[OPE] defining 'recession'

In reply to Paul:

Of course per capita GDP sounds more sexy. If you adopt GDP per capita as indicator, then, since the population grows, you obviously obtain a significantly lower growth rate. But for the population as a whole, GNP is a more relevant indicator (total factor income receipts from production). GNP is no longer accessibly published because it reveals the net inflow and outflow of international factor income, mainly international profit flows, which the development theorists want to hide. A better relativisation is GDP/employed population or GDP/working-age population. Just to illustrate the main point,

In 1980, the US had a population of about 226.5 million and a real GDP of $5,161.7 billion (in 2000 dollars) = $22,788 per capita
In 2008, the US has a population of about 305.8 million, and there was a real 2007 GDP of $11,523.9 billion (in 2000 dollars) = $37,684 per capita

So then in 1980-2008, according to these estimates, whereas total real GDP per annum in the US increased by 123% (about 4.5% per year on average), the corresponding per capita real GDP per annum increased only 65% (2.4% per year), i.e. by roughly half as much.

In reply to Jerry:

You're right, Marx's meaning of the barriers to capital involves much more. Indeed David Harvey titled his restatement of Marx "The Limits to Capital". If you want quotes, here's a few (there's more):

>From Capital (this translation is however a bad one): "The real barrier of capitalist production is capital itself." (etc.) http://www.marxists.org/archive/marx/works/1894-c3/ch15.htm

>From the Grundrisse: "Capital is the endless and limitless drive to go beyond its limiting barrier." (etc.) (p. 334). "But from the fact that capital posits every such limit as a barrier and hence gets ideally beyond it, it does not by any means follow that it has really overcome it, and, since every such barrier contradicts its character, its production moves in contradictions which are constantly overcome but just as constantly posited." (etc.) (pp. 409-10). "The barriers to realization are minimized when the 'transition of capital from one phase to the next' occurs 'at the speed of thought' " (etc.) (p.631).

But insofar as you are not simply a hack for the New Marxist Exploiting Class, I think we shouldn't just regurgitate quotations, but understand the essence of what is meant. And what it means is, generally speaking, that the process of market expansion culminates in the collapse of markets, and that in turn means that products and assets brought into existence cannot be bought and sold for one reason or another as I said. That is what the collapse of markets means, and it involves an allocation of capital which blocks trade, as I said.

Thus, the tendency towards crises is a system-immanent (endogenous) characteristic of the accumulation of capital, and not simply an effect of extra-commercial (exogenous) constraints or pressures on markets, which however might also exist. (If for example the rule of capital is overthrown in a particular place, or if a natural disaster occurs, then there is an extraneous barrier to capitalist development.)

The bourgeoisie cannot and will understand the system-immanent tendency, and therefore they start talking about capitalist crises in metereological or seizmological terms, such as a "tsunami" and so forth. They do not have any integral scientific framework to grasp what is happening, only apologetics, and therefore they resort to poetic metaphors and recommend "further study" at their banquets. No doubt further study is necessary, but if you do not even know what the questions are, you can study a lot without any viable scientific result. All you can say is that the model turned out to be the wrong one, and that you need a better one.

Marx thought that there was a "logic" in this ultimately self-destructive process (it is governed by laws or lawlike regularities), the essence of which is that rising labour-productivity culminates in a falling rate of profit on capital invested, leading to all kinds of attempts to overcome that fall (including international trade and the issue of share-capital in various complex forms), which however fail in the longer term, and result in the devaluation of capital and the underutilisation of labour. This problem cannot be overcome, only mediated, primarily because of the structural reality of competition, which gets in the way of balanced development. That is all I said before, in much fewer words. I can sympathize with Martin Wolf's call for more balance, but if you don't understand what creates the imbalance in the first place, the balance rhetoric doesn't have much content.

If I left the analysis there, I would admittedly just be restating what Marx already said, like the Marxists like to do; point is to understand how this works out in living reality these days.

For the more intelligent thinker, it is obvious, in that case, that we have to deal not just with the accumulation process ITSELF, which Marxists like to philosophize about, but with the RESULT of accumulation, which takes us analytically vastly beyond Henryk Grossmann's restatement of Marx and the other Marxists.

This result is, among other things, that a mass of capital assets is created which exists external to capitalist production, and is indeed - in the developed capitalist countries - larger in value than the mass of capital applied in production. This means that we then have to deal with an enormous capitalisation of assets which do not consist of means of production, which begins to strongly influence average yields, since the yield from property begins to compete with the yield from production investment. In New Zealand, for example (as I mentioned) half the housing is now rented. Now obviously somebody owns that housing and makes a profit from it, that's capital accumulation but it has little to do with production other than house repairs.

That is basically the foundation of modern "rentier capitalism" or "finance capitalism" (whatever you might like to call it). If you analyse this, you obtain different results and predictions than Mandel does in his book "Late Capitalism" and in this sense I'm closer to Michael Hudson's interpretation. Had Mandel thought his own theory of surplus-profit (extra-Mehrwert) to its conclusion, he would have written quite a different sort of book. As it stands, he mentions "three main sources of surplus-profit" without even specifying clearly what they are - the concept of surplus-profit relates precisely to the endogenous and exogenous "barriers" to capital accumulation at issue, which favour some capitalists at the expense of others. There are three holes in that sort of analysis. But I don't think David Harvey fills them either.

Jurriaan

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Received on Thu Dec 4 12:42:28 2008