 And I'm going to erase this now, and if I may just put the whole thing together in one equation, if I may just to capture this kind of chaotic behavior, we can say that the rate of profit for the whole economy, so that's the rate of profit for the economy, then is the combination of these two grand rates of profit. We have here the rate of profit in the C industry, and we have the rate of profit in the V industry. So this would be in the V industry. However, the industries may not contribute the same to the whole economy. And so we want to weight them to take into account their different sizes in the economy. So let me do that. I'll weight them by the proportion of their surplus in terms of the total value added in the economy. I would add up the total value added by the workers. Remember what this is now, the total use value of labor power in terms of what the workers yield. Same thing over here. So this would be the surplus value in C as a proportion of the total value. This would be the proportion in the V of adding up of the surplus value in the economy. Roughly, very roughly. For the United States, this coefficient may be 2 thirds. This coefficient may be 1 third. In other words, the wage good industry contributes more to the overall growth in the economy, the profit rate, than does the means of production. OK, so here's our weighted average equation for the two profit rates and the rate of profit for the economy as the weighted average of the two. So what do we say here? This is going up. We start with an expansion. And therefore, this is pushing it up. Expansion, everybody is happy. Jobs are available. Sales are growing, and so forth. That very expansion sets in motion in terms of what we've done here before this intense competition within each and every industry. That drives down the rate of profit, organic composition of capital going up, and so forth. And that drives this down. In turn, the very driving down of the rates of profit acts to cheapen the C and V, drives it up. The very cheapening of C and V allows some firms to expand their K star, increases competition, once more, drives the rate of profit down. It's a never-ending process of the economy being pushed and pulled in different directions. To summarize, and to pick up the thread that we had in the first part of the course, the profit rate in the economy, the economy, the demands for labor power, the demands for the means of production, wages, profits, and so forth, are all over-determined. They're all sites of these contradictory forces. Just like you and I as human beings and everything else under the sun, including the sun itself, is being propelled in different directions by these different social and natural movements, such is the case with the economy. It's not the economy, nor you and I, are well-ordered entities. Rather, we are sites of different determinations. The example I just gave you is how the economy itself is a site of these different pushes and pulls. Hence, it's not under control. Engels captures this, the great friend of Marx and co-writer. He captures this by saying the capitalist economy is in chaos. It's the nature of capitalism. It continually drives the workers, and of course everybody else, into this frenzy of expansion and decline. Later on, as I mentioned to you, another economist is going to come along. This is Marx's long dead. By now, his name, John Maynard Keynes, you've probably studied him. And he, too, is going to, for completely different reasons, seize upon this idea of we don't know what's going to happen in the economy because of this being pushed in different directions. This uncertainty, what Keynes calls this uncertainty of the economy, which haunts the lonely investor. What Keynes is going to do is recognize the uncertainty, and then he's going to link, connect that uncertainty to the business investor and show how the business investor can cut his or her investment at any moment reacting to this uncertainty of the economy. Let me just do that for a moment, since it's no minor accomplishment by this great economist, Keynes, a non-Marxist. Keynes had no great love for Marxism. What we're talking about here, if I just might translate this, what we're talking about here is that Keynes is focusing on the delta C over C. So he's just focusing on what he calls investment. That is just the investment of new plants and equipment, delta C over C. So we're not focusing on the delta V over V, just that component delta C over C. And Keynes is saying, look, business in our language, capitalists, Keynesian language, the entrepreneur has to make decisions today about what's going to happen tomorrow. So the investment decisions today, the investment decisions today, that delta C over C in Marxian terms, the investment decisions today depend upon the investors' ideas about the future. And the future, obviously, is you don't know what the future is. We're not gods. So we have to guess as what the future will be, and that's going to shape how much investment we make today. Well, the problem is that everything under the sun shapes our expectations of what the future may bring about. All the changes, all the political, economic, and cultural changes today, and natural changes which occur today, will shape our ideas about the future and enhance feedback to affect how much investment we're going to make today in plant equipment and machinery. By the way, before I give you the example, Marx calls this shaping of everything, everything shaping investment decisions today, animal spirits. What that means is as follows. Is that for corporations trying to make decisions about delta C over C, in terms of what we just did, if there's intense competition, then they might be fearful of how this is going to turn out, and they may start paradoxically reduce their investment. And they might reduce it if they're successful, because they're beginning to worry that that profit rate is falling. And hence, even the successful firms may start cutting back on their K-stop, in our case, K-stop plus lambda. When the profit rate is rising, those firms that are, when the profit rate is rising for some firms, because they're innovators, they're doing better, they're capturing super-profits, they may become fearful of the future. And they may begin to, that is fearful that the profit rate eventually is going to fall. And therefore, they may begin to hedge their bets and not invest so much, and hold more of their retained earnings in the form of money, or stocks, or bonds, whatever the case may be. And hence, they may begin to reduce their investment, but just extend this. If today the OPEC is successful in terms of raising the price of oil, such that oil prices take off and there's a worry about inflationary conditions, then business may get scared, frightened, because of that particular event. And even though it may not have a big impact upon their particular investments, they begin to cut back this delta C plus C. And so for a million different reasons, happenings today shape business decisions. And then Keynes linked that change in business decisions to the multiplier, which he got from somebody else, this guy, Khan, KDHN. And he put it together that a change in investment today via the multiplier can cause a recession. So the very uncertainty present, if we can make use of this now, the very uncertainty present in the economy can add its effectivity to business at any particular moment, because you don't know what's going to happen. And hence, that in and of itself can make investment, in my case, K star plus lambda, all over the place, shifting up and down. And that in turn can shape the economy into these expansions and these declines. So that's the summary that I wanted to present to you of the second reason for the business cycle. The first reason, if you recall, the one to lose that, is the very expansion can bid up the prices of inputs, and that can cause a decline. Remember, we did that. And Marx also provides a number of other reasons how we can get these business cycles. Can't do that in 305, but there are a number of other reasons, you can mention another one. There can be what is called the disproportionality between the means of production and the wage going to the street. That is, one industry may be expanding faster than the other, and that differential rate of expansion can cause a business cycle. It can cause the entire economy to slow down. And there's still other examples of this, but I think you get the idea in these two examples that we have discussed in some detail, how and why there can be a business cycle present in capitalism. And that, along with classic exploitation, provides this powerful critique that Marx is giving us of this capitalism. So I shall stop there until the next lecture.