - tools, machinery etc. - In
sufficient quantity and quality required based on innovation per worker. With the
increasing proportion of the physical extent of the means of production of a quantity of
labor employed, a proportion that Marx called "technical composition of capital", an
increase in the volume and quality of the means of production also implies an increase in
investment necessary to acquire them (k). This will also increase faster than investment in
workforce (v). To use the words of Marx, the "constant capital" (k) grows faster than the
"variable capital" (v).
The growth of the ratio (k/v), Marx calls the "organic composition of capital" (coc) which
is the logical corollary of capital accumulation. However, the only source of value of the
capitalist system (profit-generating) as a whole is the work as demonstrated in the Chapter
2, A verdade sobre a formação do lucro no capitalismo (The truth about the profit
formation in capitalism). If the investment (k) grows faster than the labor force (v), should
also grow faster than the Surplus Value (m) by the workers, which is where the profit is
derived. In short, the growth of capital grows faster than the source of profit.
Mathematically, the rate of profit (l') is represented as follows:
Where: m = Surplus Value or unpaid surplus labor, and v = paying job with wages. The
rate of Surplus Value (m') is the ratio of the two portions of the working day (m/v).

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Whereas m'= m/v, we will have m=m'v. Replacing m by m'v in the formula that calculates
the rate of profit we will have:
Dividing the numerator and denominator by v, we will have the profit rate:
l´= m'. 1 / (k/v + 1) = m'/ (k/v +1)
Whereas the organic composition of capital (coc) is the ratio of constant capital (k) and
variable capital (v):
It expresses the rate of profit as shown below:
l'= m'/ (coc + 1).
The analysis of this formula reveals that the profit rate (l') is proportional to the rate of
Surplus Value or worker exploitation rate (m') and inversely proportional to the organic
composition of capital (coc=k/v). The analysis of this formula reveals that with increasing
of organic composition of capital resulting from increased capacity and / or modernization
of production process results in the elevation of the denominator of the equation (coc), a
fact that would force the capitalist to raise (m') in numerator, ie, the rate of Surplus Value
or worker exploitation to maintain or raise the rate of profit. This is why every capitalist
increase their competitiveness with the increase of its "capital technical composition" and
increases the rate of Surplus Value or worker exploitation. Each capitalist search therefore,
for greater productivity of production to gain an advantage over its competitors. But what
seems beneficial to the individual capitalist is disastrous for the capitalist society as a
whole because every time that productivity increases falls the average amount of work
required on the entire economy to produce a good.
Based on the thinking of Karl Marx in The Capital, Chris Harman (2007) also said that the
profit rate will tend to fall in the long term, decade after decade. Not only will there be ups
and downs in each cycle of "boom" and crisis, but there will also be a tendency to fall in
the long run, becoming each "boom" shorter and each fall deeper. In this process, the post-
crisis restructuring carried out can restore the rate of profit to its previous level until the
increased investment does decrease again. According to this view, there is a cyclical
movement of the rate of profit traversed by acute restructuring crises. Figure 1 below
shows that the profit rate in the United States, Germany and Japan showed a declining
trend from 1950 to 2000.

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Figure 1- Profit rate in the United States, Germany and Japan
Source: https://www.marxists.org/portugues/harman/2007/mes/taxa.htm
Figure 2 shows the decline of the profit rate to the historical cost of capital assets in US
corporations from 1947 to 2007. Thus, the basis of Marx’s theory was confirmed.
Figure 2- Profit rate at historical cost of capital assets in US
corporations
Source: KLIMAN, A. The failure of capitalist production: underlying causes of the
great recession. London: Pluto, 2012.

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Subtitle: Valores nominais= Nominal values; Valores deflacionados= Deflated values;
Taxa de lucro – rendas da propriedade/custo histórico do capital fixo= Profit rate -
income property / historical cost of the capital assets
Figure 1 shows that the profit rate in the United States, Germany and Japan had a
downward trend from 1950 to 2000. If we assume that this trend is not reversed, for
example, to the United States, the largest world economy, the profit rate in this country
that was 24% in 1950 and 13% in 2000 will achieve a profit rate equal to zero in 2059.
The same will also happen to Japan, Germany and the entire world economy. Figure 2
shows that the rate of profit to the historical cost of the fixed capital of US corporations
was 32% in 1947 and 13% in 2007. Assuming that this trend will be maintained in the
coming years, the profit rate of US corporations will reach zero in 2048. It follows,
therefore, that the world capitalist system would be unfeasible between 2048 and 2059. In
other words, the world capitalist system would have negative profit rates after the mid-
twenty-first century.
4. Actions adopted to neutralize downward trend in the profit rate of the world
capitalist system
Given the inexorable trend of the profit rate to decline in the world capitalist system, they
have been implemented neutralizing actions to its reversal. Karl Marx (1999) explained in
The Capital that neutralizing actions to get the fall of the profit rate would come into
operation. It is for this reason that Marx describes the fall of the profit rate as a trend
decline. The first neutralizing trend of falling profit rates explained by Marx is a more
intense exploitation of labor, an increase in relative Surplus Value. This has happened on a
massive scale since the 1990s with the expansion of neoliberalism in the world. In Britain,
the manufacturing industry achieves the same level of production with one million
workers less. This reflects the pressure on the working class, not only in Britain but
throughout the world. The share of labor in national income has declined in all major
capitalist economies of the OECD - Organization for Economic Cooperation and
Development since 1980. The gap has been particularly large in the United States, where
productivity grew 83% between 1973 and 2007, while average real wages increased by
only 5%.
The share of national income going to wages has fallen to its lowest levels since these
records began to be made after the Second World War. Moreover, the working time has
been prolonged. The workweek was increased everywhere in the world in recent years.
The working class is being pressured by the introduction of part-time work, the production
"just-in-time" that allows losing the minimum with the backlog of inventory and raw
materials, by short contracts, and other regressive measures to extract even more unpaid
labor of the working class.
Rob Sewell (2013) report in Article A crise capitalista e a queda tendencial da taxa de
lucro (The capitalist crisis and the downward trend in the profit rate) that the fall of

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wages below their value is one of the factors used to offset a falling profit rate. Again this
has become a particularly important feature in the peripheral and semi-peripheral capitalist
countries where labor is exploited without limits. The exploitation of women's work and
children is part of this process. Marx also refers to the cheapening of constant capital (k)
as a key factor in the neutralization process of the downward trend in the profit rate of the
capitalist system. If the profit rate tends to fall with a larger proportion invested in
constant capital in relation to variable capital, then a cheapening of constant capital will
serve to also offset the falling profit rate.
Rob Sewell (2013) sys that the increase in labor productivity serves to cheapen the
constant capital transferred to the product in the transaction, despite the constant increase
in its volume. Thus, the same influence that tends to cause the decrease in the profit rate
would serve to moderate this trend. The value of the constant capital would depend on
which of these two trends is the strongest. If labor productivity doubles, so the value of
constant capital is reduced by half. If productivity is lower than the increase in the value of
constant capital, there will be a drop in the profit rate. So it´s necessary to check the net
effect of these conflicting forces. In practice, in the last 30 years we have seen a dramatic
fall in the value of the components of constant capital, especially with the advancement of
new technologies. The falling prices of computer chips, for example, cheapened the
computers that are part of the constant capital used widely in the economy. China has been
a source of cheap goods flooding the world market. These cheap goods in the form of
constant capital helped to increase the profit rate in the last three decades.
Rob Sewell (2013) adds that the relative excess of the economically active population is
another factor neutralizing the fall in profit rates. We can see the growing mass
unemployment worldwide that has now become a permanent feature. This served to lower
wage levels and lower the cost of labor and increase the surplus labor time, that is, the gain
for the capitalists. The reduction in "labor costs" is the main feature in recent years, while
the capitalists sought to increase their profits. Foreign trade is also a way to cheapen the
elements of constant capital and to introduce cheap goods abroad, which once again serves
to reduce the cost of the labor force. Capital investment in foreign countries where the
organic composition of capital is lower also yields a higher profit rate and an increase in
the average profit rate of those who engage in foreign trade.
Rob Sewell (2013) also reports that the capital invested in foreign trade can provide higher
profit rate because it competes with goods that are produced by other countries with lower
production facilities so that the most developed country sells its goods above their value
even though cheaper than the competing countries says Marx in The Capital. The
advantage is the same for the capitalists who introduce new machinery that allows them to
sell products for a price below their competitors taking a surplus profit. The expansion of
the world market ("globalization") led to a massive increase in investment, production and
sales. There was a massive increase in the export of capital. The collapse of the Soviet
Union and restoration of capitalism in Russia, Eastern Europe and China provided to

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capitalism new markets and areas of exploration. This allowed about two billion people
enter the capitalist world market.
The liberalization of the market for peripheral and semi-peripheral capitalist countries,
including the privatization of basic public services, also opened possibilities for new
investments, and they have increased the rate of profit during this period. In other words,
we are only dealing with a trend that manifests itself in the history of capitalist
development. The law of profit rate decline operates therefore simply as a tendency,
whose effect is decisive only under special circumstances and for long periods, says Marx
(1999) in The Capital. Thus, there may be long periods, even decades, in which the
tendency of the rate of profit to fall is canceled by the above-mentioned neutralizing
trends. These can stop the whole process and even reverse it, but not indefinitely.
Eventually, this downward trend will reassert itself and act as a barrier to the development
of capitalism.
It is worth noting that the successive crises affecting the capitalist system may open new
prospects for change and counteract the downward trend of the profit rate. By taking some
capitalists to ruin, the crisis may allow a recovery of profits of other capitalists. The means
of production of ruined capitalists can be purchased by other capitalists at liquidation
prices, the value of raw materials will fall and unemployment will force workers to accept
lower wages. The production would return to profitability and capital accumulation it
would restart. According to this view, there is a cyclical movement of the rate of profit
traversed by acute restructuring crises, and not an inevitable and steady decline in the long
run. The development of capitalism is not only cyclical, but also implies changes in time.
An important aspect concerns the process by which some capitals grow at the expense of
others, which Marx called "concentration and centralization" of capital, a fact that leads
eventually to that a few capitalists play a dominant role in certain parts of the system. Its
activity is intertwined with those capitals, large and small, that surround them. If major
capitals are ruined, disturbs the operation of the other destroying their markets by
eliminating their access to raw materials and components. This can bankrupt companies
that were profitable, with those unprofitable, a collapse that feeds back and place the risk
of creating "black holes" in the heart of the system.
This occurred in 1929 in the great crisis of the world capitalist system during the years
between the two world wars and in 2008 with the crisis that erupted in the United States.
The failure of some companies, far from leading to the end of the crisis, after a few years,
deepened its impact. As a result, capital cities around the world addressed the governments
of their countries in search of protection. Beyond their political differences, this is the
point that is common among the New Deal in the United States, the Nazi period in
Germany, the populist regimes that emerged in Latin America or the final acceptance of
state intervention Keynesian as the economic orthodoxy England wartime and, most
recently after the outbreak of the 2008 crisis in the United States. Such interdependence

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among states and big capital has been the norm all over the world capitalist system during
the first three decades after World War II to the contemporary era.
Prevent the onset of the crisis to develop in the direction of an absolute collapse, but also
blocks the ability of some capitals to restore their profit rates at the expense of others. This
is what is happening in the world capitalist system after the global crisis of 2008. This was
not a big problem in the first decades after 1945, given that the combined impact of the
crisis between the wars and related to the Second World War had caused a wreck massive
of old capital (according to some estimates, a third of the total was destroyed by the
economic crisis of 1929 and the 2nd World War). The accumulation of capital was thus
able to restart with higher profit rates than the pre-war period, and these rates remained
stable or fluctuated slowly. Capitalism could enjoy what often is called its "golden age" in
the 1950s, however, when profits began to fall from the 1960s, the system was faced with
the impossibility of a sufficient restructuring to restore these rates. National governments
intervened to prevent the threat of big breaks. But in doing so, they prevented the
restructuring would be enough to overcome the pressures that had caused the threat of
bankruptcy.
5. The consequences of industrial automation about profit rate in capitalism and
about society
Amilcar Moretti (2012) states in Article A Fábrica do Futuro (The Future Factory), that
the factory of the future is characterized by presenting installation full of robots and a high
degree of automation, in addition to being properly organized around technology,
computer, that integrates, by specially developed software, virtually all activities. In it
there is the widespread use of tools such as CAD, MRP II, ERP, EDI, and above all with
the presence of the knowledge worker (the worker who uses more than his hands).
Moretti (2012) also reports that the organization of production at the the future factory is
focused on the pursuit of higher productivity. Activities that do not add value are
eliminated, the waste and rework are not accepted, the working methods have mechanisms
to prevent problems, inventory levels are very low, because the just-in-time is everywhere,
that is, operates a production management system that determines that nothing should be
produced, transported, or purchased before right time and the components are delivered
directly in the manufacturing lines and / or assembly. The factories are extremely clean and
organized, due to the systematic application of housekeeping that is one of the tools used in
order to ensure the implementation of quality, productivity and agility in services, as well
as improving quality of life for employees. Workers are trained in various functions, from
the operation, preparation and maintenance to the design of new products and / or
processes which are controlled by computers through integrated software.
Today there are many factories of the future in full operation, such systems called lean
production, which emerged in Japan and are spreading throughout the world. The worker's
authority with regard to product quality is almost unlimited because it can, at any time,

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stop the production line, once found nonconformity already occurred or latent. All workers
seek help in solving the problem so that the line back to normal as quickly as possible.
Identification methodologies and troubleshooting are widely disseminated and
incorporated into the culture of all workers. The management of processes is done by using
widely discussed performance indicators and accepted by all workers who are closely
linked to business objectives.
The project of products is developed together with the project of processes which will be
manufactured. The simultaneous engineering, which is a systematic approach to the
integrated and parallel development of a product design and related processes, including
manufacturing and support, is applied on a large scale. The attention to client objectives
guide the project, and the use of techniques such as quality function deployment (QFD)
and failure analysis (FMEA) ensures higher quality and reliability of products. The
products have a lower number of components, which reduces the risks of failure and a
lower cost, because the products are modulated. The layout is the key element of the future
plant. Large plants hitherto regarded as standard are divided into several smaller units
within the original factory, properly focused, organized into production cells with a high
degree of automation.
The new projects include areas for reduced stocks of raw materials and finished products,
and there is no forecast of areas for rework. Even areas reserved for products in processes
are reduced because the lines are balanced so as to allow a continuous flow and without
accumulation in certain process points. This switching process allows bend production
using half the previously used area. In the future plant the information is available in real
time with the use of electronic control panels connected to multiple data input terminals.
The use of color is exploited to the full with colorful Kanban cards to transmit one or more
information about the progress of proceedings. The information on production,
productivity, achieved goals and to achieve, percentage of waste, etc., are arranged in
tables spread across all facilities, to be read, analyzed and criticized from all workers.
In the article Como serão as fábricas do futuro? (How will the future of the factories?) of
DELL- TECNOLOGIAS DO FUTURO (2012), is informed that in the factories of the
future the number of robots working in place of workers multiplies every year and there
are now studies that show how some professions may disappear because of that. The
DELL- TECNOLOGIAS DO FUTURO (2012) states, based on the International
Federation of Robotics report (IFR) that about 179,000 industrial robots were sold in 2013,
an increase of over 12% over the previous year. China, according to the balance of the IFR,
is the country that has more invested in automation, buying 37,000 units last year while
Brazil, for example, bought less than 1,500 units. Japan already is the largest exporter of
robots and also the country with the most automated plants in the world, with more than
300,000 industrial robots in operation.
In the above cited article Como serão as fábricas do futuro? (How will be the future of the
factories?) contained the information that is possible to imagine that the factories of the

14
future will have less and less the presence of humans in the production line. Good example
is the Audi plant in Ingolstadt, Germany, which has about 800 employees and nearly the
same number of industrial robots that do most of the heavy and operational work. In China,
the robots incorporation in factories is increasing. EXAME.COM (2014) article A era das
fábricas inteligentes está começando (The era of intelligent factories is starting) contains
the information that the automotive industry is among the most robotized of the world.
BMW in Leipzig in Germany, with more than 1,000 robots, the workers, all blue vest,
follow all the distance by computer screens. Humans only supervise the work of machines.
The Leipzig plant is a preview of the future of factories. We are in the early stages of a
profound change in manufacturing as the one caused by the Industrial Revolution in
England.
In the above-mentioned article A era das fábricas inteligentes está começando (The era of
intelligent factories is starting) contains the information that the global manufacturing
sector is in a process driven by three forces: the exponential advancement of capacity of
computers, the vast amount of digital information and new innovation strategies. The
computational progress made machines stay more powerful, flexible and above all cheap.
In 1985, the fastest computer in the world was the Cray-2, which cost 30 million dollars. In
his glory years, it was used for research on atomic energy. Today, an iPad has processing
capacity higher than the Cray-2. In the last decade, the price of some sensor models used in
electronics fell 85%. In industry in general and in the specific case of the BMW plant in
Leipzig, this trend can be felt by the strong expansion of the robots.
The NEWS TECMES (2014) article Future factory reports that in 2013, industrial robot
sales in the world reached a record of 179,000 units. According to a study by US
consultancy McKinsey, the price of robots has fallen 10% per year in recent decades. And
their productivity is increasing. Depending on the application, the newer models are 40%
faster than previous generations. High dexterity machines that are now sold at US$
150,000 would cost half that by 2025. The second feature of this new industrial age is the
vast amount of available digital information. The product design, testing with new
materials, the prototypes, the factory architecture, the organization of the production line,
the stock of materials, operating equipment, everything is digital.
The EXAME.COM (2014) article A era das fábricas inteligentes está começando (The era
of intelligent factories is starting) reports that automated and robotized plants automated
and robotized plants mean industries with fewer workers. In three decades were eliminated
6 million of manufacturing jobs in the United States causing employment in factories
reached the level of the 1940s The jobs that involve repetitive functions will disappear
rapidly in coming years, says economist Michael Spence, Nobel Prize winner and
professor at New York University. In rich countries, it is estimated that 25% of all
functions in the industry should be replaced by automation technologies by 2025.
Worldwide, it is estimated that 60 million jobs in factories will be eliminated.
If we take into account that the profit rate is measured by the formula below:

15
l'= m'/ (coc +1)
where m'= m/v coc = k/v, being m' the rate of surplus value or rate of exploitation of
workers, m corresponds to the value of surplus labor unpaid by the capitalist to worker, v
relates to expenditure on wages, k is the constant capital (means of production, raw
materials, energy, etc.) used in the production process and coc corresponds to the organic
composition of capital. The consequences of automation on the capitalist system are as
follows:
1. Automation helps to significantly increase the constant capital (k) with investments in
automated machines and plants and significantly reduce (v) with the precipitous decline of
the workforce and expenditure on wages which causes the organic composition of capital
(coc = k/v) to rise enough. This causes the denominator of the rate of profit (l') is
significantly high.
2. To compensate for the increase in the denominator of profit rate (l'), its numerator (m'=
m/v) would have to increase greatly which would force the company to significantly
increase the surplus value (m = unpaid surplus labor) of the remaining workers. The rate of
exploitation of the remaining workers would have to increase for the company to maintain
or increase their rate of profit.
3. In practice, it would be impossible to have a fully automated factory, i.e., without
workers because company needs to monitor the operation and make the maintenance of
machinery and automated equipment. The rate of exploitation of such workers (m') would
have to be raised to the maximum to ensure high profit rates for the company.
4. Theoretically, if we assume that v = 0, this is a factory without workers, coc = k/v = k/0
= infinity, contributing to the denominator of the rate of profit (coc + 1) is equal to infinity.
In turn, the added value being (m = 0) would result m'= m/v = 0/0 = undefined value. The
rate of profit would tend to zero or to an undetermined value.
It appears from the above, that automation is positive for the capitalist because it would
face its competitors a more competitive way given that provide, among other advantages,
increasing productivity and reducing costs. However, it would be extremely negative for
the capitalist because it tends to reduce the profit rate of his business. In addition, the
automation that not only happens in the industry, but which spreads by trade and service
sector tends to reduce the income available to the mass of workers excluded from
production, thus contributing to the under-consumption of the masses. There would be,
therefore, fall in demand for goods and services due to rising unemployment and the fall in
the income of workers. The human society would be highly harmed because the
automation would contribute to the increase of the unemployed army.

16
In short, the incessant and impetuous technical development, driven by competition
between capitalists obliges them to invest in automated machinery (constant capital = k)
that allows them to produce the same with less time to "work" (variable capital = v) .
Therefore, in their search for capital reproduction, capitalists tend to invest more in
constant capital (k) and less in variable capital (v) increasing tendentially the organic
composition of capital (coc) causing the profit rate has trend decrease. The main
conclusion related to the automation of productive activity is that it would collaborate in
order to compromise the interests of capitalism and that its viability should only take place
in a society that does not pursue profit.
6. The capitalist world system performance in recent period
Figure 3 shows the evolution of the rate of profit, the rate of surplus value and the organic
composition of capital for the United States, largest world economy, from 1951 to 2013
with the use of the foundations of Marxist economy. This figure was taken from the article
Capitalismo & Crises Econômicas (Capitalism & Economic Crises) prepared by Jacques
Gouverneur, Doctor of Law from the Université Catholique of Louvain, Belgium and a
PhD in Economics from the Université d'Oxford, Great Britain, and Marcel Roelandts who
works as a researcher and utters several courses in various universities and "Hautes
Ecoles", published on the website <http://www.capitalism-and-crisis.info/pt/Bem-
vindo/Novo>.
Figure 3- Profit rate - Rate of surplus value - Organic composition of capital.
United States 1951-2013

17
Source: Gouverneur, Jacques e Roelandts, Marcel. Capitalismo & Crises Econômicas
(Capitalism & Economic Crises). <http://www.capitalism-and-crisis.info/pt/Bem-vindo/Novo>.
Subtitle: Taxa de lucro=Profit rate; Taxa de mais-valia= Rate of surplus value; Composição
orgânica do capital= Organic composition of capital.
In Figure 3, the profit rate measures the return on total capital invested. It indicates how
the latter is valued and thus expresses the degree of compliance of capitalist finality. Of all
the laws of capitalism is that which Marx considered as the most historically important.
Profit rate fluctuations have two dynamics: 1) Short-term pulses of accumulation cycles,
composed successively of a period of high profit rate, followed by a low, ending a
recession (1954, 1958, 1970, 1974- 75, 1980-82, 1991, 2001, 2009). Are economic cycles
typically studied by Marx in The Capital, cycles he called "decennial"; and, 2) The Trend
developments in the profit rate in the medium term give rise to four major phases of
fifteen years each one for the high (1951-66), down (1966-82), upwards (1982- 97), down
(1997-2009) and apparently new to the top 2009. However, it is not because the profit rate
falls in output of each cycle of accumulation that necessarily is in the presence of a
downward trend in profit rates. It is in the medium term that the downward trend acts, as
indicated by Marx in The Capital, and not every short cycle. These are the conclusions of
Gouverneur and Roelandts.
According to Gouverneur and Roelandts (2014), profit rate fluctuations [l'= =m'/(coc +1)]
result from its evolution in the rate of surplus value (m') as the numerator and of the
organic composition of capital (coc) as the denominator: 1) The rate of surplus value (m')
distributes the social product between profits and wages (v). The investment dynamics and
crises depend, therefore, largely on the balance between the proportionality of that
division, as explained by Marx in Book II of The Capital. Fluctuations in the rate of
surplus value gives rise to three phases that give rhythm to the evolution of capitalism in
the post-war: it increases from 1948 to 1966 decreases by the year 1982, and retakes its
upward curve since then; and, 2) The organic composition of capital (coc) measures the
intensity in fixed capital in value when productivity gains cannot compensate the expenses
to get production means. The organic composition of capital relates the constant capital (k)
to variable capital (v). It is the relationship between the components that only transmit its
value and those that create new value, or among those that do not produce surplus value
and those who produce surplus value, or even between past labor crystallized in machines
and represented this work by employees. It is the relationship between the components
that are only convey your value and those that create new value, or among those who do
not produce added value and those that produce, or even between past labor crystallized in
machines and the present work represented by employees. This relationship is then
calculated relating the fixed capital invested with the wage bill employed.
Gouverneur and Roelandts (2014) claim that Figure 3 shows a very strong correlation
between the evolution of the profit rate and the rate of surplus value with the organic
composition of capital coming later to add or counteract its effects. So much when of the
low of surplus value as of the retaken, the profit rate back to fall first as a result of the

18
reversal of the rate of surplus value and the organic composition of capital has added its
effects only after. We cannot forget that both the numerator of the profit rate (the rate of
Surplus Value- m'), as its denominator (the organic composition of capital-coc), are all
two heavily influenced by developments in labor productivity.
According Gouverneur and Roelandts (2014), to move forward, capitalism has the need to
support on their two legs: the production and consumption. In fact the profit rate is a
synthetic variable that simultaneously expresses the dynamics and contradictions relating
to the production and realization of value. As its development depends on both the
effectiveness of capital (coc in the denominator) as the division of the total product (the
rate of surplus value, m' in the numerator), it measures both the capital's ability to ensure
its profitability as the appropriateness of markets to production. Gouverneur and Roelandts
(2014) claim that the profit rate should be conceived as a comprehensive indicator of the
restoration of conditions of production and realization of the total social product. It
expresses both the contradictions linked to the distribution of value product (class struggle,
ie, the rate of surplus value in the numerator), and the intensity of the mechanism in fixed
capital (the productive forces, ie, the organic composition of capital in the denominator).
In The Capital, Marx says that crises are nothing more than momentary solutions and
violent that restore for a moment the balance disturbed. The stagnation occurred in the
production would have prepared – in the capitalistic limits - a subsequent expansion of
production. According Gouverneur and Roelandts (2014), the capital accumulation cycle
imposes the need for growth of constant capital (k) at the expense of variable capital (v).
His pace is then essentially linked to the more or less decennial cycles of rotation of the
fixed capital. According to Marx (1999), as the value and the duration of the constant
capital develop with the capitalist mode of production, the life of industry and of industrial
capital develop in each particular company and extends over a period, say, an average of
ten years. This cycle of rotations that are linked and extend for a number of years, where
the capital is a prisoner of its fixed component, is one of the material bases of periodic
crises.
Marx (1999) speaks in The Capital of an average ten-year period, not absolute.
Undoubtedly periods of reversal of capital are very different, but the crisis always serves
as a starting point for a powerful investment. The crisis provides therefore - from the point
of view of society taken as a whole - a new base material for the next rotation cycle.
Wherefore, the law [of the downward trend of profit rate] acts only as a trend whose action
clearly manifests itself only in certain circumstances and in the course of long periods.
Marx evokes "long periods" in the course of which carries the law of downward trend of
the profit rate. He speaks of a "thirty years".
In the 1990s, the growth in unproductive work level was the main cause that prevented a
full recovery of the profit rate. Why the unproductive expenditures grown so much, even
at the cost of preventing the achievement of higher profit rates? The reasons are as
follows:

19
• There are waves and more speculative investments waves, as capitalists seek easy
profits betting on the money markets, financial adventures, investment funds (hedge
funds) etc.
• The capitalist costs to maintain a certain social peace increase, both to spending on
security, and to grant minimum benefits to those who capital cannot use productively.
• National States resort to military adventures as a way to overshooting of the problems
facing their capitalists.
The reactions of the individual companies and the national states to declining profit rates
have the effect of reducing the resources available for productive accumulation that would
help to prevent a further reduction in profitability by reducing the pressure in the
escalation of the organic composition of capital. HARMAN (2007) says, also, that the
"unproductive" work prevents the increase of pressure of capital accumulation to be more
capital-intensive and that the value, which would otherwise would increase the ratio
between means of production and work, is sucked out of the system. The accumulation of
capital becomes slower, but may continue at a steady pace. Profit rates are lower due to
the unproductive expense, but do not face sudden and deep drops by the rapid acceleration
of the capital-labor ratio.
HARMAN (2007) states that this strategy was applied in the post-war period in the United
States immediately. Spending on weapons verging on 13% of the US national product
(and indirect expenses, maybe 15%) was an important appropriation of surplus value not
continued capital accumulation. It was an expense which the American ruling class also
expected to win, spent this that sustained its global hegemony (both confronting the Soviet
Union as coalescing European capitalist classes with the United States), and guarantee a
market to some important productive sectors of the American economy. In this sense, the
capitalists could consider armaments as an advantage, very different in this sense of
spending "unproductive" to improve the poor living conditions. And if reduced capital
accumulation rate, it was not catastrophic, as the capital restructuring by crises and wars
had driven capital accumulation to a higher level as known in the 1930s.
HARMAN (2007) defends the thesis that the situation today is quite different. Since the
early 1960s, the emergence of major international competitors generated strong pressure
on the United States to reduce the percentage of production for the military spending. The
stimulus for military spending in the mid-1960s during the Vietnam War and in the 80s
during the "Cold War", allowed only a short-term alleviation to the US economy before
revealing their big problems. The increase in military spending in the Bush administration
from 3.9% to 4.7% of US Gross Domestic Product (equivalent to about a third of private
investment) has exacerbated the growing public spending and the trade deficit of the
country.
According to HARMAN (2007), the effect of all these forms of "spent" is much less
beneficial for capitalism as a whole today than a century ago. It may also decrease the

20
pressure on the rate of profit from the organic composition of capital which certainly does
not grow as fast as it could if the entire surplus value is allocated to capital accumulation.
The price that the central capitalist countries pay for this is a slow productive
accumulation and low growth of profit rates in the long run. Hence one can understand the
repeated attempts "neoliberal" of capitalists and national states to increase profit rates,
reducing the wages they pay to employed workers, the gain of the retired, unemployed and
pensioners and the restoration of commercial criteria to reduce spending in education and
health.
There remain also doubts on the part of the world where are experiencing huge investment
like China. Some analysts saw this country as the salvation of the capitalist system as a
whole. The Chinese capital has succeeded in added value for new investments - 40% of
the national product – more than United States, Europe, and even Japan. Could further
explore its employees, and has no brakes before unproductive spending levels that
characterize the core capitalist countries (although the current real estate boom is
characterized by a proliferation of high-rise buildings, hotels and shopping malls in
China). All this allowed China compete with the core capitalist countries as an export
market for many goods. However, these same high levels of investment are already
accusing a negative impact on profitability. A recent attempt application of Marxist
categories in the Chinese economy came to the result that their profit rates fell from 40%
in 1984 to 32% in 2002, while the organic composition of capital increased by 50%.
What is important is to recognize that the capitalist system has only survived because of its
recurrent crises, to advance the pressure on working conditions and large amounts of
capital diverted to unproductive expenditure. Despite all this, the world capitalist system
could not return to a "golden age" as the 1950s and did not get in the future. It may be that
capitalism is not in permanent crisis, but to be in a phase of repeated crises, of which
cannot escape. And these necessarily bring serious political, social, as well as economic
consequences.
Recently, the press highlighted the fears triggered by the slowdown of China's growth,
raising the risks of European banks with rising defaults and doubts about the financial
health of semi-peripheral capitalist countries such as Brazil and Russia. All this came to
join a new source of concern for global markets: plummeted, in recent days, the stock
prices of the major banks in the rich world, and this was followed by speculation about the
stability of the world economy. They reappeared some of the ghosts of the financial crisis
of 2008 and 2009, which devastated the capital of financial institutions after massive
losses on mortgages. A relapse occurred in 2012, when the world feared the collapse of the
Euro, and with it, large European banks, which suffer defaults of countries and companies
of the capitalist periphery. These events difficult the credit expansion channels, essential
engine for economic growth. Not surprisingly, the recovery of financial institutions took a
central place in the anti-crisis strategy.
7. World capitalist system towards debacle?

21
Faced with the problems encountered by capitalism in the productive sectors, to "survive"
to its own contradictions, capitalists have developed a massive financialization of the
economy, by exchanging the money directly for more money and without going directly
for the production merely running for speculative considerations (D D'). But
financialization of the economy is limited, however, by the real productive economy that
is generating of wealth. In other words, financial or fictitious capital that does not generate
wealth cannot become autonomous in relation to productive capital.
Although fictitious capital follows the development of capitalism from its beginnings, the
peculiarity of their behavior in today's world is in its dynamism, in its specific weight
within the financial capital in general and in their ability to penetrate all spheres of
economy. The main drivers of fictitious capital are the government bonds, the nature of
any debt securities, shares traded on stock exchanges and own credit money issued by
banks without ballast in their deposits. Figure 4 shows that the financial assets far
outweigh the world GDP 1980-2006.
Figure 4- Global financial assets as a percentage of world GDP
Source: CHESNAIS. François. As dívidas ilegítimas - quando os bancos fazem mão baixa nas políticas
públicas (Illegitimate debt - when banks make low hand in public policy). Lisboa: Círculo de Leitores,
2012.
Subtitle: PIB mundial (trilhões de US$) = World GDP (trillion US$); Ativos financeiros = Financial
assets.

22
No other sector of the economy can boast rates of return as high, or even any one of the
largest production companies can even match the record profits of the financial system.
Banks manage their biggest profits ever facilitating the concentration and centralization of
capital (operations called "mergers and acquisitions"), charging lucrative fees for
"advising" and endorsing the financing of mergers and acquisitions. The second source of
profits is speculating in general, including on debt trading countries and investing in
global securities markets, particularly in energy where Goldman and Morgan have made a
fortune in recent times.
In addition to developing their speculative activities, banks are increasingly important
shareholders in non-banking sectors. They have played the main role in reducing labor
costs and reducing long-term investments in scientific and technological research as a way
to maximize short-term profits. Finally, the most lucrative source and the most dynamic of
speculative profits are in its expansion abroad, particularly in Europe and especially in
Asia. It is therefore a process logically structured from the law of value and commodity
production under the command of capital in general. It turns out that at this stage of
"development" of capitalism, is the financial capital that expresses the fusion of the
dominant fractions of industrial capital, agricultural, commercial and banking, and guides
and submits the profitability of capital as a whole.
In essence, the financial capital includes all capital, although it differs from all. It cannot,
for structural reasons and on the logic of reproduction and capital in general, find shielded
to crises. In its full configuration, the capital valuation process incorporates the presence
of the money category, which is the most general form of wealth, presenting, therefore, the
possibility of the emergence of difficulties when changing the value of the commodity
form to the money form in the capital of the circuit (D-M-D'). At the same time, this
valuation movement, manifest as profit (or interest) in circulation plan, given the existence
of credit and loan capital, creates the illusion of extracting more value of money in itself.
(D - D'). Of course, in practical terms, a similar result would be equivalent to needlessness
of commodity-producing activity, which totally contradict and contradictorily, the law of
value, which shows that more value production only occurs in directly productive
activities, so in the industrial and agricultural sectors.
The denial of the sphere of production appears as the basis on which emerges the
"financial or fictitious capital" and introduces the possibility of empowerment of finance.
However, again, it is a contradictory procedure. If the ideal of finance capital is the
"contempt" complete and utter of the production processes and even the sale of goods, it
also originates in those sectors, unable therefore to emancipate really of them. Its multiple
natures are more than ambiguity. Their apparent independence endures for a while due to
its particular cycle of much shorter profitability than the other capitals. But because of its
links with other specific forms of capital, to bumping into the crisis of the productive and
commercial sectors, the financial capital also turns out to transmit to them the
consequences of their collapse. It is therefore an explosive symbiosis. Therefore, the
domination of finance capital, which it is, in turn, dominated by the fetish of immediate

23
profit, is dependent on the production of goods and the inherent contradictions of
extraction of surplus value and its distribution between the fractions of capital in
permanent and endless process of seeking the capital appreciation as the engine of
accumulation.
François Chesnais (2011), professor emeritus at the University of Paris 13, notes that the
functioning of the world economy since the early 2000s was based on two pillars: growth
regime driven by debt, adopted by the United States and Europe, and the growth regime
driven by global exports, in which China is the main industrial base and Brazil, Argentina
and Indonesia are the key providers of natural resources. In its view, the crisis is the dead
end, the absolute impasse of the regime guided by debt. François Chesnais (2011) says
that the second pillar is slightly better, but growth based on global exports may not work
for long without a strong external demand, especially from the United States and the
European Union. This means that the demand for commodities from China will not be able
to offset the drop in demand from the US and the European Union.
The world financial system is showing losses on a scale that no one ever predicted. The
world capitalist system is broken and it is unclear what will replace it. The current crisis is
a product of changes taking place in the West for several years. Half a century ago, the
banking appeared to be a relatively simple art. The banks have gone through a process of
transformation in its core business, leaving behind its classic function of intermediary
between savers and lenders. Benefiting from the opening of the world economy from the
1990s, these institutions have become diversified financial groups and conglomerates
whose profits come mainly from credit creation, which has become the main means of
money creation. In this process, the central banks of countries lost control completely. The
values of global transactions cited by Chesnais (2011) illustrate the size of the financial
sector: in 2002, world GDP was 32.3 trillion dollars, while financial transactions
amounted to 1,140.6 trillion. At the beginning of the crisis in 2008, while the world GDP
was 60.1 trillion, financial transactions reached 3,628 trillion.
Chesnais (2011) states that, from the 1980s, decreases the share of wages in GDP
formation and increases the tax exemption on the higher income sectors. Reductions in the
tax rate on the highest income between 1986 and 2007 give us a sense of these measures:
in France, was reduced from 65% to 40%; in England, from 60% to 40%; in Italy, from
62% to 43%; the Netherlands, from 72% to 52%; Belgium, from 72% to 52%. Access to
loans by issuing bonds in specialized markets became the main instrument of budgetary
financing of the countries. The titles of public debt have become part of the assets traded
by banks and application of funds speculative (including companies). Banks and
application of funds, making use of a procedure known as leverage effect, they carry out
loans with much higher values to their own capital, increasing the system's weakness and
the risk of payment.
The cycle of expansion and accumulation of global financial capitalism bumped into huge
global financial crisis and the synchronized slowdown in economic activity. It is

24
impossible at this point to know where the world capitalist system is going. The great
possibility of financial collapse combination with huge recession, if not something worse
such as depression, will certainly change the world. From the outbreak of the global crisis
in 2008, governments around the world have become hostages of the financial system by
adopting fiscal policies and restrictive monetary favorable to the banks to save them from
bankruptcy and contrary to the interests of their populations. This is a time of beginning of
the uprising of the masses around the world opposed to the austerity policies of
governments and cutting social benefits. Chesnais says that in 2008, the threat to global
finance came from US investment banks and big insurers. The next largest financial
episode will happen when a banking system segment in Europe collapse in Greece, Spain
or Italy which is ongoing.
According to François Chesnais (2011) there will be no end to the global crisis while
banks and financial investors are in charge of the world economy, with governments
adopting policies fully addressed the interests of rentiers and to give survival of the regime
guided by debt as is currently happening. According to Chesnais, to retake economic
growth in the United States and Europe, it would be necessary to restore the purchasing
power of low and middle classes, recreating and expanding the capacity of governments to
make social and environmental investments needed and the establishment of a system
stable international monetary, not subject to financial capital. The conditions for this will
include the cancellation of much of the sovereign debt considered illegitimate as well as
much of the domestic debt, the restoration of a correct tax to the income of finance and
capital, the restoration of a real public control of credit system, a strict control of capital
flows and an effective fight against tax havens. This means that governments should no
longer be subordinated to the dictates of finance capital and to suspend payment of its
debts even lead some banks to bankruptcy whose resources that would be allocated to
them are applied in public investment for the retake of economic growth.
Despite all the artifices to neutralize the trend of decline of profit rates in the world
capitalist system as predicted by Karl Marx (1999) in his great work The Capital, will not
prevent its collapse over time because the political and social cost would be immense for
humanity with its maintenance. Before the collapse, the world capitalist system will be
ruined by the economic depression for many years resulting in his climbing the bankruptcy
of many companies, the economic unfeasibility of the highly indebted nation states and
mass unemployment on a global scale. Given the existence of the chaos that already
dominates the world economy that is getting worse, it is time for each country and
humanity provide themselves as urgently as possible tools necessary to take control of
their destiny. To take control of his destiny humanity must take to end the world capitalist
system to exercise governance of the world economy. This is the only means of survival of
the human species.
8. Conclusions
8.1- On the rate of profit in capitalism

25
It has been shown that the generating source of capitalist profit is the worker. According to
Marx, the capitalist profit results of Surplus Value that comes from the difference between
the value of a good or service produced by a worker and the salary paid to him. In other
words, it is the working time that is not paid by the capitalist.
It became clear that the more the capitalist develops the accumulation of capital, it is more
difficult for the capitalist raise their profit rate. The downward of profit rate appears as a
threat to the capitalist production process. If investment grows faster than the labor force
employed in production, should also grow faster than surplus value extracted from
workers which is where is generated the profit. In short, the growth of capital grows faster
than the source of profit. Based on the thinking of Karl Marx in The Capital the profit rate
will tend to fall in the long term, decade after decade.
It was demonstrated the inexorable the downward trend profit rate in global capitalist
system. If admitted that this trend is not reversed in the United States, the most world
economy, the profit rate in this country that was 24% in 1950 and 13% in 2000 will
achieve a profit rate equal to zero in 2059. The same should occur also to Japan, Germany
and the entire world economy. If we consider that the rate of profit to the historical cost of
the asset capital of US corporations was 32% in 1947 and 13% in 2007 and that we
assume that this trend will be maintained in the coming years, the profit rate of US
corporations will reach zero in 2048. It follows, therefore, that the world capitalist system
would be made infeasible between 2048 and 2059. In other words, it would be the end of
the world capitalist system that would not be able to survive with zero or negative rates
after mid-century XXI
8.2- About neutralization of the downward trend of the profit rate
Given the inexorable downward trend of the profit rate in the world capitalist system that
can take it to collapse, they have been implemented neutralizing actions to its reversal.
The first neutralizing trend of falling profit rates explained by Marx is a more intense
exploitation of labor. The fall of wages below their value is one of the factors used to
offset a falling rate of profit. The cheapening of machinery and equipment is also a key
factor in the neutralization process of the downward trend in the profit rate of the capitalist
system. China currently has been a source of cheap goods flooding the world market.
These cheap goods in the form of constant capital helped to increase the profit rate in the
last three decades.
The relative excess of the economically active population is another neutralizer factor of
falling profit rates. We can see the growing mass unemployment worldwide that has now
become a permanent feature. This served to lower wage levels and lower the cost of the
workforce in addition to increasing the surplus labor time, that is, the surplus value for the
capitalists. The liberalization of the market for peripheral and semi-peripheral capitalist

26
countries, including the privatization of basic public services, also opened possibilities for
new investments, and they have increased the profit rate during this period.
It is worth noting that the successive crises affecting the capitalist system may open new
prospects for change and counteract the downward trend of the profit rate. By taking some
capitalists to ruin, the crisis may allow a recovery of profits of other capitalists. The means
of production of ruined capitalists can be purchased by other capitalists at liquidation
prices, the value of raw materials will fall and unemployment will force workers to accept
lower wages. The production would be profitable and the accumulation of capital would
restart.
Another important initiative to counteract the fall in the profit rate is to seek state
protection as with the New Deal in the 1930s, and more recently after the outbreak of the
2008 crisis in the United States. Such interdependence between states and big capital has
been the norm all over the world capitalist system during the first three decades following
the Second World War and in the contemporary era. State intervention is, however, a
double-edged weapon because on the one hand, prevent the onset of the crisis to develop
in the direction of an absolute collapse, but on the other hand, blocks the ability of some
capitalists to restore their profit rates at the expense of others. This is what is happening in
the world capitalist system after the global crisis of 2008.
8.4- On the difficulties of full profit rate recovery
This showed that in the 1990s, the growth in unproductive work level was the main cause
that prevented a full recovery of the profit rate. The "unproductive" work prevents the
increase of pressure of capital accumulation to be more capital-intensive. The value, which
would otherwise increase the ratio of production means and labor is sucked out of the
system. The accumulation of capital becomes slower. Profit rates are lower because of the
unproductive expenditure. The price that the central capitalist countries pay for this is a
slow productive accumulation and low growth rates of profit in the long run.
The capitalist system has only survived in recent times because of its recurrent crises, to
advance the pressure on labor conditions and large amounts of capital diverted to
unproductive expenditure. Despite all this, the world capitalist system could not return to a
"golden age" as the 1950s and not will get in the future. It may be that capitalism is not in
permanent crisis, but to be in a phase of repeated crises, of which cannot escape. And
these necessarily bring serious political, social, as well as economic consequences.
8.5- On the automation of productive activity and its impacts
The factory of the future is characterized by having full of robots installation and a high
degree of automation, in addition to being properly organized around technology,
computer, which integrates by specially developed software, virtually all activities. Today
there are many factories of the future in full operation, such systems called lean

27
production, which emerged in Japan and are spreading throughout the world. In the
factories of the future the number of robots working in place of workers multiplies every
year and there are now studies that show how some professions may disappear because of
that. You can imagine that the factories of the future will rely less and less with the
presence of humans in the production line. Humans only supervise the work of machines
or do its maintenance.
On the one hand, automation is positive for the capitalist because it would face its
competitors more competitively given that provide, among other advantages, increased
productivity and reduced costs, on the other hand, it would be extremely negative for the
capitalist because it tends to reduce the profit rate for your business due to the reduction of
surplus value and increasing organic composition of capital. In addition, the automation
that not only happens in the industry, but which spreads by trade and service sector tends
to reduce the income available to the mass of workers excluded from production, thus
contributing to the under-consumption of the masses. There would, therefore, fall in
demand for goods and services due to rising unemployment and the fall in the income of
workers. The human society would be highly impaired because the automation would
contribute to the increase of the unemployed army.
8.6- On the financialization of the world economy
Given the falling of profit rate in the productive sectors, to "survive" to its own
contradictions, capitalists have developed a massive financialization of the economy, by
exchanging the money directly for more money and without going directly through the
production running on speculative basis. But financialization of the economy is limited,
however, by the real productive economy that is wealth-generating. In other words,
financial or fictitious capital that does not generate wealth cannot become autonomous in
relation to productive capital.
The denial of the sphere of production appears as the basis on which emerges the
"financial or fictitious capital" and introduces the possibility of empowerment of finance.
However, again, it is a contradictory process. If the ideal of finance capital is the
"contempt" complete and utter of the production processes and even the sale of goods, it
also originates in those sectors, unable therefore to emancipate really of the same.
Benefiting from the opening of the world economy from the 1990s, many financial groups
have diversified and have become conglomerates whose profits come mainly from credit
creation, which has become the main means of money creation. In this process, the central
banks of countries lost completely control. The values of global transactions illustrate the
size of the financial sector: in 2002, world GDP was 32.3 trillion dollars, while financial
transactions amounted to 1,140.6 trillion. At the beginning of the crisis in 2008, while the
world GDP was 60.1 trillion financial transactions reached 3,628 trillion.

28
The cycle of expansion and accumulation of global financial capitalism ran into huge
global financial crisis and the synchronized slowdown in economic activity. It is
impossible at this point to know where the world capitalist system is going. The great
possibility of financial collapse combination with huge recession, if not something worse
such as depression, will certainly change the world. From the outbreak of the global crisis
in 2008, governments around the world have become hostages of the financial system by
adopting fiscal policies and tight monetary favorable to the banks to save them from
bankruptcy and contrary to the interests of their populations.
According to François Chesnais there will be no end to the global crisis while banks and
financial investors are in charge of the world economy, with governments adopting
policies fully addressed the interests of rentiers and to give survival of the regime guided
by debt as is currently happening. Despite all the tricks to counteract the trend of decline
in the world capitalist system profit rates as predicted by Karl Marx in his great work The
Capital, will not prevent its collapse over time because the political and social cost would
be immense for humanity with its maintenance. Before the collapse of the world capitalist
system will be ruined by the economic depression for many years resulting in his climb
bankruptcy of many companies, the economic unfeasibility of the highly indebted nation
states and mass unemployment on a global scale.
Given the existence of the chaos that already dominates the world economy that is getting
worse, it is time for each country and humanity provide themselves as urgently as possible
tools necessary to take control of their destiny. To take control of your destiny humanity
must take to end the world capitalist system to exercise governance of the world economy.
This is the only means of survival of the human species.
BIBLIOGRAPHY
ALCOFORADO, Fernando. A verdade sobre a formação do lucro no capitalismo.
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________________________. A inexorável tendência de queda da taxa de lucro no
sistema capitalista mundial. Disponível no website <http://fernando.alcoforado.zip.net>,
2016.
_______________________. As ações neutralizadoras da tendência de queda da taxa de
lucro do sistema capitalista mundial. Disponível no website
<http://fernando.alcoforado.zip.net>, 2016.
_______________________. As consequências da automação industrial sobre a taxa de
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_______________________. O desempenho do sistema capitalista mundial no período
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_______________________. O sistema mundo capitalista rumo à derrocada?. Disponível
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CHESNAIS, François. Les dettes illégitime. Quand les banques font main basse sur les
politiques publiques. Paris: Editions Raisons d´agir, 2011.
__________________. As dívidas ilegítimas - quando os bancos fazem mão baixa nas
políticas públicas. Lisboa: Círculo de Leitores, 2012.
DELL- TECNOLOGIAS DO FUTURO. Como serão as fábricas do futuro?. Disponível
no website <http://delltecnologiasdofuturo.ig.com.br/para-empresa/como-serao-as-
fabricas-do-futuro/>, 2013.
EXAME.COM. A era das fábricas inteligentes está começando. Disponível no website
<http://exame2.com.br/mobile/revista-exame/noticias/a-fabrica-do-futuro>, 2014.
GOUVERNEUR, Jacques e ROELANDTS, Marcel. Capitalismo & Crises Econômicas.
Disponível no website <http://www.capitalism-and-crisis.info/pt/Bem-vindo/Novo>,
2014.
HARMAN, Chris A Taxa de Lucro e o Mundo Atual. Disponível no website <
https://www.marxists.org/portugues/harman/2007/mes/taxa.htm>, 2007.
MARX, Karl. O Capital. Rio de Janeiro: Civilização Brasileira, 1999.
MORETI, Amilcar. A Fábrica do Futuro. Disponível no website
<http://ajmoreti.blogspot.com.br/2012/04/fabrica-do-futuro.html?m=1>,2012.
NEWS TECMES. Fábrica do futuro. Disponível no website
<http://www.tecmes.com.br/2014/07/fabrica-do-futuro/#.VtWUH30rLcc>, 2014.
SEWELL, Rob A crise capitalista e a queda tendencial da taxa de lucro. Disponível no
website <http://www.diarioliberdade.org/mundo/laboral-economia/42024-a-crise-
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