Category Archives: Economics
I appreciate the many thoughtful responses to my quirky first post regarding reading Zerzan prior to going shopping at a big box store, especially skepoet2’s post. There is a lot to chew on there, and rather than spiral into back and forth contretemps, I thought I would try to clarify a little more what I meant in the initial post, and perhaps show my own hand concerning my opinions if they have not been sufficiently articulated.
First of all, some of my points concerning the division of labor should have highlighted better the problem at the international level, rather than just hypothetical questions as to who takes out the garbage. I think, for example, of Bolivian president Evo Morales’s overly simplified but still rather intriguing description of the causes of the economic crisis in the “developed world”:
There’s a crisis in the United States, there is a crisis in some countries of Europe. What conclusion do I reach: since they are not robbing us, since they are not looting us, there is crisis in the capitalist European countries, and we are lifting ourselves up… Now that they can’t steal, they are having an economic and fiscal crisis.
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Derick writes: “The conservative retort that “if we are all equal at the lowest common denominator, then our future is blend indeed” is fundamentally true. The dangerous of this focus on equality for equality’s sake even in equality of substance is subtle but acute in its problem: problems of substantive equality are problems of distribution, but if these problems of distribution are fixed by a structural economic process that is dependent on classes of people doing particular kinds of production, so then we are still left with a fundamental contradiction.”
I reject “bland” or wooden equality, but still we don’t have a better word to characterize the difference between our current social and economic orders and the Communist future we are fighting towards. The distribution of wealth in the world today is grotesquely unequal. Simply reducing that maldistribution would do wonders. How we get there is not easy or obvious, but that we get closer to such substantive equality seems the inescapable consequence of forging a “classless society.”
Human needs do not vary infinitely; we all need a scientifically measurable nutritional intake, a decent place to live, reliable transportation, quality medical care, and a shorter workweek. Nobody needs caviar, a mansion, a Rolls Royce, multiple cosmetic surgeries, or to be able to live off their inheritance. At the opposite end, nobody should be forced to live off of Dickensian gruel, in a rotting shack, chained to one spot, exposed to unsanitary conditions, or forced into constant overtime labor. Between the extremes of opulence and destitution, there is a zone of basically reasonable ordinary needs.
Maybe someday, after the Singularity, we might be able to give everyone free body modification surgeries on a whim, but that day is so far from today it has minimal political implications. The scary blandness of equality is also just that, a boogie-man that doesn’t exist and probably never will. Someday, we might be unfrozen into a future world where everything is bland and sameness, but without poverty and oppression. I’ll take the boredom, please!!
Continued from part 1. A note: it took KMO a few days to answer the last two questions because he found them much more perplexing upon reflection than he thought at first.
Skepoet: You and Doug Henwood have been calling out NPR lately. Why do you think it has so much cache among liberal and lefty types?
KMO: I love NPR. I’m a lifelong listener. I think it appeals to lefty Baby Boomers because that’s the target demographic. It’s clearly aimed at people with too much education, critical thinking facility and attention span to take more ‘mainstream’ news and current events programming seriously, and so it flatters its audience with the tacit message, “You’re so smart for not settling for low-brow sound bite journalism and fake debates between shrill talking heads.”
NPR, particularly it’s flagship programs, Morning Edition and All Things Considered, annoys the living shit out of me because they respect all of the same taboos that the corporate media hold dear and actually serve to reinforce and legitimize those taboos by posing as a free and unbeholden actor. I think they function as what people more steeped in political language than I am like to call a ‘left gate-keeper.’
That said, let me reiterate; I love NPR. I listen to it all the time, although less so now that I live in New York City and have more alternatives to choose from.
S: You have been working with Occupy Cafe and you have recently moved to New York: what are you thoughts on the developments of Occupy?
KMO: You may have heard that Occupy Wall Street has moved from Zuccotti Park to Union Square. I’ve been by Union Square a couple of times to check out the vibe, and except for the inordinate police presence and a table holding up an OWS banner with a donation jar on it, I saw nothing to indicate that there was anything at all out of the ordinary going on there. I know there have been a few Occupy events at which people were arrested, but I think the mild winter weather has not been a blessing to Occupy. I think people need some recuperation, and I think that 70 degree days in February put psychological pressure on the Occupiers to get back in the game before their batteries were sufficiently re-charged.
As exciting as OWS was last year, I don’t really want to see what it will become now that it has solidified into a recognizable brand and a more-or-less fixed organization. I would rather see everybody change clothes, change dance partners, and let the spirit of protest manifest itself in a new form in 2012.
S: What would you like to the see the spirit of occupy become?
KMO: Last year, Occupy changed the parameters of the mainstream conversation. At first the corporate media ignored OWS, then they thrashed about, grasping at any possible means of discrediting or discounting it, and then the 1% / 99% lingo entered the mainstream conversation. Suddenly, the vast disparities of wealth and privilege in our society materialized in view and required acknowledgement and comment in the mainstream narrative. That is but one of a herd of elephants in the proverbial room. This year, I want more elephants to
The Drug War has become an invisible Juggernaut. It’s excesses and the resulting prison nation that have resulted from absurd mandatory minimum sentencing laws are completely indefensible from any rational perspective. In the 80s and early 90s, Drug War propaganda was everywhere. Now, prohibition-themed public service announcements are
rare. The whole monstrous program barrels forward under its own steam, but discussion of its utility or whose ends it serves is completely absent from the mainstream narrative. I think this is starting to change, and the recent Summit of the Americas at which Latin American leaders insisted that we examine alternatives to the Drug War now has
president Obama explicitly defending prohibition and the prison industrial complex. By the time November rolls around, I want it to be glaringly obvious to anyone tuned into the mainstream narrative that Barrack Obama and the Democratic Party are the party of Empire, the party of prisons, the party of the surveillance state, and the party
of the financialized economy. Whether it is OWS or some other mechanism that effects these changes in perception doesn’t matter much to me. I think that Ron Paul’s candidacy has done a lot more good on this front than has OWS.
S: The drug war is one of the few policies outside of the wars in the Mideast in which the majority of the population, outside of law enforcement, don’t support anymore. It costs the states incredible amounts of money, and it destabilize Latin American countries. Why do you think it continues?
S: Money for whom? That’s the real issue for me. It actually costs most parties involved more than they make in the long run, so the question becomes “who benefits.”
KMO: I think the key phrase there is, “in the long run.” The Drug War creates huge flows of money, the channeling of which provides short term benefit to entities like governments and corporations. This comes at an enormous short-term cost to millions of individual humans and an ultimately catastrophic cost to society, but the pressure to favor short
term gain over long term well-being is certainly not the exclusive province of the Drug War.
S: What are the best ways to frame the issue in the general public ?
KMO: That’s a really challenging question for a number of reasons. At one level, it seems that my own perspective is so deviant that what seems obvious for me is completely alien to “the common man,” whoever he is. So what are my intuitions worth when it comes to a successful re-framing of the Drug War? That viewpoint is laden with a blinding payload of self-flattery. I suspect that when the Greatest Generation dies off and the Baby Boomers are panicked over the fact that their retirement security has evaporated, we can frame the question as, “We can’t afford to fund your retirement AND the Drug War, so what’s it gonna be?” That, I think, will be a no-brainer for the Boomers.
Finally, the whole Drug War stands or falls with the prohibition of marijuana. The propaganda is all about cocaine and heroin, but without the prohibition on marijuana, there are not enough “drug criminals” out in the world to justify the gazillion dollar Drug War budget. Depending on how you massage the poll results, we’re pretty close to having half of the existing population, complete with members of the Greatest Generation who participated in lynchings, already favoring the decriminalization of marijuana for personal use. I heard Ethan
Nadelmann give a talk at the Cato Institute in 1999. He said something that stuck with me for more than a decade. He said, “Support for the Drug War is a thousand miles high, a thousand miles long, and one inch thick.”
S: Do you think pointing out how insane the prison-congressional complex has gotten which actually privatized profits from prisons at extreme cost to the tax payer could be a way forward? Recently I saw that even at the most high estimates we have beat Stalin’s gulag in raw numbers of people in prison and almost all of it is drug related. One almost sees this as a political crime, like “speculation” was in the Soviet Union, rather than a purely administrative category.
KMO: The Drug War started in a fairly honest way. It was clear that the prohibition of certain drugs and the enforcement of those prohibitions were intended to single out blacks, Mexicans, and politically and culturally disobedient youth. The architects of the Drug War were fairly open about this motivation, and the majority population favored the suppression of these groups. Now, the official policy of the federal government is one of color-blindness or the embrace of ethnic diversity, and our current cultural narrative condemns racism. While the cultural narrative has changed, the existing apparatus of the Drug War, which systematically imprisons blacks and Latinos, remains in place. Even worse, in the decades since the enactment of the Controlled Substances Act, marijuana has entered the mainstream. It’s prohibition, originally meant to criminalize ethnic minorities and rebellious youth, now criminalizes huge swathes of mainstream society. Because the racism at the heart of the Drug War cannot be admitted, the fact that the same Drug War now criminalizes the lifestyles of tens of millions of otherwise obedient whites cannot be acknowledged as an unintended consequence and corrected.
Those who profit from the Drug War (a set that includes just about everyone, if Catherine Austin Fitts is to be believed – perhaps link to her essay Narco Dollars for Dummies) cannot acknowledge the size and composition of the prison population without self-condemnation. No rational discussion of the topic can be permitted at this point, as
the avoidable and egregious harm produced by the Drug War is so glaring. It’s grounding in systemic racism and repression of political dissent is so obvious that it cannot withstand even the most cursory examination.
One reason why many whites still favor prohibition and mass incarceration is that most drug criminals are arrested in cities but housed in rural prisons. Prison jobs prop up many otherwise failing local rural economies. I saw a news story (which I posted to the Friends of the C-Realm) the other day (it was really a piece of corporate propaganda branded with the CBS News imprimatur) touting the benefits of a robotic prison guard. Corporate profits generated by mass incarceration can be increased by increasing the prison
population and decreasing labor costs. If labor costs can be lowered in the short term by replacing human prison guards with robotic systems, then the logic of the corporate mandate to maximize shareholder value in the short term will dictate that this sort of automation be adopted even if it is obvious that doing so will undermine one of the few remaining pillars of support for the Drug War. This doesn’t give me much reason for hope however. Modern-day logging operations employ very few people because technology has allowed one heavy equipment operator to do the work of an army of men wielding saws and axes. Even so, people who live in the economically devastated husks of rural towns that used to thrive on the basis of logging industry jobs still revile environmentalists as enemies of economic vitality. People in these communities still favor logging industry jobs over forests even though the logging industry no longer provides jobs to a sizable percentage of the local population.
S: The issue of stacking districts with prison populations is an interesting problem. Even though in many of the states that do this felons cannot legally vote ever, the prison population is counted for appointing state representation. So it can be a form of “empty district building” and this increases rural, generally Republicans, representation against urban centers. This leads me to think that there structural problems of electoral reform, not just for the drug but for many elements of our society, will actually not be particularly responsive to public pressure.
S: What gives you hope right now?
KMO: I hate to give a nit-picky answer to a straightforward question, but as someone who voluntarily engages in philosophical discussions, I figure it’s par for your course.
Channeling Paul Kingsnorth, now. “Hope for what?”
Hope for the future of life on Earth? I know some people who think that human industrial activity will turn the Earth into a Venus-like world, unfit even to support microbial life. This fear clusters in my own consciousness with the fear that the CERN particle accelerator will destroy the universe or that the Bible is literary true and that Christian true believers will soon be raptured into heaven leaving the rest of us in the clutches of the Anti-Christ. I’m not saying that the danger of a run-away greenhouse process is as remote as the other two I mentioned, but I have as much trouble working myself into a state of genuine concern over it as I do taking seriously a Left Behind scenario.
Hope for the future of the human species? Ninety nine percent of the species that have lived on Earth are now extinct. Perhaps humans will transcend our biology and project our consciousness out into the larger universe to take our place among the gods, but it’s also quite likely that we will go the way of most of the species that have arisen on this planet, and I’m fine with that. Even if industrial civilization has a short future, I do think that humans will be on the scene for hundreds of thousands of years yet. I’m not worried about
the survival of the human species.
Hope for the continuation of the status quo of global corporate capitalism? For the sake of the non-human life on Earth, I hope it does NOT continue.
Hope for a version of the technological singularity that preserves and advances those aspects of human intelligence that I value? There are people working on so-called Friendly AI, but given the fact that so much robotics research is driven by the military and that the leading forms of artificial pseudo-intelligence operate in the service of corporations and their overriding mandate to maximize short-term financial gain by externalizing costs at the expense of future prosperity, which is to say denying the consequences of their actions, I think that the Vile Offspring of Charles Stross’s Accelerondo is the more likely outcome.
Hope that industrial civilization can execute a deliberate soft-landing and transition to a low-power existence without leaving the survivors in a state of collective PTSD? It’s certainly within our power if we decide that that is what we want to do. The real barrier to this is our conditioned expectations and the psychology of previous investment.
Paul Gilding gave an optimistic TED talk recently in which he basically affirmed the Doomer vision that I’ve been articulating in answer to your question, and then he ended by pointing out that 4 days after the USA entered World War II our ancestors halted all domestic automobile production and converted that manufacturing capacity to the
service of the war. We CAN turn on a dime, but we won’t until a serious crisis smacks us in the face. Gilding’s faith is that the crises are coming and that the turning on a dime will follow. He might be right, and I guess that’s where my own hope finds a bit of traction. I hope he’s right.
My fear is that the media apparatus for worldview management has grown so sophisticated and effective that the majority of people will regularly be stepping over corpses on their way to work and that they will continue to believe that everything is on track for a brighter tomorrow and that better times are just around the corner so long as we all keep the faith and keep plugging away at our assigned tasks.
Hope that we can arrest the slide into a high-tech totalitarian society? Occupy Wall Street, the mass demonstrations around the globe,the work of Anonymous and WikiLeaks all give me reasons to hope.
The hope that I hold closest to my heart is that my two sons will get the chance to live full-featured human lives that include education, romantic love, family life, and satisfying work. What gives me hope here is John Michael Greer’s argument that civilizations in a free-fall state of collapse still move so slowly in comparison to a human lifetime that, for the people living through the collapse, everything seems normal. Unfortunately, his arguments are all
historical, and I think that some aspects of our current situation are unprecedented.
S: Anything you’d like to say in closing?
KMO: Last week I gave a talk at Bluestockings Bookstore, Cafe, and Activist Center, and after I had described the seemingly-inevitable and traumatic transition from a growth-based civilization to a steady state or contracting civilization, one audience member asked me what the magic lotto ticket out of our situation was. I said that I didn’t see one that seemed likely. He said he knew what it was, and I invited him to stand up, take the mic, and share with the audience. He did so. His magic lotto ticket: aliens.
He claimed that non-human intelligence from outside of space and time stand ready to resolve our dilemma any day now and that we can make contact with them via psychedelics. I myself have made a sustained and good faith effort to contact and partner with non-human intelligences via entheogens (psilocybin mushrooms, ayahuasca, and San Pedro cactus). I’ve had provocative encounters, but nothing that has convinced me completely that I wasn’t encountering myself within the confines of my own skull and nothing that engenders faith in an immanent helping hand from beyond. I remain open to the possibility, but I’m not pinning my hopes on it. It could well be that aliens or spirits have converged on the Earth to grieve for us and comfort us in
our passing. Or to gloat and feed on our suffering.
I do think that the eager Doomers of the world, the ones who see humans as a plague upon Mother Earth and who want Her to rid Herself of us, have adopted a willful blind spot concerning the progression of information technology, robotics, genetics and nano-materials. What’s more, I feel no sympathy or resonance with their condemnation of humanity. I reject and repudiate misanthropy. I value human imagination and intelligence, and I want to see it continue into the future.
I think that the Techno-utopians of the world have adopted a willed ignorance of hard resource limits in the short term. I agree that some elements of their grand vision, elements that Doomers reject as baseless fantasy, may well be achievable in the long term, but that doesn’t mean that they will come to fruition in time to avert what looks like a looming Malthusian Correction. Techno-utopians like to say that Malthus was wrong, and certainly Malthus failed to predict the Haber-Basch process, mechanized agriculture, and genetic engineering. Even so, by failing to incorporate these factors into his thinking, Malthus may have underestimated the magnitude of his predicted population contraction. It may be true that Malthus was wrong, but that shouldn’t necessarily be cause for celebration.
I’ve related this basic narrative to several live audiences, and it’s always hard for me to end those talks, because I don’t have any rousing conclusion in which I offer reasonable optimism. Some people think that suffering builds character and that we’ll be better humans for having endured the coming hardship. I don’t think so. I think that damaged, victimized people are as likely to harden themselves to the suffering of others, spread the damage, and perpetuate the cycle of victimization as they are to achieve some kind of awakening.
Conclusions are hard, I think, because they are fake. Ends can’t justify means, because there are no ends. The drama continues even though every player will eventually leave the stage.
When left-liberals and actionists accuse those like me–who may have philosophical departures from Marx and could give two shits about things like revisionism–of being “conservative economists” because we admit that economic limits are real limits and wishing Keynesianism into being won’t be an answer, I laugh. When we get called techno-utopians for saying that 99.9% of the population would die under primitive conditions and the survivalists would not likely be the survivors because self-imposed austerity doesn’t trump capital production even with reduced natural resources, I get called a dirty Enlightenment thinker. I am not a raw “base determines” everything Stalinist, as I think capitalism is a culture as well as an economic mode of production: or more specifically, several cultural kluges that share a few assumptions, but when left-liberals at Alternet start offering alternatives to capitalism, I have to just blink.
Sara Robinson offers this gem at Alternet: Capitalism Has Failed: 5 Bold Ways to Build a New World
The first normal, and weirdly conservative notion, of “Small is beauty.” One saw this in the small is beautiful movement: it’s a privilege afforded only to the those who live in hyper-affluent and relatively empty countries like the US. Psychologically, it seems to function like the noble savage that comes up every once and awhile for the affluent and privileged to op ine to fill a whole in the psyches. Now I will avoid pointing out that the great leap forward and the Khmer Rouge were also infected with this particular virus, because that’s something “right-winger” would point out, and I am a man of the left: however, it is true, localvorism and the small town are inefficient, given to nepotism, and seems to be an inverse of the facts of reality for most people. Here’s Robinson’s claims for who this is accounted for:
“Making stuff locally in small batches increases resilience, and decentralizing the process means that many more people will have jobs. For example: A single factory farmer can manage thousands of acres. An organic farm might have half a dozen workers on just 20 acres.”
And it will require double the land exhaustion as mechanized planting and advanced agriculture. The resilience argument is decent, but also for employing more people: it would do so, but at lower wages as cost gains don’t scale up. Furthermore, as Robinson admits, most infrastructure even required for localvorism and other such lifestyle pursuits, don’t scale up.
So then she offers: Marx 2.0
A”s noted, this kind of constant growth simply isn’t sustainable on a finite planet. People will always trade — it’s an essential humaneness that can stay happy and healthy without being pushed to grow. Worker ownership doesn’t really address this problem, though relocalization, which roots businesses deeply in their own local markets, limiting their reach beyond those boundaries, may provide one natural brake on growth.
For many large and necessary enterprises (utilities; essential centralized manufacturing; big, capital-intensive tech industries; and so on) public ownership may be the only way to ensure that they grow no bigger than they need to be to fulfill their mission. If there are other solutions that will allow us to have complex enterprises minus the growth imperative, they’re still lurking out beyond the horizon.”
Now completely missing that the points of Marx were both value theory and the needs for efficient production: I agree with Robinson that there is an ecological limit to development. What I disagree with is that this is fixed by reversals in technologies or simply scaling down. Inefficient manufacturing and business methods use MORE energy and resources, not less. The answer of public ownership: social democracy a la Chavezistas? misses the key points of value-theory: that the problem is as much ideological as ownership. Conservative critiques that nationalizing these industries in the hands of the state only leads to a less efficient form of capitalism is more or less born out, but the state wasn’t the focal point of Marx. Furthermore, she may be offering a syndicalist transition answer, but this doesn’t deal with the problems of value either.
I fail to see how this is Marxism 2.0.
Then Robinson offers: Systems Theory which is a variant of cybernetic theory.
Robinson, like most American leftists, don’t realize that Soviets tried this in 1960s and failed as it was a botched alternative to market economics. Furthermore for other applications of this problem see Adam Curtis’s documentary: “All Watched Over by Machines of Loving Grace.”
There are two more options but they are just re-metaphorizations of the first three: so what is offered as an alternative? Nothing really. Most of the alternatives either aren’t efficient or are just modifications of the commodity form already in capitalism. It’s time to be serious.
And now a few more words on the manufacturing revival. Friday’s Wall Street Journal had a piece (“In U.S., a Cheaper Labor Pool”) on how Caterpillar, which has been doing quite well lately, is threatening to close a plant in Canada and move operations to a low-wage site unless it gets big concessions from its union, the Canadian Auto Workers. That low-wage country its threatening to move to? The United States. The Journal also reports on other manufacturing firms moving south from Canada (but without crossing the Rio Grande): Siemens, Navistar, and Electrolux. The reason? American workers are very productive but they earn a lot less. Caterpillar claims that its workers in Illinois cost the firm less than half as much as their comrades in Ontario. Over the last decade, unit labor costs—wages and benefits paid per dollar of output—have fallen by 13% in the U.S. They rose by 2% in Germany, 15% in Korea, and 18% in Canada. When you factor in transportation and other costs, U.S. workers in some sectors are starting to become competitive with China, where wages have been rising sharply for years and workers have developed a habit of striking and ransacking the boss’s office. The trend towards bringing factory work back to the U.S. even has a name: onshoring. A revival of manufacturing would be good in many ways, but one based largely on low wages and high levels of exploitation is not something to cheer. – Doug Henwood
Actually, Doug Henwood’s entire analysis of the recent job’s report is really illuminating. The interesting point is that it appears that Globalization has reduced the labor pool of the US to an outsourcing sector for other countries, even China, where in some sectors wages are beginning to be comparable. This is Globalization, the great equalizer to the lowest common denominator what neo-liberals used to say about socialism. Welcome to the new normal. All that late 90s and mid-2000s want of manufacturing return as a way to save the economy? Well, look at it for what it is.
While I’ll admit to be skeptical about this, I have forgotten how important the distortions of fiat currency play out in the economy. We compare dollars prior to Bretton Woods and then the Nixon conversation to fait currency, we moved into a different game. A game of monetarist distortions. The reason is that “money’s” third function according to classical economics no longer applies to modern currency in a real way: it is not based by something with value outside of the promise of the state. While inflation and deflation are still a problem in commodity-backed currency, fiat currency distorts this furtherer. This makes the income inequality debate really painful because even when we adjust for inflation, we are not adjusting as compared to the value a commodity.
I think a lot of reasons we as leftists miss this is that fiat currency problems seem to obsessions of the right–gold standard talk is like that of Ron Paul. The reasons why neo-liberals oppose the gold standard is obvious in this light: it makes it harder to destroy symbolic value to create new space for the declining rates of profits. Real value is destroyed more quickly and the deprivations of the market hit in much more obvious and rapid cycles while favoring the habits of the investor class.
As the tweet master and blogger Marxist Jehu has pointed out to me:
If you plot nominal GDP as a function of the price of an ounce of gold since 1929, Kliman’s numbers will look much different. There are two things to remember:
1. Value can only be expressed in a material that itself has value, a commodity. In 1929 GDP was measured in a dollar based on gold.
2. Moving out from 1929, you have to compare nominal dollar prices to those same prices divided by the price of an ounce of gold.
Once you do this Kliman will see that gold GDP shrank from 1971 to 1980. The stagflation was actually the second 20th C. depression. Expansion began again in 1980, as gold prices fell. Also he will see we have been in a depression since 2001. The crisis of 2008 was the collapse of the mechanism by which labor power was being devalued. Between 1971 and 1980, wages measured by the gold prices, fell to 10% of 1971 level, before recovering to 40% in 2000. In this crisis, labor power has been devalued to about 3% of 1971 levels.
Also, once it is understood that the dollar is not money, it will be obvious the global economy is being managed directly by DC. And, it has been since 1945. The dollar effectively give DC control of all exchange wherever it is used as medium of circulation — international trade. Much of the surplus value derived results from DC’s exploitation of the national capitals of other nations.
Tell Kliman to plug his raw dollar numbers into gold prices and notice the significantly altered results of his analysis. Capital went off of the gold standard in 1933 because it allowed labor power to be continuously devalued as H. Grossman predicted it would need to.
I will pass this on to Dr. Kliman, but I am also pondering the real implications of this myself. To be a communist one needs to consider the philosophical, anthropological, and economic battles one is facing without obscurity. Fait currency is an obscurity.
So I have written on the Declining Rate of Profits debates before, which has to be up there with base/superstructure analysis, the meaning of “dictatorship of the proletariat,” and what is meant by the labor theory of value is on the list of things that Marxist/Left economists never can seem to come to conclusions about in a consensus way. If anything these indicate the problems of reconciling Marx’s unfinished project, but I am digressing. So here are some issues to consider that complicate my view of Kliman. In the US, the rich ARE getting richer,
IN the eight decades before the recent recession, there was never a period when as much as 9 percent of American gross domestic product went to companies in the form of after-tax profits. Now the figure is over 10 percent.
During the same period, there never was a quarter when wage and salary income amounted to less than 45 percent of the economy. Now the figure is below 44 percent.
For companies, these are boom times. For workers, the opposite is true.
The government’s first estimate of corporate profits in the third quarter was released two days before Thanksgiving, at the same time it revised the rate of G.D.P. growth in the quarter down to an annual rate of 2.0 percent.
The report showed that effective tax rates, both corporate and personal, are well below where they were during most of the post-World War II era.
This is hard to reconcile with Kliman’s observations, or is it. As Michael Robert’s points out:
Suffice it to say, that I think Kliman is right about using historic costs, but that contrary to Kliman, it don’t think it makes much difference empirically. See this graphic for the US rate of profit (using the whole economy measure that I prefer) based on both current (replacement) and historic cost measures for fixed assets. The cyclical movements and underlying trends operate for both.
That is Husson’s argument too, but I don’t agree at all with Husson’s interpretation of the data that concludes that because the US rate of profit rose from 1982 onwards, this means that Marx’s law of profitability was irrelevant to the Great Recession. Husson reckons that as profitability rose, investment growth slowed because capitalists made profits not from the productive investment sectors, but from switching into unproductive sectors like property and credit – what Marx called fictitious capital. The crisis in neo-liberalism that culminated in the Great Recession was due to the collapse of this credit-based growth – what he calls ‘chaotic regulation’.
I argue in my papers that Marx’s law operates as the ultimate and underlying cause that breeds the proximate causes of the housing boom and slump, the credit bubble and the leveraging of debt that eventually led to the financial collapse. I note that Kliman in his new book, The failure of capitalist production (http://www.amazon.co.uk/Failure-Capitalist-Production-Underlying-Recession/dp/0745332390/ref=sr_1_1?ie=UTF8&qid=1321791323&sr=8-1) makes these same points (I’ll be reviewing Kliman’s book in a future post). But I back up this conclusion with empirical data that shows the US rate of profit peaked in 1997 at a level that has not been surpassed since, suggesting that Marx’s law started to operate inexorably on capitalist production and the countervailing factors to the falling rate of profit had weakened. Indeed, from early 2006, the mass of profit in the US began to decline, well before the financial collapse, again suggesting that this is a good forward indicator (and cause) of capitalist crisis.
As Kliman said in the session, if you think the causes of the Great Recession are to be found in the financial sector and in ‘uncontrolled credit’ (this seems to be the position of Dumenil and Levy – see my post, The crisis of neo-liberalism and Gerard Dumenil, 3 March 2011), then there is a solution based on regulation of the financial system and credit creation, which is short of a transformation of the capitalist mode of production. If you reckon the cause lies in the mode of production itself (i.e. the production of surplus value) and not in its distribution (credit, rent, interest), then you are saying that credit control and tight regulation of the banking sector will not be enough to stop boom and slump in capitalism.
In other words, the profits and the income increases may seen only tangentially related. Individual incomes are increasing because of politics, and changes in the political matter. So that’s a strike against hyper-economism of a narrow view in the base/superstructure argument, but the declining rate of profits may still hold even despite that. But as Robert’s also points out: this is not a world analysis. If capitalism is a non-ontologic historical totality, then the social relationships it describes are in the entirety of the world not just the US. So much more work needs to be done.