---------- Forwarded message ----------
Date: Sun, 15 Oct 1995 10:05:05 -0700
From: Doug Henwood <dhenwood@panix.com>
To: Multiple recipients of list <pen-l@anthrax.ecst.csuchico.edu>
Subject: [PEN-L:935] Re: Re (PEN-L:853) The strange case of the reserve loan army
At 2:31 PM 10/14/95, Alan Freeman wrote:
>Though this may increase the *efficiency* with which capital is
>applied and thereby grease the wheels of accumulation, it cannot add
>to the gross wealth of society. Ceteris Paribus it acts as a *brake*
>on expansion, not a spur to it. Therefore the demand for loan capital
>is not at all set by the pace of accumulation and to a degree it is
>the reverse.
I thought Marx also argued that credit helps K break, if only temporarily,
beyond its own bounds - that is, investments are undertaken that would not
have been had K'ists had to rely entirely on internal funds. Gosh, without
Mike Milken there might have been no Ted Turner! As Milken used to say,
it's not capital that's scarce, it's Vision - and the credit system is a
mechanism for shifting funds from the K-heavy and V-short to the V-heavy
and K-short. Many of the investments so financed may not always be rational
from the individual participants' points of view; Turner, for example, has
made a profit only in one or two years of his very visible history. But
Turner did help transform both the business & ideological aspects of the
media industry, and now his operation is being absorbed by Time Warner,
which seems to have more K than V. TW itself was the product of the
absorption of Warner by Time - Warner being the creation, a generation
earlier, of Steve Ross & Co.. In the early 1960s, Ross owned a few parking
garages; thanks to his association with Felix Rohatyn & Andre Meyer (Lazard
Freres), he was transformed into a media mogul, and Warner became one of
the most influential members of the consciousness industry during the 1970s
and 1980s.
Moving away from recent celebrities, credit financed lots of railroads and
steel mills in the US in the 19th century that turned out to be busts (and
the British rentiers who financed them took big hits) and which were
Morganized towards the turn of the century. The development of US
capitalism as a whole no doubt gained enormously from these investments
that could not have been made on internal funds, and many of which were
failures in individual terms.
Finally, finance isn't just about the transfer of funds from surplus to
deficit units. The financial markets are how the capitalist class organizes
social ownership. Morganization was a stage in the creation of the modern
public corporation; privatization of the 1980s and 1990s has reconfigured
ownership; Milken's jailing was the Establishment's way of repelling a gang
of upstarts. Of all the principal 1980s characters, only Henry Kravis
penetrated the inner sanctum, signified by such positions as the
chairpersonship of WNET, the NYC "public" (as Exxon is a public company) TV
station, and, most glowingly, a board membership at the Metropolitan Museum
of Art. Kravis probably owes this class promotion to the fact that his
father was a dealmaker well known in Wall Street and political circles.
Doug
--Doug Henwood Left Business Observer 250 W 85 St New York NY 10024-3217 USA +1-212-874-4020 voice +1-212-874-3137 fax email: <dhenwood@panix.com> web: <http://www.panix.com/~dhenwood/LBO_home.html>