From: Jurriaan Bendien (adsl675281@TISCALI.NL)
Date: Thu Sep 28 2006 - 14:16:43 EDT
Rakesh, >Jerry Levy pointed us to Tony Smith's piece. You could start there if you think HG anachronistic. Are you referring to http://www.public.iastate.edu/~tonys/worldmarket.html ? Personally, I usually prefer not to start out with a theoretical object, concepts, or a Weberian typology, but with a real object to explain, i.e empirical facts - theory being a guide. Mind you, I have a fulltime job and study parttime, and I cannot devote all my time to this. >as for example the analysis of the struggle for control of raw materials? >or how about Cyrus Bina's strict application of Marx's rent theory to >understanding of OPEC and global oil pricing in general? Well, I don't really believe in pomo Marxism except as a joke. You're entitled to your heroes Grossman and Bina and your own metaphors of course. As regards the oil industry, I have only investigated it very sporadically and infrequently so far, so cannot comment further. Anwar Shaikh points out that in real terms, as an historic trend, oil prices have fallen for a long time, which "we tend to forget". http://homepage.newschool.edu/~AShaikh/The%20Bush%20Agenda%20-%20Three%20analysts%20discuss%20the%20major%20economic%20issues....pdf The movement of oil prices seems to have little to do with scarcity factors. >semantic games. I don't think so. I have already noted the different modalities of capital accumulation in previous posts, and we went over the meaning of valorization already. I've also indicated how economic growth created a large stock of non-productive assets, which can be traded, and thus becomes a source of accumulation for the social classes who own those assets. Suppose that "expanded reproduction of capital" was not just a bit of Marxist rhetoric tossed about, and that we actually empirically investigated this. What would we find? Briefly, I think around 1973 or so there probably was something like an "overaccumulation crisis" in Grossman's sense, leading to a long recession, and featuring an intensive restructuring process of capital assets, which continues to this day. Point is, the system did not break down at all, except in a few relatively "marginal" countries. Instead what happened was a marked shift in the distribution of total capital assets, from productive assets to non-productive assets (real estate and financial assets), with as its corollary, (1) that a much greater proportion of business income takes the form of property income, interest, rents and speculative profit, (2) that asset ownership is concentrated more with the financial institutions, (3) an increasing disparity between GDP and total national income receipts. The late Seymour Melman wrote a book on the subject once, tellingly titled "Profits without production". The overall real growth rate of fixed investment in the OECD productive sector mostly stagnated, with a few exceptions such as construction and computer equipment, while the property market boomed. Low interest rates caused a massive increase in home ownership. Foreign trade in goods and services as well as in capital assets grew enormously, with as a corrollary that the intermediation between producers and consumers strongly increased, giving rise to a new class of middle-men. The rate of labor-exploitation (for which the term "productivity" is a euphemism) increased significantly upon political defeats of the working classes (who were also scared of unemployment), and as a corrollary, real wages stagnated. Physical productivity in the sector producing material goods increased greatly, but the amount of capital directly tied up in it, as a proportion of total capital assets, declined. World unemployment increased. In what sense then is there a "valorisation crisis" or ""profitability crisis"? Basically, there isn't one, except that, in the final analysis, gross product (and therefore productivity) has to grow at a sufficient rate to meet all the financial claims staked on it. Investment activity is sensitive to even small increases in the interest rate, for example. But this gross product of course also increasingly - at least in the OECD -consists of traded services. So the system depends more and more on the serviceability (servility?) of people, and their ability to buy services. What is the overall economic effect of all this? Basically, a lot of surplus capital sloshing around the world economy, in search of acceptable returns - not so much overproduction, as excess capacity and rising longterm real unemployment. And there's a continual bidding down of the price of services - the long term trend is not for labour-power to be revalued, but devalued. The world economy is a bit like a bunch of cars that are being driven with the brakes depressed, the drivers gripping the steering wheel ever more tightly, hoping thereby that the cars will move faster. You could for example plot the average growth rate of real GDP in OECD countries for 1947-1973 (about 4% or so), extrapolate that average growth rate to 2006, and then compare it with the actual growth rate. The gap between the two lines, which becomes very large (given that the long recession halved real growth rates), reflects the difference between actual and potential economic growth in capitalism. The gap becomes more dramatic, if we just take the material goods-producing sector. We can repeat the same exercise for net capital formation, it shows a similar pattern. Of course, as I've also pointed out, a growing proportion of GDP consists of a fictitious net output, i.e. the imputed rental value of owner-occupied housing, which has nothing to do with production. Technically, there is no world economic crisis, insofar as there is enough produced to give everybody on earth a decent, sustainable life. The only real crisis there is, is that you have all these very poor people, many eking out a life you'd barely call human. And that gets talked about a fair bit - they might get out of hand and do extreme things, wonder why? Deregulation has certainly increased risk and market uncertainty, but it also gives rise to a whole new financial industry specialising in protecting the owners of capital against significant risk in a sluggishly growing economy. It's an economy in which, economically, real production (people making things that add to the stock of material wealth) has become less and less important in the overall capital accumulation process, while asset acquisition has become much more important. So much so that it prompted a revision of international accounting standards. I don't think Grossman's theory explains that development adequately. In Grossman's theory, you have overaccumulation in constant capital, a valorization crisis, and then a good solid breakdown of capitalism. That hasn't happened, and really the more "modifying influences" we introduce, the lower the predictive power of the theory. My hunch is that the real problem will turn out to be, not an overaccumulation of constant capital in production, but an overaccumulation of financial assets. But what is important there, is the quantitative effects of a financial crash - so far, the system has shown that it can absorb stock crashes and credit crashes of quite a large magnitude. The main thing about a modern economy increasingly based on credit money is that it requires social stability and social trust to function, it is very sensitive to that. Any large class conflicts or social explosions in the countries which are the major players can have big financial effects. Thus modern politics is more concerned than ever with taking the sting out of all manner of conflicts, mediating and minimising them, keeping social competition within acceptable bounds, ensuring social peace and encouraging "constructive" attitudes that integrate people in society. To the extent that people find that they can still make real gains, i.e. improve their conditions of life significantly, that can work, but if people find that they cannot make gains any more, that their position deteriorates, then all hell can break loose. How low can we go, while we still grow? Jurriaan There is no depression in New Zealand There are no sheep on our farms There's no depression in New Zealand We can all keep perfectly calm Perfectly calm, perfectly calm - Blam Blam Blam
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